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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Gunn v. Gunn (2/5/2016) sp-7080

Gunn v. Gunn (2/5/2016) sp-7080

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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, email  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                       

NEIL  D.  GUNN,                                                  )  

                                                                 )          Supreme  Court  No.  S-15648  

                                Appellant,                       )  


                                                                 )          Superior Court No. 3AN-09-10497 CI  

                      v.                                         )  


                                                                 )         O P I N I O N  


NONA S. GUNN,                                                    )  


                                                                 )         No. 7080 - February 5, 2016  

                                Appellee.                        )  




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


                      Judicial District, Anchorage, Mark Rindner, Judge.  


                      Appearances:  Allison Mendel, Mendel & Associates, Inc.,  


                      Anchorage,  for  Appellant.                     Richard  W.  Maki,  David  H.  

                      Shoup, and Amy E. Kropp, Tindall Bennett & Shoup, P.C.,  


                      Anchorage, for Appellee.  


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


                      Bolger, Justices.  


                      MAASSEN, Justice.  



                      A divorcing couple disputed the nature of their marital interest in a limited  


liability company. They eventually agreed that the husband would retain the ownership  


interest but the wife would receive 25% "of the net commission" from certain sales if  


they occurred within a limited time after the divorce.  When a sale occurred the parties  


disagreed on how to define "net commission":  the wife contended that it meant the  

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

commission received by the company, but the husband contended that it meant only his                                                                                                                                                                                                                                                                        

share of it.                                 The wife sought discovery in support of her interpretation of the agreement.                                                                                                                                                                                                                                                   

The husband moved for a protective order, and the parties' attorneys compromised on                                                                                                                    

some limited production.                                                                                  Although the husband produced information that appeared to                                                                                                                                                                                            

satisfy the compromise, the wife filed a motion to compel. The court granted the motion                                                                                                                                                                                                                                                    

to compel and awarded the wife attorney's fees for having had to file it. Then, following                                                                                                                                                                                                                                       

an evidentiary hearing, the superior court agreed with the wife's interpretation of the                                                                                                                                                                                                                                                                    

settlement agreement.                                                                         

                                                        The husband appeals both the decision on the merits and the award of                                                                                                                                                                                                                                  

attorney's fees on the motion to compel.                                                                                                                                     Because the language of the agreement and                                                                                                                                  

relevant extrinsicevidencefavor thewife's interpretation of"netcommission,"weaffirm                                                                                                                                                                                                                                                            

the superior court's decision of that issue.                                                                                                                                    But because we cannot see the rationale for                                                                                                                                 

the superior court's award of attorney's fees to the wife on her motion to compel, we                                                                                                                                                                                                                                                                      

remand that issue to the superior court for reconsideration.                                                                                                                     

II.                         FACTS AND PROCEEDINGS                                        

                            A.                          The Property Agreement And The Post-Divorce Commission                                                                                                                                                                                                                            

                                                       Neil and Nona Gunn                                                                   1 were married in 2005. During the marriage, Neil and  


a company called Sun Consulting, LLC formed Venture North Group, LLC to broker  


mergers and acquisitions of other companies. Neil and Sun Consulting each held a 50%  


interest in Venture North.  Neil worked part-time for the company during the marriage  


while also working for an unrelated corporation. Nona, a stay-at-home mother, also did  


some work for Venture North, though she was not named as a member on its company  


documents. At the time the parties separated in September 2009, Venture North had two  




                                                       Nona's last name is now Wilson.  

                                                                                                                                                                               -2-                                                                                                                                                                                    7080  

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

 clients for which it was attempting to broker deals: Brice, Inc., a construction company,                                                                                                                                                                                                                                                                                                                                                                                                   

 and Great Northern Engineering.                                                                                                                                                                                  

                                                                                    In 2010 Neil and Nona divorced and divided their property through what                                                                                                                                                                                                                                                                                                                                                                 

the superior court termed an "amicable settlement" incorporated into the court's findings                                                                                                                                                                                                                                                                                                                                                                                                               

 of fact and conclusions of law.                                                                                                                                                                 The agreement noted the parties' "disagree[ment] as to                                                                                                                                                                                                                                                                                      

whether they jointly ha[d] accrued a 50% marital interest, or whether [Neil] alone ha[d]                                                                                                                                                                                                                                                                                                                                                                                                                                 

 accrued a 50% interest in the business operations and potential profits of Venture Group                                                                                                                                                                                                                                                                                                                                                                                                                         

North [sic], LLC." And while the parties agreed that "the efforts invested in the business                                                                                                                                                                                                                                                                                                                                                                                                           

through the date of separation [were] marital earnings," they disagreed on the extent of                                                                                                                                                                                                                                                                                                                                                                                                                                                     

those efforts.                                                                      

