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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Dragseth v. Dragseth (07/10/2009) sp-6384
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
| GINA DRAGSETH, | ) |
| ) Supreme Court No. S- 13168 | |
| Appellant, | ) |
| ) Superior Court No. 3KN-07- 699 CI | |
| v. | ) |
| ) O P I N I O N | |
| ) | |
| JOSEPH DRAGSETH, | ) No. 6384 - July 10, 2009 |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Kenai,
Carl Bauman, Judge.
Appearances: Allan Beiswenger, Law Office of
Allan Beiswenger, Anchorage, for Appellant.
Steven Pradell, Steven Pradell & Associates,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, and Winfree, Justices. [Matthews,
Justice, not participating.]
WINFREE, Justice.
I. INTRODUCTION
Following divorce proceedings, Gina Dragseth appeals
the trial courts award of child custody, determination that
certain promissory notes were Joseph Dragseths separate property,
and decision allowing Joseph to pay a portion of an attorneys
fees award with certain property rather than cash. Because the
custody decision does not adequately reflect that the court
considered relevant statutory factors and the best interests of
the children, we vacate the physical and legal custody awards and
remand for further proceedings. Because the promissory notes
were not presented or analyzed under the correct legal framework,
we vacate the determination that the notes were Josephs separate
property and remand for further proceedings. In light of these
rulings, we vacate the order for attorneys fees and remand for
renewed consideration at the conclusion of the proceedings.
II. FACTS AND PROCEEDINGS
Gina and Joseph Dragseth married in March 1993. They
have two minor children: a son born in May 1995 and a daughter
born in June 1997.
Joseph attended junior college and has vocational
certificates and experience as an oilfield operator. He is
employed on the North Slope and typically has a three-weeks-
on/three-weeks-off schedule, meaning he is unavailable for three-
week periods while he is working. He generally is allowed to
take summers off for commercial fishing. Gina has a high school
diploma and a pharmacy technician degree, and before the marriage
was employed as a head pharmacy technician. However Gina was the
childrens primary caregiver and was not employed outside the home
for roughly the last ten years of the marriage.
Relevant to this appeal are two income-producing
promissory notes in favor of Taku Marine. Taku Marine was
originally established as a fifty-fifty partnership between
Joseph and his parents. Joseph purchased his parents partnership
interest in 1998, after which Joseph continued to operate Taku
Marine as a sole proprietorship. Also relevant to this appeal is
a marine engine (with an agreed value of $5,000) included in the
parties lists of marital assets.
Gina filed for divorce in August 2007. After an
evidentiary hearing an interim order for child custody and
visitation, child and spousal support, and attorneys fees was
entered in December 2007. Trial took place in early May 2008,
and the trial court issued its findings of fact and conclusions
of law on May 13, 2008. Gina filed a motion for reconsideration,
but it was denied under Civil Rule 77(k)(4) when the trial court
did not rule on it.
Gina appeals.
III. STANDARD OF REVIEW
The trial court has broad discretion in determining
child custody,1 and we will not set aside a child custody
determination unless the lower courts factual findings are
clearly erroneous or unless the lower court abused its
discretion.2 A court abuses its discretion if it issues a
custody decision without considering all statutorily mandated
factors that are relevant to the case at hand.3 The courts
findings should give us a clear indication of the factors which
the superior court considered important in exercising its
discretion or allow us to glean from the record what
considerations were involved.4 We will set aside the courts
factual findings as clearly erroneous only if review of the
entire record leaves us with a definite and firm conviction . . .
