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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Mellard v. Mellard (09/21/2007) sp-6169
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
| MILTON D. MELLARD, | ) |
| ) Supreme Court No. S- 11987 | |
| Appellant, | ) |
| ) Superior Court No. | |
| v. | ) 4FA-04-01363 Civil |
| ) | |
| CATHLEEN C. MELLARD, | ) O P I N I O N |
| ) | |
| Appellee. | ) No. 6169 September 21, 2007 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Mark I. Wood, Judge.
Appearances: Richard W. Wright, Richard W.
Wright, P.C., and Christopher E. Zimmerman,
McConahy, Zimmerman & Wallace, PC, Fairbanks,
for Appellant. Mila A. Neubert, Neubert Law
Office, LLC, Fairbanks, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
FABE, Chief Justice.
I. INTRODUCTION
Milton Mellard appeals the property division in his
divorce. He argues that the trial court erred when it failed to
value Cathleen Mellards retirement account. Milton also
challenges the trial courts failure to provide for Miltons future
medical expenses in the property division and its award of $1,500
in attorneys fees to Cathleen. Because the trial court failed to
place any value on Cathleens retirement account, we remand the
case so that the account can be valued and the property division
reevaluated. The trial courts decisions regarding future medical
expenses and attorneys fees are affirmed.
II. FACTS AND PROCEEDINGS
Milton and Cathleen Mellard were married on July 14,
1979 and separated in June of 2004. They have three children
from the marriage, all of whom were adults at the time of the
divorce. The parties had accumulated a substantial amount of
property over their marriage and had no marital debt to allocate.
Both parties had vested IBEW retirement accounts at the time of
separation.
After trial on May 3-4, 2005, the court awarded each
party his or her own retirement account. But while the trial
court valued Miltons retirement at $346,319, placing that value
in Miltons column, it failed to value Cathleens retirement
account. Instead, it assigned to Cathleen the value of her
survivorship benefit in Miltons retirement, placing that value of
$168,308 in her column. The resulting division of the remaining
assets required Milton to pay Cathleen $5,999.44 to balance out
the larger award to Milton. The amount was to come out of the
investment account, life insurance policies, and other assets
awarded to Milton. The trial court also ordered a number of
marital items sold, with the amount divided equally between the
parties. The court awarded Cathleen $1,500 in attorneys fees,
bringing the total amount that Milton was to pay Cathleen to
$7,499.44.
III. STANDARD OF REVIEW
The trial court has broad discretion in dividing
property in a divorce proceeding.1 The trial court uses a three-
step procedure for a property division.2 First, the trial court
determines what property is available for division.3 Second, the
court values that property.4 Third, the trial court determines
how to equitably divide the property.5 The valuation of property
available for division is a factual determination that will only
be reversed if it is clearly erroneous.6 The equitable valuation
of property is reviewed under an abuse of discretion standard and
will only be reversed if it is clearly unjust.7 The award of
attorneys fees in a divorce case is within the broad discretion
of the trial court and will be overturned where the attorneys
fees award was manifestly unreasonable.8 An award of attorneys
fees in a divorce action is based on the relative economic
situation and earning power of the spouses and is designed to
assure that both spouses are able to litigate on an even playing
field.9
IV. DISCUSSION
Prior to trial, Cathleen retained an expert to perform
a formal valuation of Miltons retirement account. Miltons
present value interest in his retirement account was valued at
$346,319. Cathleens survivorship benefit in Miltons retirement
was valued at $168,308. Milton did not retain an expert to value
Cathleens retirement account but instead provided a pension
worksheet which reported all of the contributions that had been
made to Cathleens retirement account. The trial court awarded to
the parties their respective retirement accounts but did not
place a value on Cathleens retirement account because the court
did not have a dollar value for it. Instead, the court assigned
to Cathleen the value of her survivorship benefit in Miltons
retirement in order to balance the estate.
