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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Haines v. Cox (05/16/2008) sp-6261
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
| KELLI HAINES, | ) |
| ) Supreme Court No. S- 12386 | |
| Appellant, | ) |
| ) Superior Court No. 3HO-03-174 CI | |
| v. | ) |
| ) O P I N I O N | |
| JOHN L. COX, | ) |
| ) No. 6261 May 16, 2008 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Homer,
Margaret L. Murphy, Judge pro tem.
Appearances: Carol A. Brenckle, Kenai, for
Appellant.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
This appeal concerns property division issues in Kelli
Haines and John Coxs divorce following trial. Haines argues that
the trial court erroneously failed to consider a 2006 tax
assessment when it valued the marital home. She also argues that
it was error not to credit her with half the rental value for the
marital home while Cox lived in it after separation and not to
credit her with half the marital home property insurance premiums
she paid before trial. Because Haines first offered the 2006
assessment when she sought reconsideration, she did not offer it
in a timely manner. We therefore affirm the trial courts
valuation. But because it was legal error not to consider
whether to credit Haines with half the rental value or half her
insurance expense, we remand for consideration of those claims.
II. FACTS AND PROCEEDINGS
Kelli Haines and John Cox married in June 1999 and
separated in May 2003. During their marriage they lived in a
Homer house built during the marriage on land Cox had purchased
before the marriage. After separation Cox continued living in
the home and Haines moved out, but Haines paid the 2003, 2004,
and 2005 property taxes and the property insurance premiums to
insure the marital home for 2003, 2004, and 2005; it appears she
paid the first premium in October 2002.1
The divorce trial was held October 7, 2005. The only
contested issue was how to value and divide the marital property.
The home was the only marital property remaining to be divided.
In determining the homes value, the trial court considered three
different valuations. Haines offered the testimony and
comparative market analysis of a real estate broker who valued
the property at $135,000 to $145,000. This valuation, dated
August 25, 2005, was based on the brokers view of the land and
the homes exterior. Cox submitted an opinion of value from
another broker, who estimated the value at $95,000 to $98,000 as
of March 25, 2005.2 This opinion was based on viewing the home
inside and out. The third valuation was the Kenai Peninsula
Boroughs 2005 tax assessment as of January 1, 2005. It stated
that the assessed value was $119,200.
The trial courts April 20, 2006 memorandum decision
and order contained its post-trial rulings. It found the tax
assessment was the most reliable of the three proffered
valuations because it was not prepared for either party and was
not done for the divorce trial and further was done by a neutral
party with a mandated obligation to assess the property at the
fair market value. The court found the homes value was $119,200
at the time of trial.
After considering the Merrill factors,3 the court found
that the circumstances of the parties were very similar and that
their economic situations were approximately the same. The court
concluded that an equal division of the value of the marital
residence was appropriate and awarded Haines $61,566.98 as her
share of the marital residence.4
Haines filed a motion for reconsideration in late April
2006 arguing, among other things, that the courts valuation
erroneously relied on the outdated 2005 tax assessment; that
Haines should be awarded half the homes fair rental value because
Cox had lived in the house rent free after separation; that the
court should reconsider its decision to require Haines to
transfer the property to Cox before she received payment; and
that the court failed to credit Haines for half the insurance
premiums she paid for the years 2003, 2004, and 2005 to preserve
the marital asset.5 The motion attached the 2006 tax assessment.
The trial court denied the reconsideration motion.
Haines appeals.6
III. DISCUSSION
A. Standard of Review
The valuation of available property is a factual
determination that should be reversed only if clearly erroneous.7
We review the equitable allocation of property under the abuse of
discretion standard; we will not reverse an allocation unless it
is clearly unjust.8 Although we review for an abuse of
discretion whether to grant credit for rental value and expenses
to preserve the marital property,9 in this case we review for
legal error Hainess contention that the trial court simply failed
to exercise its discretion.10
B. The Valuation of the Marital Property Was Not Clearly
Erroneous.
Hainess reconsideration motion argued that the trial
court incorrectly valued the marital property by relying on an
outdated 2005 tax assessment. In support of her reconsideration
motion, Haines submitted the 2006 Kenai Peninsula Borough tax
assessment valuing the home at $137,800; this assessment was
dated January 1, 2006. The 2006 assessment was not previously
provided to the trial court.
On appeal Haines argues that the 2006 assessment is
similar to her brokers trial testimony, which valued the house at
$135,000 to $145,000 as of August 25, 2005. Haines asserts that
although the 2006 tax assessment is dated almost three months
after trial ended, the trial court did not issue its decision
until April 20, 2006, three and a half months after the effective
date of the 2006 assessment. Haines points out that her brokers
analysis was made closer to the trial date than the 2005 tax
assessment. Haines argues that the trial courts decision was
incorrect and that, because the current value of the home is
higher than the value the court used for division, Cox will
effectively receive $18,600 more than Haines. Haines concludes
that the trial court should have valued the home based on the
2006 assessment or her brokers market analysis.
There are two potential problems with Hainess argument.