that a mistake has been made. 5
The equitable allocation of marital property is
reviewed for abuse of discretion, as is the characterization of
property as marital or separate.6 Whether the trial court
applied the correct legal rules in the process of classifying
property is reviewed de novo.7
IV. DISCUSSION
A. Child Custody
Under AS 25.24.150(c) the trial court shall award
custody in the best interests of the child. In determining the
childs best interests, it shall consider nine factors:
(1) the physical, emotional, mental,
religious, and social needs of the child;
(2) the capability and desire of each parent
to meet these needs;
(3) the childs preference if the child is of
sufficient age and capacity to form a
preference;
(4) the love and affection existing between
the child and each parent;
(5) the length of time the child has lived in
a stable, satisfactory environment and the
desirability of maintaining continuity;
(6) the willingness and ability of each
parent to facilitate and encourage a close
and continuing relationship between the other
parent and the child . . . ;
(7) any evidence of domestic violence, child
abuse, or child neglect . . . or a history of
violence between the parents;
(8) evidence [of] substance abuse . . .
directly affect[ing] the child; [and]
(9) other factors that the court considers
pertinent.[8]
Gina claimed at trial that Josephs discipline
techniques amounted to a history of domestic violence. She
requested sole legal custody of the children and asked that
Joseph be allowed only supervised physical custody until he
received evaluation and treatment. The trial court rejected
Ginas request, calling her accusations frivolous and without
merit and concluding that Gina likely raised her claims against
[Joseph] to influence the [custody] investigator and the court
regarding custody and child support.
The custody investigator found no reportable child
abuse, but recommended awarding Gina sole legal and primary
physical custody. The trial court rejected that recommendation.9
The trial court awarded joint legal custody, finding
that Joseph and Gina were able to have constructive discussions
about major parental decisions10 and finding that there was no
other evidence joint legal custody would be inappropriate. The
trial court also awarded joint physical custody and continued the
interim visitation framework that accommodated both Josephs work
schedule and Ginas ability to have overnights with the children
during the weeks Joseph did not work.
Gina argues with respect to the award of joint legal
custody that the trial court erroneously found the parties could
reach agreement on major parental decisions. Gina does not offer
any specific evidence that she and Joseph differ on major issues
such as the childrens social or religious upbringing. Gina
instead points to reluctant compromises she and Joseph have made
regarding child custody during the separation.
This court will not disturb the trial courts factual
findings unless review of the entire record leaves us with a
definite and firm conviction . . . that a mistake has been made. 11
Our review of the record reveals sufficient grounds for the trial
courts determination that Gina and Joseph are able to communicate
effectively when necessary. Although the custody investigator
testified that there had been a breakdown in their ability to
communicate, Gina admitted that she and Joseph had been able to
agree on a visitation schedule that was simpler than the one
provided by the trial courts interim order. Joseph agreed that
he and Gina had essentially devised their own custody schedule
and had traded days of custody without problems. He also
testified that he and Gina were able to work things out regarding
day-to-day affairs. The trial court found no evidence that Gina
and Joseph would have difficulty agreeing on decisions about
schooling, religious practice, or extracurricular activities. We
are not left with the impression that the trial court was
mistaken in finding that the parties are able to communicate
effectively enough to share legal custody. We therefore conclude
that this finding is not clearly erroneous.
Gina also argues that the trial court did not make any
explicit findings regarding the childrens best interests for its
legal and physical custody determinations. The custody
investigators assessment methodically addressed the statutory
factors underlying the best-interests analysis. The custody
investigator noted that Joseph relies on his parents to perform
many day-to-day tasks, such as cooking and cleaning, making it
difficult to assess his ability to maintain a household if he
moves out of his parents house. She noted that both children
expressed a preference for spending most of their time with their
mother. She also noted that both children voiced dissatisfaction
with the interim custody arrangement which was adopted without
alteration by the trial court as the final custody arrangement
apparently finding it disruptive. As the custody investigator
put it, [t]he current schedule, while on paper seems equitable to
the adults, has dramatically changed the childrens lives and it
is something that neither of them [is] liking or wanting to have
continue.
