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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Laughlin v. Laughlin (4/30/2010) sp-6472
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
| KAREN LAUGHLIN, | ) |
| ) Supreme Court No. S- 13313 | |
| Appellant, | ) |
| ) Superior Court No. 3PA-05- 01818 CI | |
| v. | ) |
| ) O P I N I O N | |
| BRIAN LAUGHLIN, | ) |
| ) No. 6472 - April 30, 2010 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Palmer,
Vanessa White, Judge.
Appearances: Robert C. Erwin, Robert C.
Erwin, LLC, Anchorage, for Appellant.
Appellee not participating.
Before: Carpeneti, Chief Justice, Fabe,
Winfree, and Christen, Justices. [Eastaugh,
Justice, not participating.]
CHRISTEN, Justice.
I. INTRODUCTION
Karen and Brian Laughlin divorced in October 2008.
Before trial, the parties agreed to establish a childrens fund
from which they would pay certain childrens expenses in lieu of
child support. The superior court conducted a bench trial on the
issues the parties were unable to resolve and incorporated the
childrens fund agreement into its final order. Karen appeals
restrictions the court placed on the use of the childrens fund.
She also appeals the superior courts allocation of dependent tax
credits and its determination of the reasonable rental value of
the parties marital residence. We reverse the superior courts
decision to approve the creation of the childrens fund in lieu
of child support and remand for calculation of child support
consistent with Alaska Rule of Civil Procedure 90.3. Because the
agreement to establish a childrens fund was the basis for the
superior courts decision to allocate a dependent tax deduction to
Brian, we also vacate that decision. We affirm the superior
courts determination of the reasonable rental value of the
parties marital residence.
II. FACTS AND PROCEEDINGS
Karen and Brian Laughlin were married in Palmer, Alaska
in 1982 and have four children. Brian filed a complaint for
divorce in 2005.
Karen and Brian reached settlement on most issues prior
to trial, including child custody, child support, and a majority
of the disputes over property distribution. Superior Court
Judge Vanessa White read the parties partial settlement
agreements into the record on April 23, 2007 and June 8, 2007.
In lieu of monthly child support payments, the parties agreed to
set up a bank account (the childrens fund) to pay some of the
childrens expenses. The childrens fund was set up to cover
specified expenses only, including uncovered medical expenses,
school activity fees, and the parties life insurance premiums.
To establish the fund, the parties agreed that Karen would
contribute approximately $19,000 from her Morgan Stanley account
and that they would jointly contribute approximately $12,000 from
a joint Scudder money market account. The parties also agreed
that Brian would not make ongoing child support payments to
Karen, and that Karens $12,000 child support arrearage would be
forgiven. In addition to the expenses covered by the childrens
fund, both parents agreed to be responsible for the childrens
discretionary expenses incurred during the time each had physical
custody. Karen had physical custody 70% of the time; Brian had
physical custody 30% of the time.
The superior court addressed the remaining disputes
over custody, property, and tax considerations at trial, and
issued findings of fact and conclusions of law on May 29, 2008.
The court incorporated the parties partial settlement agreements
into its final order. Both parties moved for reconsideration and
the court issued an order on September 24, 2008 adopting some of
the suggestions from both parties.1 A divorce decree was
entered on September 11, 2008, although its effective date was
December 11, 2007.
On appeal, Karen argues that the superior court erred
by: (1) restricting the use of the childrens fund; (2) not
considering appropriate tax implications resulting from the
transfer of assets to the childrens fund and the division of
shares that were marital property; (3) granting a dependent tax
deduction to Brian, who had custody only 30% of the time; and (4)
setting the rental value of the marital home at $1,000 per month.
Brian filed a notice of non-participation in the appeal.
III. STANDARD OF REVIEW
Superior courts have broad discretion in determining
child custody issues2 and in fashioning a property division in a
divorce action.3 We use our independent judgment when reviewing
the legal interpretation of property settlements and child
custody agreements that are incorporated into divorce decrees.