The first is substantive and the second is procedural.
The date on which a trial court values the marital
property should be as close as possible to the date of trial, but
in special circumstances the court may value property as of the
date the parties separated.11 Absent special findings justifying
use of the separation date, the trial court should value the
marital property as of a time as close as practicable to the date
of trial.12 Haines implies that because the 2006 assessment is
similar to her brokers analysis, the brokers analysis was a more
accurate assessment of the value of the home than the 2005
assessment relied on by the court. If Haines had presented the
2006 assessment to the trial court in a timely manner with a
request to reopen the evidence, the court could have determined
whether it was relevant to the valuation of the home at the time
of trial, and the parties could have disputed whether the 2006
assessment reflected the value as of the date of trial. But
because Haines did not submit the 2006 assessment until she moved
for reconsideration, we do not have to determine whether the
trial court should have considered the 2006 assessment relevant
to its valuation of the home. Instead, our decision here turns
on the timeliness of Hainess request.
Assuming that the 2006 assessment was relevant to the
issue of valuation, Hainess arguments are nonetheless unavailing
because she did not raise them in a timely manner. She did not
submit the 2006 tax assessment or ask the court to rely on it
until after the court had issued its decision in April 2006.
Submitting the January 2006 assessment only when she moved for
reconsideration in late April 2006 forecloses her claim that the
court abused its discretion by failing to rely on the 2006
assessment.13
Haines alternatively argues that we should order the
marital home sold and the proceeds divided equally to give Cox
the opportunity to purchase the home for fair market value. She
asserts that the trial court erroneously concluded that the only
reason Haines wanted the home sold was to force Cox to move out.
Haines implies that the trial court incorrectly valued the home
and argues that selling the home is, and was, the best way to
determine its value. The trial courts decision to value the home
based on the 2005 tax assessment after considering the differing
opinions of the parties brokers was within its discretion.14
Haines points to no evidence justifying a conclusion that the
trial court clearly erred in valuing the home. And given the
adequate, if disputed, evidence of the homes value, there is no
basis for thinking the court abused its discretion in not
ordering the home sold to establish fair market value.
C. It Was Error Not To Consider Whether To Grant Haines
Credit for Half the Fair Rental Value.
Haines argues that the trial court erred by failing to
award her half of the fair rental value of the marital home and
that the trial court misinterpreted Wood v. Collins15 in denying
her reconsideration motion.
Haines asked at trial and again in her reconsideration
motion that she be credited with half the fair rental value of
the marital home because Cox remained in the home rent free after
the parties separated in May 2003. She estimated that the fair
rental value was about $850 per month during the pertinent
period. On appeal she raises other arguments supporting her
assertion that it would have been equitable to award her this
credit, and argues that Cox forced her to move from the
residence.
In denying Hainess reconsideration motion the trial
court concluded that Wood does not apply to cases involving the
division of the value of a marital home. The court further
stated that Haines had not provided any legal authority that
would allow her to receive half the rental value.
The trial court correctly concluded that Wood does not
apply to marital cases.16 But that does not mean that a trial
court is altogether foreclosed from considering whether there
should be an adjustment for fair rental value for the marital
home.
Korn v. Korn states the proper rule in divorce cases.17
Per Korn, the issue is addressed to the trial courts discretion;
the trial court may award rental value but only as an adjustment
to the equitable division of assets in the third step of the
property-division process, if it provides a careful explanation.18
Applying Korn, we have held that it is not an abuse of discretion
to treat for property division purposes a husbands exclusive post-
separation occupancy of the marital residence as though he
received rent from the marital estate.19
Here the court erroneously concluded that it was
legally foreclosed from deciding whether to grant the requested
credit. This legal error requires remand. This does not mean
that as a matter of law Haines is entitled to an offset. But
given the evidence, it does mean that on remand the court must
exercise its discretion in considering whether to adjust the
equitable division of assets by half the rental value. If the
court takes the rental value into account, it should make written
findings on the issue.
D. It Was Error Not To Consider Whether To Credit Haines
for Half the Cost She Paid To Insure the Marital
Property.
Haines next argues that it was error not to award her
half the cost of the premiums she paid to insure, and thus
preserve, the marital residence for 2003, 2004, and 2005. There
was undisputed trial evidence that Haines paid the property
insurance premiums for three years beginning with a payment in
October 2002.
Haines raised this argument at trial and in her
reconsideration motion. The trial court did not discuss Hainess
request in its April 20 order, and addressed the argument for the
first time in its order rejecting Hainess reconsideration motion:
Although Haines testified that she had paid
the insurance on the property, she did not
provide any evidence that Cox was or would
have been a beneficiary of the insurance.
Since Haines would have been the only one to
benefit if a claim had been filed, she cannot
now ask to be reimbursed for one-half the
cost of the insurance since no claim was
filed.
On appeal, Haines argues that no evidence supports the
courts reasoning. She contends that [h]ad there been a claim,
and the property destroyed, . . . Cox would have had a cause of
action against [her] for his share of the proceeds. She reasons
that his cause of action would have been based on a failure to
take steps to preserve the marital asset if the house had burned
down and she had not purchased insurance.