After proposed findings of fact and conclusions of law
were submitted, but before the trial courts final divorce decree,
Milton objected to various provisions of Cathleens proposal,
including the treatment of the retirement accounts. Milton
specifically objected to a proposed finding that [t]he court is
unable to value Defendant Cathleen C. Mellards IBEW retirement
because no evidence was presented as to its value. Milton
pointed out that he presented evidence at trial that
contributions to Cathleens retirement account totaled $124,992.52
as of March 2005 and that even after subtracting Cathleens post-
separation contributions, the value of her pension contributions
alone was $116,040.52. Milton also objected to the proposed
finding that valued Cathleens survivorship benefit in Miltons
retirement, arguing that he should be permitted to cancel
Cathleens survivorship benefit in his retirement. The court
entered Cathleens proposed findings without making the changes
advocated by Milton.
On appeal, Milton argues that the superior court was
required to value Cathleens retirement account, renewing his
argument that he supplied enough information for the court to
calculate the value of the contributions made to the retirement
account during the marriage, and that under this method, the
value of Cathleens retirement would be at least $116,040.52.
Milton also argues that under Root v. Root,10 the trial court
should have ordered the parties to fill the evidentiary void
regarding the value of Cathleens retirement account. Milton also
contends it was error for the court to award Cathleen survivor
status under Miltons retirement plan without valuing the award of
survivorship.11 Cathleen counters that the superior court did not
order that Cathleen be granted survivorship benefits in Miltons
retirement, but rather, Milton made an irrevocable survivorship
election at the time he retired. Cathleen maintains that the
trial court valued the survivorship benefit in lieu of Cathleens
retirement and used it to equalize the property division.
Cathleen contends that if Miltons suggestion of $116,040.52 as
the value of Cathleens retirement is accepted, then Milton was
not prejudiced because Miltons valuation of her retirement is
less than the valuation of the survivor benefit. Cathleen also
maintains that under Tanghe v. Tanghe,12 a case decided after the
Mellards trial, it was improper for the court to value a spouses
survivorship benefit, and therefore Milton has actually
benefitted from the trial courts valuation of Cathleens
survivorship benefit instead of the retirement account.
A. Cathleens Retirement
The trial judge divided the property evenly between the
parties. This resulted in Milton having to pay Cathleen
$5,999.44 in order to equalize the property division. However,
while the trial court awarded Milton his retirement with a value
of $346,319, it awarded Cathleen her retirement without placing a
value on it.
In Root v. Root, the court divided marital property
that included both a nonvested pension and a vested PERS pension.13
The court divided the marital estate without valuing either of
the assets because neither party presented any evidence at trial
as to the value of the benefits.14 Although we recognized that it
is the duty of the parties, not the court, to ensure that all
necessary evidence is before the court in divorce proceedings and
that a party who fails to present sufficient evidence may not
later challenge the adequacy of evidence on appeal, we noted that
where a party identifies a significant marital asset but presents
no evidence as to its value, the best practice is for the trial
court to direct the parties, or the delinquent party, or the
party having the best access to the proof, to fill the
evidentiary void.15 In this case, the pension worksheet submitted
for Cathleens retirement account did not include evidence of
present value as was performed for Miltons retirement account.
Thus, if the trial court did not wish to resolve the matter by
issuing a QDRO that would divide the marital portion of both
pensions, and wished to award the parties their own pensions, it
should have directed one of the parties to fill this evidentiary
void and to provide a present-day value of Cathleens retirement.
It was error to fail to value Cathleens account and to assign a
zero value to Cathleens retirement account.
B. Survivorship Benefits
The trial court valued Cathleens survivor benefits in
Miltons retirement at $168,308 and placed that value on Cathleens
side of the property division worksheet. Cathleen maintains that
Miltons election of survivorship benefits was irrevocable.
Although the trial court did not directly address the question
whether the election of survivorship benefits was irrevocable, it
did note its understanding that Cathleen will receive half of
Miltons retirement if Milton dies before Cathleen. Milton does
not appear to have contested that fact at trial, and he points to
no support on appeal for his contention that he can revoke his
survivorship election.
