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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Mahan v. Mahan (3/27/2015) sp-6991

Mahan v. Mahan (3/27/2015) sp-6991

          Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

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MORRILL MAHAN,                                            )  

                                                          )         Supreme Court No. S-15456  

                             Appellant,                   )  

                                                          )         Superior Court No. 3KN-11-00497 CI  

          v.                                              )  

                                                          )         O P I N I O N  

JESSICA MAHAN,                                            )  

                                                          )        No. 6991 - March 27, 2015  

                             Appellee.                    )  


                   Appeal from the Superior Court of the State of Alaska, Third  


                    Judicial District, Kenai, Anna Moran, Judge.  

                   Appearances:    Richard  W.  Postma,  Jr.,  Law  Offices  of  


                    Mitchell K. Wyatt, Anchorage, for Appellant. Shana Theiler,  


                    Walton, Theiler & Winegarden, LLC, Kenai, for Appellee.  

                    Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                    Bolger, Justices.  

                    FABE, Chief Justice.  


                   A  husband  and  wife  obtained  a  marriage  dissolution  that  included  a  


provision to split the "profits . . . after the cost of fuel and can[ne]ry dues" from their  


jointly owned commercial fishing boat.  The ex-spouses dispute the meaning of the term  


"profits."  Each party maintains that the other owes a large sum of money pursuant to the  


agreement.    The  superior  court  approved  a  standing  master's  recommendation  that  

interpreted "profits" to mean "payment from the cannery, less deductions for fuel, dues  


----------------------- Page 2-----------------------

and other advancements."  Because the superior court's findings regarding the parties'  

reasonable  expectations  at  the  time  of  the  dissolution  agreement  are   not  clearly  

erroneous, and because the superior court's interpretation of the provision accurately  

reflects those expectations, we affirm.  



                   Morrill and Jessica Mahan married in 2004 and dissolved their marriage in  

June 2011.  During their marriage, the couple had one medically fragile child.  Morrill  


was the primary wage-earner for the family. As reported in their petition for dissolution,  

Morrill's total gross wages for 2010 were $137,362.81 while Jessica's total gross wages  

were $ 16,716.21.  In addition, the petition indicated that Morrill and Jessica had each  

received $31,292.14 in gross income in 2010 from their commercial fishing business.  

                   The  petition  for  dissolution  included  an  addendum  providing  for  the  


temporary maintenance of joint interests in the marital home and commercial fishing  


business.  The parties agreed to maintain joint ownership of the marital residence and to  


split the profits from the commercial fishing business until October 2012, at which point  


Jessica  was  to  take  sole  title  to  the  home  and  Morrill  was  to  take  sole  title  to  the  

commercial fishing boat and permit:  


                   The   house   and   property   will   be   owned   jointly   until  

                   10/1/2012.  The mortgage and utilities will be paid 50% by  

                   husband and wife.  On 10/1/2012 the house will be paid by  

                   wife 100% and the house and property will be then turned  


                   over to the wife.  The title will be solely in the wife's name.  

                   Household furnishings, everything in it will belong to wife.  

                   The  commercial  fishing  boat  will  be  owned  jointly  until  

                   10/1/2012 and operated by the husband.  The profits will be  


                   split equal between husband and wife after the cost of fuel  

                   and can[ne]ry dues.  On 10/1/2012 the commercial fishing  

                   boat and permit will be then turned over to the husband.  The  


                   title will be solely in the husband's name.  

                                                           -2-                                                    6991

----------------------- Page 3-----------------------

          A.        The Initial Dissolution Hearing  


                    In June 2011 Magistrate Judge Jennifer Wells, serving as a standing master  


for the superior court, heard testimony from Morrill and Jessica before recommending  

that  the  superior  court  approve  their  dissolution.    Morrill's  and  Jessica's  testimony  

emphasized the connection between specific provisions of the agreement and the best  


interests of their child in light of her medical condition.  Morrill and Jessica planned to  


rotate in and out of the marital home every two weeks so that their daughter would not  

need to travel back and forth between two homes.  Morrill also agreed to remain named  

on the home mortgage even after the transfer of title to Jessica because she would be  


unable to obtain a low interest rate for the mortgage if she were to refinance on her own.  

Morrill  testified  that  he  intended  to  stay  on  the  mortgage  because  "three  percent  


interest . . . [is] hard to beat for [Jessica] and my daughter needs a place to live . . . ."  

Magistrate Judge Wells found that the dissolution agreement was fair and that Morrill  


and  Jessica  entered  into  the  agreement  freely  and  voluntarily.    The  superior  court  

promptly approved the master's report and granted the dissolution.  

