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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ethelbah v. Walker (11/13/2009) sp-6434
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
| LAWRENCE J. ETHELBAH, | ) |
| ) Supreme Court Nos. S- 12994/S-13013 | |
| Appellant and | ) |
| Cross-Appellee, | ) |
| ) Superior Court No. | |
| v. | ) 1JU-07-506 CI |
| ) | |
| MARY SUE WALKER f/k/a | ) |
| ETHELBAH, | ) O P I N I O N |
| ) | |
| Appellee and | ) |
| Cross-Appellant. | ) No. 6434 - November 13, 2009 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Patricia A. Collins, Judge.
Appearances: Gregory W. Lessmeier, Lessmeier
& Winters, Juneau, for Appellant and Cross-
Appellee. Chrystal Sommers Brand, Family
Lawyer (An Alaska Corp.), Juneau, for
Appellee and Cross-Appellant.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, Winfree and Christen, Justices.
CARPENETI, Justice.
I. INTRODUCTION
I. A husband appeals the property division in his divorce.
He argues that the trial court erred in distributing a retirement
survivorship benefit by present value instead of by a qualified
domestic relations order; in valuing a retirement health
insurance benefit, an excavator machine, and two trucks; and in
ordering recapture of marital income earned from his pension
during the period of separation. The wife cross-appeals, arguing
that the court erred in depriving her of the right to devise a
pension survivorship benefit and in valuing a marital escrow
account. We affirm the superior courts decision in all respects
except its order that pension income paid to the husband during
the separation period should be recaptured.
II. FACTS AND PROCEEDINGS
A. Facts
Lawrence Ethelbah and Mary Sue Walker married in
Arizona in 1966. They divorced in October 2007. At the time of
divorce, Lawrence was sixty-eight years old and Mary Sue was
sixty-four. They had one adult son. During the marriage, Mary
Sue worked for the Alaska Department of Education and for Alaska
school districts. Lawrence worked for the United States Bureau of
Indian Affairs. Lawrence retired from the federal government in
1994 and Mary Sue retired from state service in 1998. The
Ethelbahs lived summers in Alaska and winters in a home in
Pinetop, Arizona on an Apache Indian reservation. During
retirement, the parties started two businesses that bought, sold,
and leased machinery. Mary Sue was the corporate officer of both
corporations.
On January 10, 2007, Mary Sue was diagnosed with breast
cancer and underwent surgery and chemotherapy. The parties
permanently separated on or about January 12, 2007. The
separation was not amicable. Each party accused the other of
stealing personal property from the estate. Lawrence filed an
action in an Arizona tribal court seeking to have Mary Sue
arrested for these alleged thefts. Mary Sue offered testimony
(which the court called believable) that she fled the Arizona
home after Lawrence threatened her with a gun.
B. Proceedings
The divorce trial was held October 11-12, 2007.
Superior Court Judge Patricia A. Collins ordered the sale of
several items of real and personal marital property, with the
proceeds to be divided equally. Other property items were
allocated to the parties, with the distribution to be balanced
later by an equalizing payment. These included a number of
vehicles, boats, trailers, pieces of heavy machinery, halibut
fishing quotas, and other items. The court found that Lawrence
had received but not shared certain marital funds during the
period between separation and trial, including pension income,
proceeds from halibut fishing quotas, income from rental
properties, and proceeds from selling a Linkbelt excavator
machine. The court placed these funds on Lawrences side of the
marital property ledger so they would be factored later into an
equalizing payment.
At the time of the divorce, each party was receiving a
defined benefit retirement pension. Mary Sues was from the
Teachers Retirement System (TRS) and Lawrences was a federal
civil service pension. The trial court ordered that the marital
portion of each partys pension benefits be divided equally by
qualified domestic relations order (QDRO) or Court Order
Acceptable for Processing (COAP).1 Each party was also awarded
survivorship benefits associated with the other spouses pension,
and they were to share the costs of the survivorship benefits.
Mary Sue also had a medical insurance retirement policy
from TRS that the court determined to have a present value of
$111,821. This policy provided a survivorship benefit to
Lawrence in the form of lifetime medical coverage should he
survive Mary Sue, which the court estimated had a present value
to him of $45,064. Rather than distribute the TRS medical
survivorship benefits by QDRO, the court used the present value
estimates, placing $45,064 on Lawrences side of the ledger in the
tabulation of marital assets, and $111,821 on Mary Sues side.
The court ordered that bank accounts, which likely
contained more than $400,000, be divided equally after tracing by
a jointly-selected CPA. The court prepared a property
distribution table dividing the assets fifty-fifty as closely as
possible. An equalizing payment would be calculated after the
CPA completed the tracing of the assets in the marital bank
accounts. Later, however, the parties stipulated that there
would be no tracing and that monies withdrawn from these accounts
by the parties during the separation were used for reasonable
living expenses.