The trial court valued the survivorship benefit in
order to balance the estate. The question Cathleen presents is
whether it was error to assign any value to that survivorship
benefit. In Tanghe v. Tanghe,16 the husband had elected survivor
benefits for his wife, and the pensions were separated using
QDROs.17 The husband argued that because the wife was expected to
live longer than he, she would receive not only her remaining
interest in the husbands retirement, but also an increase in her
retirement, representing the portion that was being paid to the
husband.18 The husband argued that the court should have assigned
values for both the wifes survivorship interest in the husbands
pension and her reversionary interest in her own pension after
the husbands death.19 The question before us was thus whether the
wifes survivorship interest in her husbands retirement should
have been capitalized and credited to the wife, in addition to
being included in the QDRO.20 We held that the capitalization of
the survivorship benefits would place all of the risk of
outliving the husband on the wife.21 While the differences in
parties ages and life expectancies made the risk that the husband
would not benefit from his wifes retirement greater, this was the
same risk the husband took during the marriage.22 Therefore, we
determined that the use of the QDROs to divide the retirement of
the parties and their survivorship benefits was proper and that
it was not error for the trial court to refuse to capitalize the
survivor benefits the wife might receive under the QDRO.23
In this case, however, there were no QDROs dividing the
retirement accounts of the parties; instead, the parties were
awarded their own retirement accounts. As the Tanghe court
noted, QDROs do not require that the parties retirement funds be
valued.24 Although Milton has no interest at all in Cathleens
retirement, unlike the situation in Tanghe, where both parties
had an interest in the other partys retirement accounts,25 Milton
will receive less money for his retirement because of his
election giving Cathleen survivor benefits in his retirement
plan. On the other hand, awarding and valuing Cathleens
survivorship benefit and placing it in her column does place on
Cathleen the entire risk that she will outlive Milton. Although
Milton is twenty-one years older than Cathleen, she only receives
the survivor benefit from his retirement if she does in fact
outlive him.
Because we conclude above that it was error not to
value Cathleens retirement account, this case must be remanded to
the superior court, which will have to revisit the property
division in order to rebalance the marital estate in light of
this asset. In doing so, the court must devise an equitable way
to treat the survivorship benefit because Miltons interest in his
retirement has been reduced by the survivorship election. The
trial court will have several options, which could include
valuing Cathleens survivorship in Miltons retirement interest and
placing it on her side of the property division, or, as in
Tanghe, ordering that Milton receive survivorship benefits in
Cathleens retirement and dividing both parties retirement
accounts using QDROs.
C. Attorneys Fees
Milton argues that the trial court erred when it
awarded Cathleen $1,500 in attorneys fees. Cathleen maintains
that the award was appropriate based on the conduct of the
parties throughout the litigation. Cathleen notes that she
provided thirty-two exhibits for trial, prepared the property
distribution spreadsheet, and obtained real and personal property
valuations and a retirement valuation, all at her own cost.
Milton, on the other hand, did not provide any input into the
property spreadsheet and refused to make even the initial
disclosures. Cathleen argues that the trial would have been much
shorter had Milton participated more actively in the process,
which the court noted in its findings. Cathleen therefore argues
that the attorneys fees award was appropriate under the
circumstances.
When the trial court made its findings on the record at
the end of the trial, the court stated:
But I find that this trial has taken one day
longer than it should [have] because there
was no participation [by Milton]. . . . We
basically did a settlement conference with me
here and me deciding because either there
wasnt enough proof or there was . . . just
approximate proof on both sides . . . .
And so Im going to assess you can treat
it as a sanction or you can treat it as
attorneys fees, but its $1,500 for the cost
of not participating earlier and causing this
thing to last an extra day.
In the divorce decree, Cathleen was awarded $1,500 in costs and
attorneys fees based on a finding that [t]he trial took one day
longer than necessary, because of [Miltons] lack of participation
prior to trial.
In making an increased attorneys fees award in a
divorce proceeding, the trial court must engage in a two-step
process.26 [T]he court must first determine what fee award would
be appropriate under the general rule, and only then increase the
award to account for a partys misconduct. Failure to follow this
two-step process constitutes an abuse of discretion.27 The trial
court must also make explicit findings of bad faith or vexatious
conduct to justify the increased fee award.28 In this case, the
trial court did not first make a determination whether any
attorneys fees award would be appropriate in this case. But the
trial court did make references to the size of the marital
assets, and characterized this case as a fifty-fifty division in
which no spousal support or maintenance was required because both
parties have their own income. Although not as explicit as they
could be, the courts statements indicate that attorneys fees
would not have been awarded under normal circumstances because
the parties were economic equals.