          B.        Jessica's Motion To Enforce  


                    Despite the amicable dissolution proceeding, Morrill and Jessica's post- 

dissolution relationship soon became more adversarial.  In October 2011 Jessica filed her  


first  motion  for  an  order  enforcing  the  dissolution  decree.    The  motion  alleged  that  


Morrill was impermissibly removing from the home property that belonged to Jessica  


under the terms of the dissolution agreement.  At the evidentiary hearing related to her  


motion to enforce, Jessica also alleged that Morrill had not paid her the 50% share of the  


2011 commercial fishing profits to which he had agreed.  The standing master's report  


concluded that Morrill was obligated to pay Jessica half of the 2011 commercial fishing  

income from the cannery, less fuel and dues, immediately.  

                                                              -3-                                                        6991

----------------------- Page 4-----------------------

                   Morrill immediately objected to the master's report, arguing that the word  


"profit" meant "the positive income left after subtracting expenses from revenue," and  

that he was not afforded an opportunity to subtract his expenses other than fuel and  


cannery  dues.    He  asserted  that  typical  additional  expenses  included  "pay[ing]  


deckhands,"  as  well  as  "supplies,  gear,  bait,  etc.,"  and  that  he  typically  spends  


"thousands of dollars in preseason costs . . . out of pocket before the boat even gets in  

the water."  

                   Superior  Court  Judge  Anna  Moran  conducted  a  de  novo  review  and  


approved the master's report.  Addressing Morrill's objection, the superior court found  

"that  Master  Wells  reasonably  concluded  Mrs.  Mahan  was  to  receive  50%  of  2011  

income from cannery income less deductions for fuel, dues and other advancements" and  


ordered payment of that amount.  Following the order, Morrill made a one-time $15,000  


payment to Jessica. But Morrill now characterizes this payment as an "advance" that did  

not "account[] for Jessica['s] share of expenses."  


          C.	      Jessica's  Motion  To  Show  Cause  And  Morrill's  Cross-Motion  For  

                   Money Judgment  

                   In July 2013 Jessica filed a motion to show cause alleging, among other  

grievances, that Morrill had "failed to pay any funds towards the 2012 fishing money  

owed or demonstrate [that] he fully paid her portion of 2011 funds."  In opposition,  


Morrill filed a cross-motion for money judgment and asserted for the first time that the  

total fishing losses in 2011 and 2012 amounted to $96,826.  He requested a judgment in  


the amount of $48,413 - half of the total losses.  Jessica responded that Morrill in fact  

owed her $49,079 as her share of the 2011 and 2012 fishing profits.  


                   After hearing additional testimony from Morrill and Jessica, Magistrate  


Judge Wells issued another report, which noted that the term "profits" already had been  


defined in her previous report and had been reviewed de novo by the superior court  

                                                             -4-	                                                     6991

----------------------- Page 5-----------------------

following Morrill's objection in 2012.  Nevertheless, Magistrate Judge Wells held an  


additional evidentiary hearing and issued a new series of findings in a master's report,  


which concluded that "[t]here is virtually nothing in the contract's purpose, the extrinsic  


evidence, or the contract's written terms, to support Mr. Mahan's interpretation."  The  


report recommended that the superior court "continue to use its prior definition of this  


term."  In January 2014 the superior court approved the master's report and ordered that  

the term "profits" continue to be defined as "payment from the cannery, less deductions  

for fuel, dues and other advancements."  Morrill appeals.  


                   "Contract  principles  govern  the  interpretation  of  property  settlement  

agreements incorporated in dissolution decrees.  When interpreting any contract, the goal  

is  to  give  effect  to  the  reasonable  expectations  of  the  parties.    We  review  the  


interpretation  of  a  contract  de  novo.    Where  the  superior  court  considers  extrinsic  


evidence in interpreting contract terms, however, we will review the superior court's  

factual determinations for clear error and inferences drawn from that extrinsic evidence  

for support by substantial evidence."1  


                   The sole issue on appeal is the superior court's interpretation of "profits"  

to  mean  "payment  from  the  cannery,  less  deductions  for  fuel,  dues  and  other  


advancements."  Morrill contends that the definition of "profits" is unambiguous and  


means "net profits," or  "the excess of revenues over expenditures." He argues that the  


superior court erred by failing to apply this definition when it approved the standing  


master's report.  Morrill also alleges that Jessica was a partner in the commercial fishing  


          1         Villars v. Villars, 277 P.3d  763, 768 (Alaska 2012) (internal quotation  

marks and citations omitted).  