But when the trial court looks to extrinsic evidence to interpret
an agreement, we review its factual determinations under the
clearly erroneous standard and will reverse only if the facts do
not support the trial courts interpretation.4 Child support
awards are reviewed for abuse of discretion and will not be set
aside unless a review of the record as a whole leaves us with a
definite and firm conviction that a mistake has been made.5
The valuation of available property is a factual
determination that should be reversed only if clearly erroneous.6
IV. DISCUSSION
A. The Childrens Fund Is Invalid Under Rule 90.3.
Karen argues on appeal that it was an abuse of
discretion for the superior court to restrict the use of the
childrens fund. She does not question whether the childrens fund
itself is permissible under Rule 90.3.7 But in Cox v. Cox we
held that [p]arents may not make a child support agreement which
is not subject to [Rule 90.3].8 We observed that the guidelines
[in Rule 90.3] reflect a paternalistic view toward child support
agreements which conflicts with the freedom of contract9 and we
concluded that [t]he presumption imposed by [Rule 90.3] is that
the guidelines are applicable and may be departed from only for
good cause.10 In Nix v. Nix we reiterated that a court may
deviate from the Rule 90.3 child support schedule only upon good
cause and clarified that a court is not required to find that
good cause existed merely because the parties had reached an
agreement. 11 Nix reaffirmed that no parental agreement regarding
child support is valid until it receives judicial scrutiny under
Rule 90.3.12 Given this case law, we must address whether the
agreement to create a childrens fund in lieu of child support is
permissible before considering Karens argument that the court
should have allowed broader use of the fund.
The permissibility of the childrens fund was discussed
at length at oral argument before our court. After the argument,
we issued an order inviting both parties to address whether their
agreement is permissible under Civil Rule 90.3 and this courts
precedent including Cox v. Cox and its progeny. Only Karen
responded to the order.
We review matters that were not raised below and not
listed in a statement of points on appeal for plain error.13
Plain error exists where an obvious mistake has been made which
creates a high likelihood that injustice has resulted.14
Rule 90.3(c) states that a superior court may vary the
child support award as calculated under the other provisions of
this rule for good cause upon proof by clear and convincing
evidence that manifest injustice would result if the support
award were not varied. The superior court must specify in
writing the reason for the variation, the amount of support which
would have been required but for the variation, and the estimated
value of any property conveyed instead of support.15 Rule 90.3(c)
explains that the good cause requirement may include a finding
that unusual circumstances exist which require variation of the
award in order to award an amount of support which is just and
proper for the parties to contribute toward the nurture and
education of their children.
The superior court partially addressed the requirements
of Rule 90.3(c) when it approved the parties agreement to create
the childrens fund. After hearing the contours of the proposed
childrens fund, the court asked the parties if they were
suggesting to the court that there are extraordinary
circumstances here that justify a zero child support obligation,
to which counsel for both parties responded, yes. After the
settlement agreement was read into the record, the court stated:
The parties agree that there are
extraordinary circumstances in this case in
that, number 1, at the present time mom is
earning at a higher rate than dad, and she is
the primary custodian. Second, the parties
have each have substantial separate estates.
And finally, the parties marital estate is
fairly substantial. And all of these
circumstances together, the parties stipulate
and agree, create extraordinary circumstances
which justify deviating from Alaska Rule of
Civil Procedure 90.3. And they both believe
that manifest injustice would occur if a
standard 90.3 child support calculation were
accomplished. The parties agree that by mom
by forgiving the existing arrearages that mom
owes based on prior orders [in the amount of
approximately $12,000], and taking into
account all of these other circumstances,
that the childrens needs are best going to be
met by the arrangement they have made whereby
henceforth, meaning beginning May 1, neither
party will owe child support to the other.