This brings us to the second step of the analysis:
whether the award should have been increased to account for a
partys misconduct. The course of conduct in this case that
justified the trial courts enhanced fee award included Miltons
passivity during the pretrial proceedings, his failure to make
even initial disclosures without being compelled to do so, and
his failure to present evidence or contribute in any way to the
property spreadsheet. This caused the trial to last longer than
necessary. Bad faith conduct that prevents the parties from
litigating on an equal plane may lead to an award of enhanced
fees.29 By engaging in bad faith conduct, one party can increase
the other partys attorneys fees and can prevent that party from
litigating on an even playing field. Again, while the trial
court could have been more explicit in its findings to support
the fee award in this case, it did refer to conduct that touched
on the underlying purpose of allowing an increased fee award in a
case of vexatious or bad faith litigation tactics. Thus, the
award of attorneys fees was not an abuse of discretion. But we
caution that a finding of vexatiousness or bad faith to support
an enhanced fee award should be more clear in order to allow
review on appeal.
D. Miltons Future Medical Expenses
Milton argues that it was an abuse of discretion for
the trial court to fail to make some provision for Miltons future
medical needs. Cathleen responds that Milton provided no
information to the trial court about his health and notes that if
Miltons future medical needs had been important, he could have
presented evidence to the trial court to substantiate his claims.
On February 15, 2005, Cathleen sent Milton a letter
asking for a signed medical release because Milton might have had
some medical issues and Cathleen wanted more information before
trial. Milton responded that he [was] at a loss to understand
why or how the parties medical condition[s] are an issue. At the
conclusion of the trial, the court made one reference to medical
issues:
In terms of health, Mr. Mellard, you know,
may have to have some surgery in the future.
Nobody talked to me about what type of
medical benefits he has. I assume hes on
Medicare at this point in time. I dont know.
I assume that. Should the parties have set
aside some money for that future surgery when
they got the word? Oh, absolutely. Did
they? No. They went on vacations, they
bought toys, they paid off the house. Was it
a boon to the marriage? Absolutely.
Milton did not request an award for future medical
needs at trial, and he never argued for an unequal distribution
of property based on his medical condition. We generally will
not consider a claim raised for the first time on appeal, absent
plain error.30 In this case, Milton presented no evidence or
exhibits to the trial court regarding his future medical needs.
As Milton failed to present any evidence or argument regarding
the future medical expenses at the trial court level, his
argument is waived on appeal.
V. CONCLUSION
The trial court erred in not valuing Cathleens
retirement account. The decision of the trial court regarding
Cathleens retirement account is REVERSED, and the case is
REMANDED to the trial court to reevaluate the property division.
The trial courts decisions to award attorneys fees and not to
award future medical expenses are AFFIRMED.
_______________________________
1 Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).
2 Laing v. Laing, 741 P.2d 649, 651 (Alaska 1987).
3 Id. at 651-52.
4 Id. at 652.
5 Id.
6 Cox, 882 P.2d at 913-14.
7 Id. at 914 (internal quotations and citation omitted).
8 Kowalski v. Kowalski, 806 P.2d 1368, 1372 (Alaska
1991).
9 Id.
10 851 P.2d 67 (Alaska 1993).
11 Milton argues that it was error to award Cathleen
survivor benefits in his retirement without valuing that
interest. However, the trial court did assign a value to that
benefit in the property division.
12 115 P.3d 567 (Alaska 2005).
13 851 P.2d at 68.
14 Id. at 69.
15 Id.
16 115 P.3d 567 (Alaska 2005).
17 Id. at 569.
18 Id.
19 Id.
20 Id.
21 Id. at 570.
22 Id.
23 Id.
24 Id.
25 Id. at 569.
26 Kowalski, 806 P.2d at 1373.
27 Id.
28 Id.
29 Id.
30 Alderman v. Iditarod Props., Inc., 104 P.3d 136, 145-46
(Alaska 2004).
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