                                                             -5-                                                          6991  

----------------------- Page 6-----------------------

business.  Citing his 2011 and 2012 federal income tax returns, Morrill asserts that the  

commercial fishing business operated at a loss, and he argues that Alaska partnership law  



requires Jessica to pay a 50% share of the business's alleged losses in 2011 and 2012. 

                          In the alternative, Morrill argues that even if the definition of "profits" is  

ambiguous,  AS  25.24.220(g)  "prohibited  [the  trial]  court  from  using  principles  of  

contract interpretation to modify a dissolution agreement" without the consent of both  


ex-spouses.    Finally,  Morrill  argues  that  even  if  the  fishing  profits  provision  is  

ambiguous and the superior court had authority to resolve that ambiguity, it erred by  


relying on impermissible self-serving testimony from Jessica about her subjective intent  


as extrinsic evidence. He asserts that the superior court should have instead resolved any  


ambiguity in favor of his definition.  But as Magistrate Judge Wells concluded, "[t]here  

is virtually nothing in the contract's purpose, the extrinsic evidence, or the contract's  

written terms to support Mr. Mahan's interpretation."  

             A.	          The  Definition  Of  "Profits"  In  The  Context  Of  The  Commercial  

                          Fishing Provision Of The Dissolution Agreement Is Unambiguous.  


                          "We examine 'both the language of the [agreement] and extrinsic evidence  


to determine if the wording of  the [agreement] is ambiguous.' "   Although Morrill  


argues  that  extrinsic  evidence  may  only  be  considered  if  the  plain  language  of  an  

             2            While Morrill argued below that the commercial fishing business operated     

as a partnership, he did not raise this argument on appeal until his reply brief.  It is well              

established that "issues not argued in opening appellate briefs are waived."                                                                    See Hymes v.  

DeRamus , 222 P.3d 874, 887 (Alaska 2010). Even if Morrill's partnership argument was                 

not waived, it would not succeed because the only evidence supporting the existence of  

a partnership was the joint ownership of the fishing boat.  AS 32.06.202(c)(1) provides  


that joint ownership of an asset "does not by itself establish a partnership, even if the co- 


owners share profits made by the use of the property."  

             3             Villars, 277 P.3d at 768 (alteration in original) (quoting N. Pac. Processors,  

Inc. v. City & Borough of Yakutat , 113 P.3d 575, 579 (Alaska 2005)).  

                                                                                  -6-	                                                                          6991

----------------------- Page 7-----------------------



agreement reveals ambiguity, that is not the law in Alaska.   Rather, "[e]xtrinsic evidence  

may always be received on the question of meaning."5  


                    Morrill argues that the term "profit" is so well defined, in both ordinary and  

technical usage, as "total revenue minus total expenditures" that no other definition could  


possibly reflect the reasonable expectations of the parties. But while total revenue minus  


total expenditures may be a common meaning of the term "profit," it is by no means the  


only definition.   Moreover, interpretation of a contract term does not take place in a  

vacuum, but rather requires consideration of the provision and agreement as a whole.6  


With that principle in mind, our starting place is the commercial fishing provision of the  

dissolution agreement, which provides:  


                    The  commercial  fishing  boat  will  be  owned  jointly  until  

                    10/1/2012 and operated by the husband.  The profits will be  


                    split equal between husband and wife after the cost of fuel  

                    and can[ne]ry dues.  On 10/1/2012 the commercial fishing  


                    boat and permit will be then turned over to the husband.  The  

                    title will be solely in the husband's name.  

                    Read as a whole, the commercial fishing provision undermines Morrill's  


position.  If the term "profit" already contemplated subtraction of all expenditures, then  

          4         See  Alyeska Pipeline Serv. Co. v. O'Kelley , 645 P.2d 767, 771 n.1 (Alaska   

 1982) (rejecting a two-step approach to plain language and extrinsic evidence in contract  

interpretation and noting that its application was "artificial and unduly cumbersome,"  

and "that it offers no advantage over [an approach] which initially turns to extrinsic  


evidence for such light as it may shed on the reasonable expectations of the parties").  



                    Alaska Diversified Contractors, Inc. v. Lower Kuskokwim Sch. Dist. , 778  

P.2d 581, 584 (Alaska 1989) (citing Alyeska Pipeline , 645 P.2d at 771 n.1).  



                    See Fairbanks N. Star Borough v. Tundra Tours, Inc., 719 P.2d 1020, 1024  


(Alaska 1986) ("The parties' reasonable expectations are assessed through resort to the  

language of the disputed provision and other provisions of the contract . . . ." (citing  

Peterson v. Wirum , 625 P.2d 866, 872 n.10 (Alaska 1981))).  