III. STANDARD OF REVIEW
A trial court has broad discretion to provide for the
equitable division of property between the parties in a divorce.2
We review the trial courts equitable distribution under an abuse
of discretion standard, and will reverse only if the division is
clearly unjust.3 We review a trial courts decision to classify
property as marital for abuse of discretion, and review the
courts underlying factual findings on classification and
valuation of marital property for clear error.4 Clear error
exists when we are left with a definite and firm conviction that
the superior court has made a mistake.5 We review questions of
law de novo, adopting the rule of law that is most persuasive in
light of precedent, reason, and policy.6
IV. DISCUSSION
A. The Superior Court Did Not Err in Assigning a Present
Value to Lawrences Survivorship Interest in Mary Sues
Retirement Health Insurance, Rather than Distributing
It Through Qualified Domestic Relations Order.
Lawrence objects to the way the court distributed the
health insurance survivorship benefit that he was entitled to
under Mary Sues retirement plan. He argues that the law
prohibits distributing a survivorship benefit according to an
estimate of present value, that doing so was unfair, and that it
should have been distributed by QDRO instead. While we
ordinarily prefer the QDRO method for distributing pension
benefits,7 the trial court retains discretion to use a present
value distribution for vested pension benefits,8 including
survivorship benefits, where justified by the circumstances and
the need for an equitable distribution.9 We find the trial court
did not abuse its discretion in this case.
An expert witness testified that Mary Sues post-
retirement medical insurance benefit had a present value of
$111,821 to her, based on actuarial calculations given her age
and history of cancer. The expert similarly estimated Lawrences
survivorship benefit from that insurance to have a present value
worth of $45,064 to him. The court accepted these valuations and
treated these amounts as marital property possessed by each party
in its tabulation for the equitable division of property.
Lawrence argues that assigning a present value to the
survivorship benefit places an unfair risk on him by crediting
him with possession of $45,064 in marital property, even though
he will receive this benefit only if he outlives Mary Sue and
enjoys the benefit for the amount of time the expert predicted.
He calls the benefit speculative and highly contingent. Lawrence
points out that the other survivorship benefits in this case were
not assigned present values. Citing Tanghe v. Tanghe10 and
Nicholson v. Wolfe,11 he says that it was error to capitalize this
survivorship benefit because doing so placed an unfair risk on
the non-employee[] spouse and was inconsistent with the wait and
see approach underlying the use of qualified domestic relation
orders. He also cites Laing v. Laing,12 in which we rejected the
present value method of dividing non-vested pensions in favor of
a QDRO approach.
Mary Sue argues that there was a good reason to treat
the medical survivorship benefit differently from the other
retirement benefits that were distributed by QDRO. Unlike those
pension benefits, which provided each party a corresponding
survivorship benefit, only Mary Sue had retirement health
insurance benefits with a survivorship for the other spouse.
Therefore there was no offsetting health insurance survivorship
benefit that a QDRO could allocate to Mary Sue from Lawrences
retirement plan.
As we noted in Laing, courts have used two primary
methods of valuing and dividing pension benefits upon divorce:
the present value approach and the reserved jurisdiction
approach.13 In the present value approach, the court uses
actuarial and other calculations to estimate how much the future
receipt of pension benefits is worth to the beneficiary in
present value dollars.14 That amount is then awarded at the time
of divorce, with an equalizing offset to the other party.15 In
contrast, we have called the QDRO a wait and see approach.16
Unlike the present value, immediate offset approach, a QDRO
provides that when the nonowning spouse becomes eligible for
benefits in the future, the owning spouse or the pension plan
pays him or her those benefits at that time.17
We have considered whether the superior court should
use a QDRO or a present value distribution in several similar but
distinct contexts. In Laing, we rejected the present value
method of dividing nonvested pension benefits, because it
unfairly places all risk of possible forfeiture on the employee
spouse.18 In Broadribb v. Broadribb,19 we affirmed the
distribution of survivorship benefits in a vested retirement plan
according to present value, albeit under unusual circumstances.20
In Nicholson, we held that the choice between a present value and
QDRO approach was within the trial courts discretion for the
distribution of vested retirement benefits.21 In Tanghe, we
expressed disfavor for the present value method of distributing
pension survivorship benefits,22 although we did not actually hold
that using it would necessarily be error. In Mellard v. Mellard,23
we affirmed that a present value approach to distributing vested
pension survivorship benefits lay within the trial courts
discretion.24
Lawrence, citing Laing and Tanghe, argues that the
present value approach is unfair because it means that the non-
owning spouse bears all the risk that the benefit may never be
realized. It is true that a spouse in Lawrences position bears
the risk of forfeiture, that is, of getting nothing. Mary Sue
gets her offset up front during the divorce, and Lawrence gets
nothing unless he outlives her. However, as we noted in Laing,
the situation changes when a pension vests, making a present
value payout much less speculative and reducing the risk of
forfeiture:
[R]eserving jurisdiction does not necessarily
mean that a protracted pay-out to the former
spouse will follow vesting. Once vesting
occurs, that portion of the pension which is
marital property can be calculated as of the
time of the divorce. The non-employee spouses
share of this figure may, in appropriate
cases, be payable in a lump sum or in
installments which do not particularly have
to be keyed to the time that the pension
benefits are actually received.[25]
Although the QDRO method is ordinarily preferable, the court in
the present case had reasons of equity for taking a
present value approach to this particular asset.