The home remained a marital asset following separation.
Haines incurred expense to preserve or protect it by buying
insurance that would have replaced or repaired it in the event of
loss. As Haines argues, there was no evidence supporting the
notion that Cox would have recovered nothing under the insurance
policy or that the expense did not benefit both parties by
protecting the main marital asset. It was therefore error not to
consider whether the credit should be given. We consequently
remand as to this issue.20 The superior court should determine on
remand whether Haines is entitled to a credit for half the cost
of the insurance premiums for the marital home.21
IV. CONCLUSION
The valuation of the marital property is AFFIRMED. The
denials of credits for half the rental value and half the cost of
insurance are VACATED. We REMAND for further proceedings
consistent with this opinion.
_______________________________
1 As of October 2005, the 2005 property taxes had not
been paid. The court ordered Cox to pay the 2005 taxes; when he
did not, Haines paid them.
2 This brokers original estimate valued the home at
$90,000 as of February 2004.
3 Merrill v. Merrill, 368 P.2d 546, 547 n.4 (Alaska 1962)
(discussing factors now codified in AS 25.24.160(a)(4)).
4 The court stated that this amount represents the total
of Hainess half of the value of the residence plus half the 2003,
2004, and 2005 property taxes, to reimburse Haines for Coxs half
of the property taxes Haines had paid since separation.
5 The supporting memorandum also asserted that the courts
April 20, 2006 decision was issued more than six months after
trial ended on October 7, 2005. The October 7 log notes reflect
that the court dissolved the marriage as of that date and took
property division under advisement.
6 Cox has not filed a brief.
7 Cox v. Cox, 882 P.2d 909, 913-14 (Alaska 1994).
8 Id. at 914 (internal quotations omitted).
9 Berry v. Berry, 978 P.2d 93, 95 (Alaska 1999) (We
review for abuse of discretion a superior courts decision whether
to give a credit to a spouse for payments made to maintain
marital property.); see also Martin v. Martin, 52 P.3d 724, 726
(Alaska 2002) (noting equitable allocation step is reviewed under
abuse of discretion standard); cf. Korn v. Korn, 46 P.3d 1021,
1024 (Alaska 2002) (noting allowances for rental value are made
in equitable-division step of property division process).
10 Whether the trial court erred by allegedly
misconceiving the scope of its discretion or thought that it had
no discretion to decide a dispute is a legal question. See Garner
v. State, Dept of Health & Soc. Servs., Div. of Med. Assistance,
63 P.3d 264, 269 (Alaska 2003) (stating that it is legal error
for an agency to fail to apply exceptions found in its own
regulations, or . . . to inquire into their applicability); see
also Cano v. Municipality of Anchorage, 627 P.2d 660, 663-64
(Alaska App. 1981) (stating that failure to exercise discretion
is legal error).
11 Ogard v. Ogard, 808 P.2d 815, 819-20 (Alaska 1991); see
also Walker v. Walker, 151 P.3d 444, 448 (Alaska 2007) (stating
valuation date should be as close as practicable to date of trial
unless special circumstances justify valuing property as of
separation date).
12 Walker, 151 P.3d at 448.
13 See Stadnicky v. Southpark Terrace Homeowners Assn, 939
P.2d 403, 405 (Alaska 1997) (An issue raised for the first time
in a motion for reconsideration is not timely. (citing Miller v.
Miller, 890 P.2d 574, 576 n.2 (Alaska 1995))); see also Koller v.
Reft, 71 P.3d 800, 805 n.10 (Alaska 2003) (noting that superior
court is under no obligation to consider documents first
presented with motions for reconsideration).
14 See Cox, 882 P.2d at 913-14.
15 Wood v. Collins, 812 P.2d 951 (Alaska 1991).
16 We have held that Wood does not apply to marital cases
stating, Wood did not involve marital property because the
parties were not married. . . . [Therefore,] Wood does not
require a trial court to apply these rules of cotenancy to
married parties seeking a divorce. Dodson v. Dodson, 955 P.2d
902, 912 n.17 (Alaska 1998).
17 Korn v. Korn, 46 P.3d 1021 (Alaska 2002).
18 Id. at 1024 ([A]ny allowance for [imputed rental value]
in the property decision [is] reflected in the third step of
property-division process as an adjustment to the equitable
division of marital assets that actually existed.).
19 Carr v. Carr, 152 P.3d 450, 454-55 (Alaska 2007)
(citing Korn, 46 P.3d at 1023-24).
20 Haines seeks a credit for the premiums she paid for the
years 2003, 2004, and 2005. The log notes of her untranscribed
testimony imply that she paid the premium for 2003 in late 2002.
We note as to this payment that the parties did not separate
until May 2003.
21 Ramsey v. Ramsey, 834 P.2d 807, 809 (Alaska 1992)
([T]he fact that one party has made payments from non-marital
income to preserve marital property should be considered as one
of the circumstances to be weighed by the trial court in dividing
the marital property.).
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