                                                               -7-                                                         6991

----------------------- Page 8-----------------------


there would be no reason to specify that specific expenses such as fuel costs and cannery  


dues were to be subtracted.  The maxim of construction expressio unius est exclusio  


alterius applies when "parties list specific items in a document" and instructs that "any  

                                                                                 7   This principle suggests that  

item not so listed is typically thought to be excluded."    

expenditures other than fuel and cannery dues were not intended to be included because  


the  parties  did  not  list  them.    Our  "preferred  method  of  interpreting  contracts  is  to  


reconcile conflicting terms in a way that gives effect to them all,"8  and it is the superior  


court's interpretation of "profits" - not Morrill's - that best achieves this end.  

                    The interpretation of "profits" to mean fishing income finds substantial  

support in the extrinsic evidence findings made by Magistrate Judge Wells and relied  


upon by the superior court.  The relevant findings are as follows:  


                    7.       .  .  .  [Ms.  Mahan]  argues  that  this  agreement  was  

                    designed  to  give  her  extra  income  flow  in  the  short  term,  

                   recognizing the income disparity between the parties.  

                    . . . .  

                    11.      .  .  .  [A]t  the  time  of  the  dissolution,  Mr.  Mahan  

                   reported an adjusted annual income of $129,649.  Ms. Mahan  


                   reported  an  adjusted  annual  income  of  $47,432.    In  the  

                   petition, each party reported that they received $31,292 in  

                    fishing income.  

                    12.      This  income  disparity  has  widened.    Mr.  Mahan  

                    continues to commercial fish and work lucrative jobs with  


                    employers such as Conoco Phillips and  Chugach  Electric.  


                   Ms. Mahan no longer receives commercial fishing income,  


                    and does not enjoy lucrative employment.  

          7         Tesoro  Alaska  Co.  v.  Union  Oil  Co.  of  California,  305  P.3d  329,  334  

(Alaska 2013) (quoting Bentley Mall Assocs. v. ADC Distrib. Corp. , Mem. Op. & J.  


No. 865, 1997 WL 33812770, at *1 (Alaska Oct. 15, 1997)).  

          8        Hussein-Scott v. Scott , 298 P.3d 179, 182 (Alaska 2013).  

                                                             -8-                                                          6991  

----------------------- Page 9-----------------------

13.      The   parties'   tax   returns[]   regarding   the   fishing  

business show the following:  

         Year               Loss              Profit

         2012               $78,462

         2011               $18,364

         2010                                 $3,874

         2009               $24,933

         2008               $33,724

         2007               $36,251

         2006               $28,255

         2005               $32,847

14.      Ms. Mahan argues that the parties historically used the  


fishing  business  as  a  tax  shelter.    The  reported  profit  and  

losses tend to corroborate this testimony.  

15.      Given  the  parties'  disparate  incomes,  cooperative  

agreements, and desire to work together for [their daughter's]  


ongoing security and stability, it is hard to imagine that they  

intended Ms. Mahan to pay Mr. Mahan 50% of whatever loss  


he reported on his tax return. . . .  

16.      .  .  .  [T]he  dissolution  petition  reflected  more  than  

$32,000 in actual income to each party from the 2010 fishing  


business - yet the tax return reported a $3,874 . . . profit.  


This difference suggests that the parties had a shared view of  


the [business] as an income [tax] shelter, and the check from  


the cannery as income.  

. . . .  

18.      . . . This particular contract seems clear.  The parties  

stated  "profit."  They  did  not,  either  in  writing  or  at  the  

hearing, state that they intended to share "profit and loss."  

Additionally, they did not reference the tax returns.  Instead,  


their language references the cost of fuel and cannery dues  

which is consistent with the fact that, at the end of the fishing  


season, the cannery writes a check to a fisherman less these  


                                       -9-                                                    6991

----------------------- Page 10-----------------------

                    19.       There is virtually nothing in the contract's purpose, the  

                    extrinsic evidence, or the contract's written terms, to support  


                    Mr. Mahan's interpretation.  

There  is  ample  evidence  to  support  these  findings,  and  the  findings  reinforce  the  

conclusion  that  the  parties  intended  to  split  the  income  derived  from  Morrill's  

commercial fishing less costs for fuel and cannery dues. Morrill and Jessica entered into  


other cooperative agreements to provide for their daughter at the time of the dissolution,  


which supports the inference that two years of shared fishing money was designed to  


provide temporary support to Jessica in her role as their daughter's primary caregiver and  


not designed to create a financial business-focused burden both parties knew Jessica  


would be unable to repay.  Elsewhere in the dissolution agreement the parties asserted  


that the fishing business provided $31,292 in income to Jessica in 2010, and nowhere in  


the agreement do the parties refer to the tax returns indicating a history of commercial  

fishing losses.  Instead, the dissolution agreement acknowledges only the positive income  

provided by the commercial fishing.   