The trial court is under no obligation to make specific
findings regarding [a custody investigators] report as long as
the court considers the appropriate statutory factors when making
custody determinations.12 But the trial courts eighteen-page
decision does not contain the phrase the best interests of the
children, and the trial court failed to address, explicitly or
implicitly, the relevant statutory factors including the
childrens custody preference, the relative bonds between the
children and each parent, and the childrens need for stability.13
Even after Gina pointed out this deficiency in her motion for
reconsideration, the trial court failed to present best interests
findings in support of the custody award. The trial courts
decision does not give us the required clear indication of the
factors which the . . . court considered important in exercising
its discretion.14
Joseph argues that the trial courts best interests
findings in the December 2007 interim custody and visitation
order are sufficient to support the trial courts custody award
after trial. After an evidentiary hearing on December 19, 2007,
the trial court noted in its order only that it found both of the
parties are fit parents and that [it] is in the best interests of
the children to have substantial quality time with each parent.
Joseph argues this finding implicitly reflects that the trial
court considered AS 25.24.150(c)(1)-(2) (needs of the children
and capability and desire of parents to meet childrens needs), AS
25.24.150(c)(4) (stability and continuity), and AS
24.25.150(c)(6) (parents willingness to facilitate and encourage
relationships between the children and the other parent).
We disagree with Joseph. He reads much into a single
conclusory statement in an interim order entered after an
abbreviated evidentiary hearing, and we note that the trial court
did not incorporate its interim order into the final findings and
conclusions. The brief mention of the childrens best interests
in the December 2007 interim order cannot be considered an
acceptable substitute for appropriate findings on the statutory
best-interests factors after the full trial on the merits of the
custody dispute.
Generally the remedy for failing to consider statutory
custody factors is a remand to the trial court for specific
findings on relevant factors.15 Gina asserts she should be
awarded legal and physical custody as a matter of law. Although
Gina argues that the facts relevant to the childrens best
interests are not in dispute, we disagree with this
characterization of the evidence and decline Ginas invitation to
make a custody determination as a matter of law.
We vacate the legal and physical custody awards and
remand for specific findings on the best-interests factors set
out in AS 25.24.150(c). Because new findings will be made on
remand, the parties should be allowed to present the trial court
with updated factual evidence bearing on these factors.
B. Taku Marine Promissory Notes
When dividing the parties marital assets the court
considered the factors specified in AS 25.24.160 to determine a
fair and equitable division.16 Because of Josephs higher earning
capacity and other differences in financial status between Joseph
and Gina, the court found that a fifty-five/forty-five division
of the marital assets in Ginas favor would be fair and equitable.
Neither party appeals this determination.
The character of the Taku Marine promissory notes was
disputed at trial: Gina claimed they were marital property and
Joseph claimed they were his separate property. The trial court
found that Taku Marine had been a fifty-fifty partnership between
Joe and his parents, that Joe had purchased his parents interest
and continued to operate the business as a sole proprietor, and
that the two promissory notes arose not from loans of marital
funds, but from Taku Marine business operations. The trial court
found that Joe passed fifty percent of the note payments to his
parents under an oral agreement with them, and that the note
proceeds that Joe kept and placed in joint accounts became
marital property. The court concluded that the notes themselves
were Joes separate property.
This analysis was misplaced. Instead of focusing narrowly
on the notes, the parties and the trial court should have been
looking at Taku Marine itself and whether Josephs interest in the
business was marital or separate.17 This gives rise to certain
observations.
First, Joseph was a partner in Taku Marine beginning in
1980 and continuing after the 1993 marriage until the purchase of
his parents interest in Taku Marine in 1998. Assuming Josephs
partnership interest in Taku Marine remained separate property
from 1993 through 1998, any demonstrated increase in the value of
that interest from the date of the marriage until the purchase of
his parents interest would be marital property.18 Assuming Joseph
thereafter maintained Taku Marine as separate property, any
demonstrated increase in the value of the business from the
purchase of his parents interest until the parties separated also
would be marital property.19 The burden of persuasion on such
increases in value rests on Gina.20
Second, property obtained during marriage is marital
unless it can be traced to a source considered separate property.21
The party seeking to establish that the property is separate
always bears that burden of proof; thus untraceable assets are
marital property.22 Joseph acquired his parents interest in Taku
Marine during the marriage, and unless Joseph can provide
persuasive evidence that the funds for the acquisition came from
a separate property source, the fifty-percent interest in Taku
Marine acquired in 1998 would be marital property.