Alaskas divorce statute calls for the division to
fairly allocate the economic effect of divorce by
taking into account several factors, including the
station in life of the parties during the marriage,
their age and health, earning capacity, and financial
condition.26 In this case, it is likely that Mary Sue
will predecease Lawrence due to her age and breast
cancer, and that Lawrence will thus benefit financially
from the survivorship benefit. A present value
distribution allows both parties to share this marital
asset during their lifetimes. The trial court was
consistent in its treatment of this retirement health
insurance benefit, crediting Lawrence with the
estimated present value of the survivorship benefit,
but also crediting Mary Sue with the estimated present
value of her insurance coverage. The court did not
abuse its discretion in distributing these benefits.
B. The Superior Court Did Not Err in Its Valuation of
Mary Sues Retirement Health Insurance Benefits.
The court valued Mary Sues post-retirement medical
insurance benefit at $111,821. Lawrence argues that the court
undervalued this asset. He cites Hansen v. Hansen27 to argue that
the superior court failed to look to the amount of the premium
subsidy provided by the employer, rather than to either the
proceeds or the cost of procuring comparable insurance.28 We
conclude that the trial court did not err and followed the Hansen
requirement to base the valuation on the amount of the employer
premium subsidy.
An expert witness provided three different ways of
estimating the value of the health insurance benefit. The court
selected the middle estimate of $111,821 based on what the expert
termed the individual rate. Lawrence argues that the court
should have chosen a higher estimate based on the so-called
composite rate, which would have placed the value at $166,026.29
Retirement medical insurance for TRS members is
provided by AlaskaCare, a health insurance plan funded by the
State of Alaska Retiree Health Fund, and administered by the
States Division of Retirement and Benefits.30 The State of
Alaskas Commissioner of Administration sets premiums to cover
estimated costs of claims to be paid in the coming year. Mary
Sues expert witness described the difference between the use of
the individual rate and the composite rate for estimating the
employer premium subsidy:
The individual rate approaches reflect what
Ms. Ethelbah would pay to the Teachers
Retirement Fund, if she were required to pay
premiums (for herself only). The composite
rate reflects what TRS pays from the Teachers
Retirement fund to the State of Alaska
Retiree Health Fund. Each month during 2007,
employers participating in the [Teachers
Retirement System] pay $876 per benefit
recipient . . . to the Retiree Health Fund.
(Emphasis in original.)
TRS paid the composite rate of $876 per month per employee to
cover its Tier I employees such as Mary Sue. Because Mary Sue
was a Tier I TRS member, she received fully subsidized health
insurance. Employees in certain other categories (which are
determined based on factors such as date of hire) have to pay
their own premiums.31 Individual employees without dependents who
purchased their own insurance paid the individual rate of $590
per month.
The expert testified that the composite rate is higher
than the individual rate because it is based on an average cost
of coverage for all employees that includes not only coverage of
the participant, but also spouses and minor children. So this
results in the composite rate being about 50 percent higher than
the individual rate. Thus, the composite rate is actually a less
precise measure than the individual rate as to how much it costs
TRS to insure Mary Sue. The expert witness observed that the
composite rate is a weighted average that reflects the value and
incidence of coverage of spouses and children, as well as the
retiree. It takes into account not only the coverage of spouses
and dependents, but also the probability that a given individual
will acquire a new spouse or new children in the future.
The assumptions inherent in the composite rate, for
dealing with unknown future familial status, are not applicable
to Mary Sue. It was known that Mary Sue was sixty-four years old
and had breast cancer, making her less likely than the average
insured to remarry or acquire additional dependent children. The
composite rate is better viewed not as the size of the subsidy
provided to an individual like Mary Sue, but as an estimate of
average per-employee costs for all insureds, used to assure that
in aggregate TRS pays AlaskaCare enough to cover the claims of
its entire pool of insureds. Thus, the expert witness concluded
that in Mary Sues case, the individual rate would be more
appropriate than the composite rate because the composite rate
would likely overstate the cost of Mary Sues coverage:
The composite rate primarily reflects the
probability of marriage, remarriage following
divorce. And I think to some extent a person
would want to discount that where a person
has a life-threatening illness. So I think,
in this case, given Ms. Ethelbahs breast
cancer, one might want to shy away from the
composite rate.
The expert testified that in his view both the individual and
composite rates were different ways of estimating the employers
premium subsidy in accord with the Hansen mandate. As the trial
court concluded, the individual rate most closely approximates
the likely premium rate charged by the State for estimated costs
of claims, given Ms. Walkers life expectancy and personal
circumstances. We conclude that the court did not err as a
matter of law or make any erroneous factual findings in adopting
the individual rate calculation to value this asset.