                                                                                   Nonetheless, Neil and Nona were able to agree on a division of the Venture                                                                                                                                                                                                                                                                                                                                           

North ownership interest. Neil would "retain sole ownership and control of" the interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

But if Venture North succeeded in selling either of its two clients, Brice and Great                                                                                                                                                                                                                                                                                                                                                                                                                                  

Northern, "on or prior to June 30, 2011, [Nona] shall be paid 25% of the net commission                                                                                                                                                                                                                                                                                                                                                                                        

 from each such sale and [Neil] shall ensure that such payment is timely made."                                                                                                                                                                                                                                                                                                                                                                                                                        If a sale      

 occurred "on or after July 1, 2011 and before January 1, 2013, [Nona] shall be paid 20%                                                                                                                                                                                                                                                                                                                                                                                                                                      

 of the net commission from each such sale."                                                                                                                                                                                                                                               And for any sale after January 1, 2013,                                                                                                                                                                                   

Nona would receive nothing.                                                                                                                                                                  The agreement also required that Neil give Nona his                                                                                                                                                                                                                                                                                      


personal tax returns and those for Venture North for the tax years 2010 through 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

                                          2                                         The relevant portion of the agreement reads in full:                                                                                                                                                                                                                                                  

                                                                                     [The   superior   court   finds   t]hat   the   parties   disagree   as   to

                                                                                   whether they jointly have accrued a 50% marital interest, or

                                                                                   whether the husband alone has accrued a 50% interest in the

                                                                                   business operations and potential profits of Venture Group

                                                                                   North [sic], LLC, an Alaskan joint venture in concert with

                                                                                   third parties.                                                                      Regardless, the parties agree that the efforts


                                                                                                                                                                                                                                                                      -3-                                                                                                                                                                                                                                                    7080

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

                          In July 2010 Venture North successfully brokered the sale of Brice and                                                                

received a commission of $1,875,000.                                           There is no dispute that Neil's membership                      

interest entitled him to half this commission, and he wrote Nona a check for 25% of his                                                                          

                                                                                                                          3   The check apparently  

half (that is, 12.5% of the commission earned by Venture North).                                                                                   

contained a restrictive endorsement.4  




                          invested in the business through the date of separation are  


                          marital earnings.  In connection with this specific asset, the  


                          parties have agreed that the Defendant husband shall retain  


                          sole ownership and control of said business interest, however  


                          characterized.  He shall, however, report on the sales of any  


                          "existing client assets" or "existing clients" to the Plaintiff  


                          wife until December 31, 2012 and, for a period of three years  


                          (i.e. tax years 2010, 2011 and 2012) shall provide a true and  


                          accurate copy of the Venture North Group, LLC federal tax  


                          return to her as well. In the event of full or partial sale of one  


                          or both clients or assets of said existing clients on or prior to  


                          June 30, 2011, the Plaintiff wife shall be paid 25% of the net  


                          commission from each such sale and the Defendant husband  


                          shall ensure that such payment is timely made.  In the event  


                          that a sale shall occur on or after July 1, 2011 and before  


                          January 1, 2013, the Plaintiff wife shall be paid 20% of the  


                          net commission from each such sale.  


A footnote defined "existing client" to mean "any business or person who retained the  


services of Venture Group North, LLC on or before February 14, 2010."  The entities  


meeting the definition were identified as Brice and Great Northern.  

             3            The parties have stipulated to the amounts due Nona under their differing  


arguments, and the amounts are therefore irrelevant to this appeal.  


             4            The record does not contain a copy of the check, but the parties appear to  


agree that it was tendered in full satisfaction of Neil's obligations under the settlement  




                                                                                 -4-                                                                         7080

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

                    Nonarefused to accept the check; she contended that theagreement entitled  


her to 25% of Venture North's commission, not 25% of Neil's share of it. Neil provided  


another  check  without  any  restrictions,  and  Nona  accepted  it  while  continuing  to  


maintain she was entitled to more.  There followed several years' hiatus in the parties'  


communications  on  this  issue;  Nona  then  contacted  Neil  through  her  attorney  in  


September 2013, reiterating her belief that Neil owed her 25% of Venture North's  


commission.  She told Neil that unless he paid her the additional amount due she would  


commence discovery related to the dispute, then file a motion to enforce the parties'  


2010 agreement.  Neil responded that he had satisfied the agreement and that Nona had  


waived or abandoned any claim to the contrary.  