Third, evidence and arguments relied upon by Joseph
suggest that even if Taku Marine had been his separate property
in whole or in part after 1998, the entire business may have been
transmuted into marital property. [A] spouses premarital
separate property can become marital through transmutation . . .
. Transmutation 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.23
Despite claiming to have purchased his parents interest in Taku
Marine and operating it as a sole proprietorship, Joe claims that
he had an agreement with his parents that they still were to
receive fifty percent of the note proceeds.24 He also claims the
Taku Marine payments to his parents were gifts, that Gina knew
the Taku Marine payments to his parents were gifts, and that
Gina, a signer on the Taku account, wrote checks for some of the
gifts because annual gift limits under federal tax law precluded
him from giving enough to his parents to get their half. But
Gina could only make personal gifts of Taku Marine business
assets if those assets were hers, and so the Taku Marine business
may have been treated as and thus may have become jointly owned
marital property.
Because neither the parties nor the trial court
addressed Taku Marine itself, the present record is insufficient
for a determination of whether Taku Marine was separate or
marital property. We therefore vacate the trial courts
determination that the notes were Josephs separate property and
remand for further property division proceedings, and specific
findings and conclusions, regarding the Taku Marine business.
C. Attorneys Fees
The December 2007 interim order required Joseph to pay
Gina $5,000 for attorneys fees. In light of that award and the
division of marital assets in Ginas favor, the trial court
awarded Gina an additional $2,000 in attorneys fees after trial.
The trial court offered Joseph the option of delivering a marine
engine valued by both Gina and Joseph at $5,000 to a place of
Ginas choosing in lieu of paying cash.
Gina argues that giving Joseph the option to pay Gina
with a boat engine instead of cash was gratuitous, inappropriate,
and an intended sanction of Gina that was unwarranted, and
constitutes an abuse of discretion. Gina contends the trial
court was trying to punish her for her claims of domestic
violence, but Joseph points out that the trial court had no
obligation to award Gina additional attorneys fees in the first
place.
The purpose of awarding attorneys fees in divorce
proceedings is to level the playing field, which means taking
into account not only earning capacities and separate resources,
but also the distribution of marital assets itself.25 We have
noted that a party who receives a property settlement sufficient
to cover . . . attorneys fees should not expect an attorneys fee
award.26 By reversing the trial courts characterization of the
Taku Marine promissory notes as Josephs separate property, we
increase the value of the marital estate and the assets that will
be distributed to Gina. On remand the award of attorneys fees
should therefore be reconsidered.
The trial court did not explain why it chose the boat
engine as a cash substitute for part of the attorneys fee award.
Absent a dispute about the ability of one party to convert the
property into cash, we see no problem per se in awarding property
as a substitute for the cash value of an attorneys fee award.
But when one party raises concerns about the ability to convert
that property to cash, as Gina has here, the trial court should
make findings to justify that aspect of its award. If on remand
the trial court reinstates the specifics of its award, it should
address Ginas arguments and explain its reasons for allowing
Joseph to pay attorneys fees with the boat engine.
V. CONCLUSION
We AFFIRM the trial courts factual finding that the
parties are able to communicate sufficiently for joint legal
custody, but we VACATE the trial courts child custody decision
and REMAND for specific findings and conclusions on the best-
interests factors of AS 25.24.150(c).
We VACATE the trial courts determination that the Taku
Marine promissory notes are separate property and REMAND for
further property division proceedings regarding the Taku Marine
business.
We VACATE and REMAND the issue of attorneys fees for
renewed consideration at the conclusion of the proceedings.
_______________________________
1 Blanton v. Yourkowski, 180 P.3d 948, 951 (Alaska 2008)
(citing Borchgrevink v. Borchgrevink, 941 P.2d 132, 134 (Alaska
1997)).