C. It Was Error To Order Recapture of Pension Income
Lawrence Received During the Separation Without Finding
that the Income Was Wasted, Dissipated, or Converted to
Non-Marital Form.
Both parties received monthly retirement income after
they separated, which the court classified as marital property.
Lawrences pension payments were higher than Mary Sues by $1,216
per month. This monthly difference in retirement income totaled
$10,945 during the period between separation and trial. The
trial court concluded that Lawrence failed to share this marital
asset, and placed a $10,945 marital property credit on Lawrences
side of the property distribution table. We conclude that it was
error to order recapture of these funds without making sufficient
findings based on evidence that the funds had been dissipated,
wasted, or converted to non-marital form.
The party that controls a marital asset during
separation may have to compensate the other party if he or she
dissipates or wastes the asset or converts it to non-marital
form.32 The marital asset is not considered to have been
dissipated, wasted or converted if it was expended for marital
purposes or normal living expenses.33 In a majority of courts,
[t]he spouse claiming dissipation bears the burden of proving the
first two elements of dissipation the fact that the asset in
question existed, and the fact that it was lost during or after
the marital breakdown.34 Once that burden is met, the burden
shifts to the owning spouse to show that he or she did not
dissipate the asset.35
An order of recapture is thus not justified without
findings of fact that the assets in question were actually
wasted, dissipated, or converted to non-marital form.36 These
findings cannot be merely conclusory, but must be based on
evidence. In Ogden v. Ogden,37 we noted that [o]rdinarily, . . .
neither party is charged for loss in the value of marital
property occurring in the interim between separation and trial.38
However, we have occasionally recognized an exception that allows
recapture of property that has been dissipated or wasted in the
interim between separation and trial where there are exceptional
circumstances warranting recapture.39 In Brandal v. Shangin,40 we
vacated a trial courts recapture of Exxon Valdez settlement
monies paid to the husband during separation because [i]t was
error to charge the settlement amount . . . without first
conducting a recapture analysis.41 In Foster v. Foster,42 we
reversed an order recapturing pension payments received by the
husband after separation but spent by the time of trial.43 We
held that the trial court erred . . . in recapturing the payments
which had been made to and spent . . . before trial without
making findings that circumstances existed which warranted their
recapture.44
In this case, the trial court appears to have inferred
the dissipation, waste, or conversion of the pension income
solely from the fact that Lawrence had a larger income than Mary
Sue during the period of separation, and that his various sources
of income, taken together, exceeded his living expenses.
However, the court did not cite any evidence or make any findings
about what Lawrence actually did with his pension income. The
court does not appear to have considered the possibility that
Lawrence deposited any pension income beyond his normal living
expenses into marital bank accounts, as Lawrence asserts in his
brief. These marital bank accounts likely contained more than
$400,000 at the time of trial. It appears that no tracing of
withdrawals or deposits was made because the parties stipulated
that withdrawals from these accounts were for reasonable living
expenses. If Lawrence did deposit any excess pension income into
marital bank accounts, it would be double-counting to order its
recapture because these accounts were divided equally. We
conclude there were insufficient findings supporting the order of
recapture.
D. The Superior Court Did Not Clearly Err in Its Valuation
of the Linkbelt Excavator.
After separation, Lawrence sold an item of marital
property, a Linkbelt excavator, without notice to or the consent
of Mary Sue. The court found that the sale was an unjustified
dissipation of marital assets and that Lawrence had sold it for
far less than market value. It added the fair market value,
which it set at $92,000, to Lawrences side of the marital
property ledger. In his points on appeal, and in the headings of
his brief, Lawrence disputes both the conclusion that he
dissipated this asset and the valuation. However, in his brief
he provides arguments regarding only the valuation. We therefore
treat the dissipation issue as waived and focus on the valuation
question.45 We conclude the court did not commit clear error in
this valuation.
When a marital asset is sold after separation and there
is evidence that the asset was wasted or converted to nonmarital
form, the court may recapture the asset by crediting all or part
of its value to the account of the party who controlled the
asset.46 The court accepted Mary Sues estimate of $92,000, while
Lawrence argued that the fair market value was $51,156.
Mary Sue argued that the excavator was purchased for
$98,085. Lawrence did not dispute this. It was three and a half
years old at the time Lawrence sold it to a broker for $54,240.
However, what he actually received was $25,865 in cash and a
sawmill that he testified was worth $26,400. This totals
$52,265, so it is unclear why he also states that the sales price
was $54,240. In any event, he put its value at $51,156, so he
said the price he got was a good deal. Mary Sue estimated its
value at the time of sale at $92,000, based on the excavators low
number of hours, and its excellent condition, and her familiarity
with this kind of equipment.
In explaining why $54,240 (or less) reflected fair
market value, Lawrence factored in a twelve percent annual
depreciation rate, along with a ten percent brokerage fee. Mary
Sue testified that Lawrence overstated the amount of depreciation
because the machine only had 71.6 hours on it. So that is very
low mileage . . . . This is a practically new machine . . . .