                    Finally, our inquiry seeks "to give effect to the reasonable expectations of  

                                                          9  With this in mind, it is noteworthy that Morrill  

the parties" at the time of the agreement.                                      

did not assert his belief that the agreement was intended to provide for the sharing of  


both losses and profits until two years after the agreement was entered.  

                    Morrill  suggests  that  the  magistrate  judge  and  the  superior  court  made  

inappropriate  use  of  Jessica's  testimony  in  their  findings.    He  alleges  that  "both  

[Magistrate Judge Wells and Judge Moran] relied entirely upon Jessica's self-serving  


testimony"   in   their   respective   analyses.      But   a   party   may   "testify[]   about   its  


understanding in objective terms . . . sufficiently detailed to enable [the] trier of fact to  


          9         Villars v. Villars, 277 P.3d 763, 768 (Alaska 2012).  

                                                             -10-                                                           6991  

----------------------- Page 11-----------------------


form its own judgment as to the reasonableness of the party's understanding and the  


likelihood that the other party would have the same understanding."                                         

                    Here, the language of the findings makes clear that Magistrate Judge Wells  


did  not  rely  solely  on  Jessica's  testimony.    For  example,  Magistrate  Judge  Wells's  


finding of an income disparity between the parties was based on details recorded in the  


dissolution agreement itself.  And the parties' 2011 and 2012 tax returns corroborate the  

testimony from both parties at the initial dissolution proceeding that providing short-term  


financial support for Jessica was in the best interests of their child.  Moreover, it was not  


unreasonable for Magistrate Judge Wells to draw an inference from the consistent tax  


losses recorded in Morrill and Jessica's pre-dissolution tax returns that the commercial  


fishing business was used as a tax shelter.  Magistrate Judge Wells's inference that it is  


unlikely that the parties "intended Ms. Mahan to pay Mr. Mahan 50% of whatever loss  

he reported on his tax return" is supported by both Morrill's and Jessica's testimony at  


the initial dissolution hearing in 2011 - testimony that provides the best window into  


the parties' understanding of the agreement at the time it went into effect.  The findings  


also rely on undisputed testimony from Jessica regarding how the cannery typically paid  


                    Contrary   to   Morrill's   alternative   argument   that   the   superior   court  


improperly modified the terms of the dissolution agreement, "interpret[ing] a property  

          10        Nautilus Marine Enters., Inc. v. Exxon Mobil Corp.                               , 305 P.3d 309, 317  

(Alaska 2013) (second alteration in original) (quoting Alaska Tae Woong Venture, Inc.  

v.  Westward Seafoods, Inc., 963 P.2d 1055, 1067 (Alaska 1998)); see also Norville v.  


Carr-Gottstein Foods Co., 84 P.3d 996, 1003 (Alaska 2004) ("Testimony of a party as  

to his subjective intentions concerning the meaning of a particular clause in a contract  


is not probative unless the party in some way expressed or manifested his understanding  


at the time of contract formation.").  

                                                               -11-                                                         6991

----------------------- Page 12-----------------------

agreement's provisions to clarify confusing language and resolve ambiguity"11 is not  


                                                                           because "[an] agreement entered  

only appropriate, but "required under our case law" 

into in connection with a dissolution proceeding is a contract subject to interpretation   


under contract principles."              Thus, in our independent judgment, the plain text of the  

dissolution agreement's commercial fishing provision and the extrinsic evidence both  

support the conclusion reached by the superior court.  

                   Because the superior court's factual findings are not clearly erroneous and  

its  inferences  drawn  from  extrinsic  evidence  are  otherwise  supported  by  substantial  


evidence, and because the plain text of the dissolution agreement supports the superior  


court's interpretation, we affirm the superior court's interpretation of the contract terms.  


                   We  AFFIRM  the  superior  court's  order  interpreting  "profits"  to  mean  

"payment from the cannery, less deductions for fuel, dues and other advancements."  

         11       Song v. Song, 972 P.2d 589, 593 (Alaska 1999).  

         12       McCarter v. McCarter , 303 P.3d 509, 514 (Alaska 2013).  

         13       Knutson v. Knutson , 973 P.2d 596, 600 (Alaska 1999).  

                                                         -12-                                                       6991  

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