The court also stated:
I find that there are extraordinary
circumstances that justify deviating from
Alaska Rule of Civil Procedure 90.3, and that
manifest injustice would occur if the parties
were required to calculate child support
pursuant to 90.3, and therefore the agreement
that they have as to the expungement of the
arrears and that neither party will pay child
support going forward adequately meets all of
the childrens financial needs.
The courts written findings of fact and conclusions of law
include the courts finding that:
. . . requiring a rote child support
obligation, in addition to the financial
arrangements the parties[] agreed upon, is
both unnecessary and likely to result in
manifest injustice. Because the parties have
made alternative arrangements for child
support, no final child support order shall
issue in this matter.
Based upon these statements and a full examination of
the record, it is clear that the agreement to establish a
childrens fund in lieu of child support does not meet the
requirements of Rule 90.3 or our case law. Most prominently, the
record does not include a written calculation of the amount of
support which would have been required but for the variation,16 as
required by the rule. In the absence of such a calculation, the
superior courts approval of the childrens fund in lieu of child
support constitutes plain error. The order approving the
childrens fund must be reversed for this reason.
A second problem with the parties agreement is the
absence of good cause to vary the application of Rule 90.3. As
Rule 90.3(c) explains, good cause may include unusual
circumstances which justify varying the award, but parties must
prove by clear and convincing evidence that manifest injustice
would result if the support award were not varied. Children have
an interest in adequate support independent of either parents
interest, and it is in this light that trial courts should
consider whether the facts of a case warrant a finding of unusual
circumstances.
The superior court identified the extraordinary
circumstances that justify deviating from Alaska Rule of Civil
Procedure 90.3 as: (1) the mother has a higher income than the
father and is the primary caretaker;17 (2) the parties each have
substantial separate estates; (3) the parties have a substantial
marital estate; and (4) the father is willing to forgive the
mothers child support arrearage in consideration of the agreement
to establish a childrens fund in lieu of child support. It is
not unusual for one spouse to have a greater income than the
other. Nor is the fact that each parent has independent assets
extraordinary. And while the Laughlins separate and marital
assets are not insubstantial, neither are they unusually large.
A child support arrearage, even one of approximately $12,000, is
not unusual nor is it a reason to deviate from the rule. In
short, none of the extraordinary circumstances of this case,
viewed independently or together, support the finding that
manifest injustice would result if the Rule 90.3 guidelines were
followed.
We reverse the superior courts decision permitting
Karen and Brian to establish a childrens fund in lieu of child
support and remand for calculation of child support consistent
with Rule 90.3. On remand, the superior court should conduct
further proceedings as necessary to ensure that each party
receives credit for all payments made to the childrens fund.18
B. We Do Not Decide Whether the Superior Court Erred in
Permitting Brian to Claim a Dependent Tax Deduction.
Karen argues that the superior court violated Rule
90.3(k) by permitting Brian, who has custody of the children 30%
of the time, to claim a dependent tax deduction. The superior
court concluded that the parties special financial arrangement
for the childrens support justifies allowing each parent to
receive some of the tax benefit associated with claiming one or
more of the qualifying children as his or her dependent.
Because we reverse the decision to adopt the childrens fund
agreement which was the basis for the superior courts allocation
of dependent tax deductions we must also vacate the allocation
of these tax deductions and remand for reconsideration of this
issue.
C. The Superior Court Did Not Err in Setting the
Reasonable Rental Value of the Marital Home at $1,000
Per Month.
Brian received a pre-trial benefit by having exclusive
use of the marital residence with no mortgage obligation. Karen
argues that the superior courts determination of the reasonable
rental value of the marital residence was clearly erroneous.
At trial, Karen introduced an appraisal which estimated
the rental value of the property to be $1,700-$2,700 per month if
its fixed up. Brian estimated that given the poor condition of
the house, the rental value was less than $500 per month. The
superior court considered this evidence and determined that the
reasonable rental value of the residence during separation was
$1,000 per month. Karen argues that this determination was
simply unsupported by the evidence. We disagree.