Lawrence argues that Mary Sue did not support her
opinion of the excavators value with any documentation or any
informed third-party opinion. While that is true, the same can
be said of Lawrences opinion of the excavators value. In
general, the opinion of a lay owner as to the value of his or her
property is admissible evidence.47 The evidentiary weight to be
accorded such opinion and the adequacy of its foundation are
matters which fall squarely within the trial courts discretion.48
Mary Sue was the corporate officer of the Ethelbahs equipment
leasing and sales companies, and was involved in the buying and
leasing of its equipment. The trial court accepted her
valuations of all the heavy equipment assets at issue, finding
her testimony on their value more credible than Lawrences. On
appeal, we will generally accept the determination of witnesses
credibility that are made by the court as a trier of fact, since
the court heard and observed the witnesses first hand.49
Part of Lawrences argument is that the court erred by
ignoring depreciation. We have held that we disapprove[] of
property divisions which fail to consider appreciation and
depreciation.50 However, in this case, the court did not fail to
consider depreciation. Rather, it credited Mary Sues testimony
regarding the condition of the machine and the amount of
depreciation. Given conflicting testimony, it is not error for
the trial court to decide which testimony it finds more credible.
Evidence of the price paid for personal property is probative of
value where there has been no substantial change in the propertys
condition in the interim.51
Lawrence also faults the trial court for failing to
consider the ten percent brokers fee. However, Lawrence offered
no explanation of why it was necessary to use a broker to sell
the excavator. The most likely explanation is that Lawrence was
in a hurry to sell the excavator and therefore chose to use a
broker for his own benefit. He sold the machine to a broker a
week before he filed the complaint for divorce, taking $2,000 in
earnest money. A week later, the court issued a domestic
relations order prohibiting the sale of marital assets. Several
weeks later he received the cash and the sawmill, minus the
brokers fee. When asked why he sold the excavator, and why he
could not get more money for it, he said,
I knew this was going to become a very costly
divorce, and [I] wanted the sawmill worse
than I did the excavator. So I thought,
well, a 50/50 split between the cash and the
sawmill would be a good deal for me.
And . . . I dont have any more work under
[the machinery company]. She owns [that]
company. And so I sold the excavator, and I
sold it for what I felt like was well within
fair market value . . . Ive got a bunch of
logs to mill here.
Because Lawrence likely used a broker to further his own
financial gain rather than to maximize the return on the sale, it
was within the courts discretion to view the expenditure of the
brokers fee as a dissipation of marital assets.
E. The Superior Court Did Not Clearly Err in Its Valuation
of Two Trucks.
In his points on appeal, Lawrence asserts that the
court erred in concluding that the parties owned a 2006 John
Deere loader motor and in assigning its value to Lawrence. He
also claims the court erred in its valuation of several trucks in
Lawrences possession, and that it erred in not ordering them sold
so the proceeds could be divided equally. Lawrence has abandoned
several of these issues by not arguing them in his brief,52 but
two remain: the valuations of a 1995 Dodge Ram pickup truck and a
1999 Ford pickup truck. We conclude the court did not err in
valuing these assets. The court adopted the values for these
vehicles proposed by Mary Sue, which it found generally track
Blue Book when available.
1. Value of the 1999 Ford truck
Mary testified that she looked up Blue Book values for
each of the vehicles (although it appears she actually looked up
the values on the website AutoTrader.com). The court accepted
the value of $10,000 for the 1999 Ford truck Mary Sue researched
in this way. She testified that the estimate was based on her
classification of the Ford as being in very good condition.
Lawrence does not agree the truck is worth $10,000. He testified
that he had been trying to sell it for $9,000 without success,
and then reduced the price to $7,000 and nobodys called me yet.
Therefore, he concludes that the truck would probably sell for
$6,000. He testified that it was formerly a Forest Service truck
and as such had an uncomfortable bench seat, and that the air
conditioning did not work.
The court was thus faced with conflicting testimony
about the condition and value of this truck. It concluded that
Mary Sues estimates generally track Blue Book when available and
that her testimony was far more credible than Lawrences regarding
the value of the vehicles. As noted above, we generally defer to
the finder of fact with regard to the credibility of witnesses.53
We conclude it was not clearly erroneous to accept Mary Sues
estimate of the market value of this truck.
2. Value of the 1995 Dodge truck
The court also adopted the $8,500 value Mary Sue
estimated for the value of the 1995 Dodge truck. It is not clear
from the record how she classified its condition when she looked
up its market value. Lawrence testified that this truck was not
worth the book value because it was inoperable due to a leaky
transmission. He testified that a repair service, A-1
Transmission, estimated a repair cost of $5,500. He offered into
evidence a photo of the truck showing a pool of liquid underneath
it, which he testified was transmission fluid.
In valuing the Dodge truck according to its book value,
the trial court evidently chose to discount Lawrences testimony
about the condition of the transmission. Again, the court had to
base its valuation on the credibility of the witnesses. As noted
already, it did not find Lawrence as credible as Mary Sue on the
value of the vehicles, and we generally defer to the finder of
fact with regard to the credibility of witnesses.54 We have also
held 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 the evidence on
appeal.55 Given that Lawrences challenge to the courts valuation
is based only on his own testimony, that the court doubted the
credibility of this testimony, and that such judgments of
credibility are afforded strong deference, we find that the
courts valuation of the Dodge truck was not clearly erroneous.