2 Id.
3 Park v. Park, 986 P.2d 205, 206 (Alaska 1999).
4 Smith v. Weekley, 73 P.3d 1219, 1226 (Alaska 2003)
(quoting Borchgrevink, 941 P.2d at 139-40) (internal quotation
marks omitted).
5 Id. at 1222 (quoting Duffus v. Duffus, 932 P.2d 777,
779 (Alaska 1997)).
6 Fortson v. Fortson, 131 P.3d 451, 456 (Alaska 2006);
Leis v. Hustad, 22 P.3d 885, 887 (Alaska 2001).
7 Leis, 22 P.3d at 887 (citing Cox v. Cox, 882 P.2d 909,
913 (Alaska 1994)).
8 AS 25.24.150(c)(1)-(9). If there is a finding of
domestic violence, the court must consider AS 25.24.105(g), which
creates a rebuttable presumption that sole or joint legal or
physical custody should not be awarded to a parent with a history
of perpetrating domestic violence. Puddicombe v. Dreka, 167 P.3d
73, 77 (Alaska 2007).
9 The trial court is not obligated to adopt a custody
investigators recommendations. See, e.g., Chase v. Chase, 109
P.3d 942, 945-46 (Alaska 2005) (noting that a custody
investigators report is just one of many pieces of evidence
available for the trial courts resolution of child custody
disputes).
10 See Bird v. Starkey, 914 P.2d 1246, 1250 n.6 (Alaska
1996) (Joint legal custody is predicated upon the parents ability
to reach ultimate agreement on the important decisions involved
in child rearing.).
11 Smith v. Weekley, 73 P.3d 1219, 1222 (Alaska 2003)
(quoting Duffus v. Duffus, 932 P.2d 777, 779 (Alaska 1997)).
12 Chase, 109 P.3d at 946.
13 The trial court did implicitly address AS
25.24.150(c)(7), the factor concerning domestic violence, when it
rejected Ginas characterization of Josephs disciplinary
techniques as domestic violence.
14 Smith, 73 P.3d at 1226 (quoting Borchgrevink v.
Borchgrevink, 941 P.2d 132, 139-40 (Alaska 1997)) (internal
quotation marks omitted).
15 See id. at 1227.
16 AS 25.24.160(a)(4) specifies that the division of
property must fairly allocate the economic effect of divorce,
based on consideration of several factors including the length of
the marriage as well as the parties ages, health, earning
capacities, financial condition, and needs.
17 See, e.g., 2 Brett R. Turner, Equitable Distribution of
Property 6:71 (3d ed. 2005) (There is broad general agreement
that a business . . . as an entity constitutes property. It is
therefore marital property to the extent that it was acquired
during the marriage.). (Emphasis in original.)
18 See, e.g., Hanson v. Hanson, 125 P.3d 299, 304-06
(Alaska 2005) (holding increase in value of husbands ongoing
business which was attributable to his marital efforts was
marital property); Schmitz v. Schmitz, 88 P.3d 1116, 1125 (Alaska
2004) (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)); Abood v. Abood, 119 P.3d 980, 989-90
(Alaska 2005) (holding that time the husband spent working for a
business he ran as a sole proprietorship was a marital
contribution to the property).
19 Hanson, 125 P.3d at 304-06; Schmitz, 88 P.3d at 1125;
Abood, 119 P.3d at 989-90.
20 Hanson, 125 P.3d at 304.
21 Schmitz, 88 P.3d at 1128.
22 Id. at 1128 (internal citation omitted).
23 Id. at 1125 (citing inter alia, Harrower v. Harrower,
71 P.3d 854, 857 (Alaska 2003)).
24 Joe also inconsistently claims that his agreement with
his parents is that they still own half of Taku Marine and always
will.
25 See, e.g., Tybus v. Holland, 989 P.2d 1281, 1289
(Alaska 1999); Money v. Money, 852 P.2d 1158, 1165 (Alaska 1993);
Siggelkow v. Siggelkow, 643 P.2d 985, 989 (Alaska 1982).
26 Tybus, 989 P.2d at 1289.
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