The rental appraisal provided by Karen included the
substantial caveat that it was BASED ON A [HYPOTHETICAL]
CONDITION THAT THE SUBJECT IS IN LIVABLE, MARKETABLE AND
[RENTABLE] CONDITION, WHICH IS NOT THE CASE AT THIS TIME. The
superior court acknowledged this caveat when it found that the
facts adduced at trial established that this home could not be
marketed for rent at an amount close to its reasonable rental
value if it were in good condition. While recognizing that the
residence sits on a large parcel of land, and has many other
attractive features, the superior court found that its state of
disrepair and the deferred maintenance would make it an
unattractive prospect for any prospective tenant. The court also
found that at the time of separation [s]ignificant repairs, such
as replacement of a window, were needed. The superior courts
finding regarding the rental value of the marital residence is
well supported by the evidence; it is not clearly erroneous.19
V. CONCLUSION
We REVERSE the superior courts decision permitting
Karen and Brian to establish a childrens fund in lieu of child
support and REMAND for the superior court to calculate and award
child support consistent with Rule 90.3. On remand, the superior
court should also conduct further proceedings as necessary to
give each party credit for the contributions made to the
childrens fund.
We VACATE the superior courts decision regarding
allocation of the dependent tax deductions and REMAND for further
proceedings consistent with this opinion.
We AFFIRM the superior courts valuation of the
reasonable rental value of the parties marital residence.
_______________________________
1 The superior court did not permit Karen to deduct the
taxes that resulted from the transfer of her Morgan Stanley
account to the childrens fund, did permit Brian to deduct the
taxes that accrued from transferring the Scudder account to the
childrens fund, amended its decision to state that the childrens
income tax obligations would be paid out of their annual
Permanent Fund Dividends rather than out of the childrens fund,
did not accept Karens request to eliminate the requirement that
the parents agree on written criteria for periodic accounting of
the childrens fund, and agreed that Karens payment to Brian for
his share of their CompuShare account should be reduced by the
tax obligations associated with the distribution.
2 Barrett v. Alguire, 35 P.3d 1, 5 (Alaska 2001).
3 Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).
4 Brown v. Brown, 983 P.2d 1264, 1267 (Alaska 1999)
(citations omitted).
5 Harvey v. Cook, 172 P.3d 794, 797 (Alaska 2007)
(citations omitted).
6 Cox, 882 P.2d at 913-14.
7 At oral argument before our court, Karens counsel
clarified that Karen does not challenge the validity of the
childrens fund agreement.
8 776 P.2d 1045, 1048 (1989).
9 Id. at 1048.
10 Id. at 1049.
11 855 P.2d 1332, 1333 (Alaska 1993) (quoting Cox, 776
P.2d at 1049).
12 Id. at 1334.
13 In re Estate of Fields, 219 P.3d 995, 1011 (Alaska
2009).
14 Id. (quoting Miller v. Sears, 636 P.2d 1183, 1189
(Alaska 1981)).
15 Alaska R. Civ. P. 90.3(c).
16 Alaska R. Civ. P. 90.3(c)(1). At oral argument, when
asked whether child support had been calculated according to Rule
90.3, Karens counsel responded, It has not been computed anywhere
I could find.
17 At the time of trial, Karen was employed at the Mat-Su
Regional Medical Center and her 2006 gross wage income was
$67,178. Brian was employed as a bus driver for Laidlaw and his
2006 gross wage income was $32,294.
18 Because we reverse the superior courts decision
relating to the childrens fund, we do not address Karens appeal
of the restrictions placed on the use of the fund or her appeal
of the tax considerations the superior court took into account
when establishing the fund.
19 We do not address Karens appeal of the superior courts
refusal to credit her in the distribution of marital property for
her appraisal costs because this argument is absent from her
points on appeal. See, e.g., Wetzler v. Wetzler, 570 P.2d 741,
742 n.2 (Alaska 1977) ([W]e will not treat issues that were
argued in the brief but not set forth in the Points [on
Appeal].).
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