F. The Superior Court Did Not Err in Taking Mary Sues
Right To Devise Her Share of Lawrences Retirement
Benefits to her Heirs.
Mary Sues TRS retirement plan is governed by the
Employee Retirement Income Security Act (ERISA), under which in
the event the non-owning spouse, Lawrence, predeceases the owning
spouse, Mary Sue, then Lawrences share of the plan benefits must
revert to Mary Sue. In order to balance this out, the court
attempted to fashion a symmetrical treatment of Lawrences
retirement plan. It ordered that for Lawrences pension, if the
non-owning spouse, Mary Sue, predeceased Lawrence, then Mary Sues
share of the plan benefits would revert to Lawrence. Mary Sue
argues that this order deprives her of her full property interest
in Lawrences pension and that she should have retained the right
to devise her share of the benefits to her heirs or estate.
Mary Sue cites the cases of Wahl v. Wahl56 and Zito v.
Zito57 for the proposition that an award of retirement benefits in
a divorce must include the full benefit of her property interest,
including the right to devise her share to her children. She
also cites Turners treatise to the effect that most courts grant
a non-owning spouse the right to devise retirement benefits
awarded in a divorce, in keeping with the principle that deferred
distribution is a full transfer of all ownership rights,
including the right to devise to an heir.58
However, Mary Sue misconstrues these authorities, none
of which states or implies that a court must always award to one
party the full suite of property interests associated with a
given pension. Trial courts have broad discretion to reallocate
property rights in pursuit of equitable division.59 Alaskas
divorce statute provides:
[T]he court, in making the division, may
invade the property . . . of either spouse
acquired before marriage when the balancing
of the equities between the parties requires
it; and to accomplish this end the judgment
may require that one or both of the parties
assign, deliver, or convey any of their real
or personal property, including retirement
benefits, to the other party; the division of
property must fairly allocate the economic
effect of divorce . . . .[60]
Neither of the main cases cited by Mary Sue, Wahl and Zito,
limits the discretion of the court to alter existing property
rights associated with a pension. The only question posed in
those cases was whether an award of retirement benefits under a
divorce agreement should be construed as including associated
property rights such as survivorship benefits and devisability
where the agreement was silent on that question.61 In other
words, these items should be treated like other kinds of
property, and should ordinarily carry the full suite of property
rights unless otherwise stated. As Turners treatise notes, the
fact that pension benefits awarded in divorce are ordinarily
devisable is merely another application of the general rule that
deferred distribution is a full transfer of all ownership rights,
including the right to devise to an heir.62
None of these authorities states or implies that a
court lacks discretion to award a spouse something less than the
full bundle of property rights normally associated with a pension
plan, any more than it lacks such discretion with regard to other
property such as a house or business. To take the example of a
house, a party awarded title to a house ordinarily gains the
rights of occupancy and devisability. However, trial courts may
separate and reallocate the bundle of property rights associated
with the marital home. For example, a court may award a spouse
raising children an exclusive right of occupancy during the
minority of the children without granting him or her a right to
devise the house to heirs.63 Similarly, an award of a pension
benefit is ordinarily an award of all the property rights
associated with that benefit, and in most circumstances such an
award is preferable. However, a court has discretion to do
otherwise where circumstances make that more equitable. The
courts order to have Mary Sues portion of Lawrences pension
benefits revert to him if Mary Sue predeceased him was not an
abuse of that discretion. The court ordered this because it was
attempting as nearly as possible to divide the marital estate
equally, and this arrangement made the benefit Mary Sue received
from Lawrences pension more closely resemble the benefit Lawrence
received from Mary Sues pension.
Mary Sues other argument against making her portion of
the pension revert to Lawrence upon her death is that she wants
to be free of any control or entanglements with Lawrence. She
says she is fearful of Lawrence and cites some incidents in which
she says Lawrence physically threatened her, including one in
which he threatened her with a gun. It is true that we have
stated a strong policy to disentangle fully interspousal affairs
upon dissolution. 64 But the trial courts order does not require
that Mary Sue have any contact with Lawrence, nor does it create
any more entanglement than the parties have as a result of the
survivorship interest that exists with respect to Mary Sues
retirement plan; the order merely makes Mary Sues survivorship
benefit mirror Lawrences survivorship benefit. We see no reason
why this arrangement would unacceptably entangle Mary Sues
affairs with Lawrences or bring the two into unwanted contact.
G. The Superior Court Did Not Clearly Err in Failing To
Value the Roswell Escrow as of the Date of Separation.
The Ethelbahs had an escrow account containing proceeds
from the sale of real property near Roswell, Arizona. At trial,
Lawrence introduced into evidence a statement from the escrow
company indicating that the account had a balance of $5,298 as of
May 1, 2006. The trial court credited this $5,298 to Mary Sues
side of the marital property ledger. Mary Sue objected that this
overvalued the account, which she claims was worth only $3,403 at
the date of separation. The court concluded that it was using
the most recent valuation available at trial. Mary Sue appeals
this determination.
The date of the account statement relied upon by the
court was May 1, 2006, which was about eight and a half months
before the separation date of January 12, 2007. Mary Sue arrives
at the lower figure of $3,403 by taking the monthly amount that
was being dispersed from the account and multiplying it by the
number of months from May 1 to the date of marital separation,
and then subtracting that total ($1,896) from the known May 1
balance shown on the account statement.
Mary Sue is almost certainly correct that the account
was worth less at the time of trial than the amount it was valued
at by the court. It is not clear why Mary Sue argues that the
date of separation should be used, rather than the date of trial.
However, there is no dispute the account contained less than the
$5,298 valuation used by the court. Lawrence agreed that there
had been some monthly payments out of the account after May 1,
although Lawrence disputes the number and amount of those
payments. Mary Sue testified that based on a conversation with
the escrow company, she expected to receive the balance of the
account in a check for about 4,200. Lawrence estimated in his
own testimony the balance was 4,000-something.
It is true that the date on which the trial court
values marital property generally should be as close as
practicable to the date of trial.65 However, as close as
practicable is an important qualifier. It was not clearly
erroneous to view the amount on the escrow statement admitted
into evidence as being the best estimate as close as practicable
to the date of trial. If Mary Sue did not want to use that
statement, she could have obtained and introduced a more recent
statement. We have held 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 the evidence on appeal.66 The courts only alternative to using
the $5,298 figure based on the May 1, 2006 escrow statement would
have been to pick a number out of the air that roughly matched
the parties back-of-the-napkin calculations. The court
reasonably relied on the most recent solid evidence it had of the
value of the escrow account.
V. CONCLUSION
While we generally favor use of a QDRO to distribute
pension benefits, a present value distribution of vested pension
benefits, including survivorship benefits, is not barred where
circumstances make that method more equitable. Because only Mary
Sue had a retirement health insurance benefit, and given her
shorter life expectancy, the trial court did not abuse its
discretion in making a present value award of her retirement
health insurance and Lawrences survivor interest in that benefit.
We also conclude that the court properly based its valuation of
Mary Sues retirement health insurance on the amount of the
employer subsidy. Because we defer to the trial court in its
assessment of witness credibility, and because it is the
obligation of the parties to produce sufficient valuation
evidence, we conclude that the court did not clearly err in its
valuation of the excavator, two trucks, and the Roswell escrow
account. Although an award of pension benefits is normally
devisable, we conclude the trial court did not err in making Mary
Sues interest in Lawrences pension benefits non-devisable,
because courts retain broad discretion to reallocate property
rights in pursuit of an equitable property division. It was
error, however, to order recapture of pension income Lawrence
received during the separation period, because there were no
findings that he wasted, dissipated, or converted these assets to
non-marital form. We therefore VACATE the order for recapture of
these funds, and REMAND for the trial court to reconsider the
distribution of these assets. It should only order recapture if
it can make evidence-based findings that Lawrence dissipated,
wasted, or converted the disputed income to non-marital form. We
AFFIRM on all the other issues raised in this appeal.
_______________________________
1 QDROs are the orders used to distribute the majority of
pension plans governed by the federal Employee Retirement Income
Security Act (ERISA), 29 U.S.C. 1056 (2009). Federal civil
service pensions are divided by COAP. 5 C.F.R. 835.305. Since
the distinction between QDRO and COAP is not important for
purposes of this case, we will refer to qualified orders for
deferred division of both kinds of pensions as QDROs.
2 AS 25.24.160(a)(4); Nicholson v. Wolfe, 974 P.2d 417,
421 (Alaska 1999).
3 Brotherton v. Brotherton, 941 P.2d 1241, 1244 (Alaska
1997).
4 Carr v. Carr, 152 P.3d 450, 454 (Alaska 2007); Doyle v.
Doyle, 815 P.2d 366, 368 (Alaska 1991).
5 Josephine B. v. State, Deptt of Health and Soc. Servs.,
Office of Childrens Servs., 174 P.3d 217, 220 (Alaska 2007)
(citations omitted).
6 Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).
7 See, e.g., Tanghe v. Tanghe, 115 P.3d 567, 570 (Alaska
2005).
8 A pension is said to have vested at the point in time
when an employee would still have a right to receive benefits
even if he or she were to leave the employer immediately. Brett
R. Turner, Equitable Distribution of Property 6.2, at 6-7 (3d
ed. 2005).
9 Mellard v. Mellard, 168 P.3d 483, 487 (Alaska 2007).
10 115 P.3d 567 (Alaska 2005).
11 974 P.2d 417 (Alaska 1999).
12 741 P.2d 649 (Alaska 1987).
13 Id. at 656.
14 Id. at 656-57.
15 Id. at 657.
16 Tanghe v. Tanghe, 115 P.3d 567, 568-69 (Alaska 2005).
17 2 Turner, supra note 8, 6:30, at 192. A domestic
relations order granting property rights to the pension owners
spouse is qualified if it is determined by the pension plan
administrator to comply with the requirements of federal law.
See id. 6:19, at 96-98.
18 Laing, 741 P.2d at 657-58.
19 956 P.2d 1222 (Alaska 1998).
20 Id. at 1227. Broadribb dealt with a couple that
married and lived in England before moving to Alaska, and the
trial court ruled that under British law the pension and
survivorship benefits were not subject to QDRO or division by the
court. Id. Broadribb thus did not deal with a situation where
the court had a choice between a present value and a QDRO
approach.
21 Nicholson v. Wolfe, 974 P.2d 417, 425-26 (Alaska 1999).
22 Tanghe v. Tanghe, 115 P.3d 567, 568-71 (Alaska 2005).
23 168 P.3d 483 (Alaska 2007).
24 Id. at 487.
25 Laing v. Laing, 741 P.2d 649, 657 (Alaska 1987).
26 See AS 25.24.160(a)(4).
27 119 P.3d 1005 (Alaska 2005).
28 Id. at 1016.
29 Neither party argues the lowest of the three estimates,
referred to as the post-65 rate, should have been chosen. The
post-65 rate attempts to factor in the cost savings for retirees
in the health plan as a result of receiving Medicare.
30 State of Alaska Retiree Health Fund, Financial
Statements, June 30, 2007 and 2006, available at
http://doa.alaska.gov/drb/ghlb/retiree/pdf/fs07rhf.pdf.
31 See id.
32 Foster v. Foster, 883 P.2d 397, 400 (Alaska 1994).
33 Jones v. Jones, 942 P.2d 1133, 1139 (Alaska 1997).
34 2 Turner, supra note 8, 6:105, at 557.
35 Id.
36 See Korn v. Korn, 46 P.3d 1021, 1023 (Alaska 2002)
(Although we have sometimes recognized that orders dividing
marital property may recapture a marital assets pre-trial loss in
value, we have held that such orders must be supported by
findings that the assets value was dissipated, wasted, or
converted to a non-marital form by the party who controlled the
asset during the period of separation.) (internal citations
omitted); Foster, 883 P.2d at 400 (Where there is evidence that a
marital asset was dissipated, wasted, or converted to a non-
marital form, the court can recapture the asset . . . .).
37 39 P.3d 513 (Alaska 2001).
38 Id. at 521.
39 Id.
40 36 P.3d 1188 (Alaska 2001).
41 Id. at 1194-95.
42 883 P.2d 397 (Alaska 1994).
43 Id. at 400.
44 Id.
45 Shearer v. Mundt, 36 P.3d 1196, 1199 (Alaska 2001)
([I]ssues not briefed or only cursorily briefed are considered
waived.).
46 Jones v. Jones, 942 P.2d 1133, 1139 (Alaska 1997).
47 Schymanski v. Conventz, 674 P.2d 281, 286 (Alaska
1983).
48 Id.
49 Dodson v. Dodson, 955 P.2d 902, 907 (Alaska1998)
(quoting Demoski v. New, 737 P.2d 780, 784 (Alaska 1987)).
50 Zimin v. Zimin, 837 P.2d 118, 122 (Alaska 1992).
51 31A C.J.S. Evidence 339, at 478 (2008) (citing Esteel
Co. v. Goodman, 348 S.E.2d 153 (App. N.C. 1986)).
52 See Vezey v. State, 798 P.2d 327, 336 (Alaska 1990);
Kodiak Elec. Assn, v. DeLaval Turbine, 694 P.2d 150, 153 n.4
(Alaska 1984).
53 Dodson v. Dodson, 955 P.2d 902, 907 (Alaska 1998).
54 Id.
55 Root v. Root, 851 P.2d 67, 69 (Alaska 1993).
56 945 P.2d 1229 (Alaska 1997).
57 969 P.2d 1144 (Alaska 1998).
58 See 2 Turner, supra note 8, 6.33, at 213-14.
59 Nicholson v. Wolfe, 974 P.2d 417, 421 (Alaska 1999).
60 AS 25.24.160(a)(4).
61 Wahl, 945 P.2d at 1232; Zito, 969 P.2d at 1147-48.
62 2 Turner, supra note 8, 6:33, at 214.
63 See id., 6:85, at 444-45 (noting that a court can
recognize one spouses special need for the marital home by
awarding that spouse exclusive use of the home and its contents
until the emancipation of the youngest minor child, at which
point the occupying spouse could purchase the home or it could be
sold and the proceeds divided).
64 Musgrove v. Musgrove, 821 P.2d 1366, 1370 n.7 (Alaska
1991) (quoting Voyles v. Voyles, 644 P.2d 847, 849 (Alaska
1982)).
65 Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991).
66 Root v. Root, 851 P.2d 67, 69 (Alaska 1993).
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