          B.        The Discovery Dispute And Attorney's Fees Award  


                    In  November  2013  Nona  served  Neil  with  interrogatories  seeking  


information about the sale of Brice and the commission Venture North received from the  


sale; asked that Neil produce a broad set of documents; and gave notice of the deposition  


of Venture North's accountant. Neil responded that "[Nona] ha[d] no right to discovery  


because the case is closed, and she does not have a judgment on which she is seeking  



                    In December 2013 Neil moved for a protective order.  Shortly thereafter  


Nona's  attorney  wrote  Neil's  attorney,  stating  that  the  discovery  dispute  could  be  


resolved if Neil provided "documentation that would show (1) whether [Great Northern]  


was sold and the timing of such a sale, (2) the actual amount actually received by  


Venture North for the Brice sale, and when, and (3) [Neil's] tax returns for the other two  


years in question."  But the discovery dispute remained unresolved, and Nona filed an  


opposition to the motion for protective order, as well as a motion to show cause why Neil  


should not be held in contempt for failing to respond to her discovery requests.  


                                                               -5-                                                         7080

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

                                      The parties' attorneys exchanged emails in January 2014.                                                                                                          On January 14,                     

Nona's attorney wrote that he " need[ed] Neil Gunn's personal tax returns for 2010, 2011                                                                                                                                              

and 2012, documentation of the full amount of the commission on the Brice sale, [and]                                                                                                                                                

documentation showing there was no sale of the second company during the relevant                                                                                                                                            

time period."                          He continued:                                "I am agreeing that if you will produce the things listed                                                                                        

herein, we will review the materials and determine whether we need anything else. . . .                                                                                                                                                                

If I do not receive these materials shortly, I will be forced to file a motion to compel."                                                                                                                                                             

Neil's attorney responded the next day that she would "forward [the documents] . . . this                                                                                                                                              

week," to which Nona's attorney immediately replied, "Thank you for agreeing to send                                                                                                                                                   


the documents this week." (Emphasis in original.)  


                                      Two  days  later  Neil's  attorney  hand-delivered  to  Nona's  attorney  the  

                                                                                                                                                                             5  (2) a "Brice letter dated  



following documents:  (1) Neil's 2011 and 2012 tax returns; 

 12.18.13"; and (3) a "Great Northern Engineering Biennial Report." Neil's later notice  


to the court described the "Brice letter" as "stating the total commission Venture North  


Group, LLCreceived upon successful brokerage of Brice'ssale," and the Great Northern  


biennial report as "showing no change in the company's ownership."  


                                      Without further communication between the parties on the subject, Nona  


filed a motion to compel discovery on February 4.  The motion asserted that Neil had  


failed to provide documentation of the sale of Brice, the non-sale of Great Northern, or  


any commissions paid; had not provided responses to interrogatories; and had "provided  


only partial responses" to Nona's other discovery requests. The motion also asserted that  


Nona's counsel had "undertaken reasonable efforts to meet and confer with opposing  


counsel to obtain without court intervention the requested documentation ofthesales and  




                                      Venture North's returns for the three years at issue, and Neil's personal  


return for 2010, had already been produced.  

                                                                                                                      -6-                                                                                                                        7080  

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

commissions for  Brice, Inc. and Great Northern Engineering."                                                                                            In opposition, Neil                  

explained that the parties had discussed whether a more limited production would satisfy                                                                                                  

Nona's demands; that his counsel had produced some responsive documents in hopes of                                                                                                                 

furthering this discussion; and that Nona had made no objection to the adequacy of the                                                                                                            

materials produced, leading Neil to believe that the limited production was sufficient.                                                                                                                    

The superior court granted Nona's motion to compel and awarded Nona "reasonable                                                                                              

attorney's fees incurred by plaintiff in litigating the motion to compel."6  On the same  

day, the court denied Neil's motion for a protective order.  


                C.             The Evidentiary Hearing And Decision  


                               In May 2014 the superior court held an evidentiary hearing to determine  


how much of the commission from the Brice sale was due Nona under the settlement  


agreement. The court heard argument from counsel as well as testimony from Nona and  


Neil about their respective roles in Venture North.  In a written decision, the superior  


court concluded that Nona was entitled to 25% of the net commission paid to Venture  


North rather than 25% of Neil's half of that commission.  In support of this decision the  


court cited the language of the agreement, a discussion between counsel and the court  


at the time the agreement was put on the record in 2010, and the parties' circumstances  


at the time. The court observed that Nona could have been awarded 25% of the company  


if the case had gone to trial; her agreement instead to stepped-down percentages of sales  


made within three years of the divorce, with the attendant risk that she would receive  


nothing if no sales occurred, supported her claim to the higher amount.  




                               Neil moved for reconsideration, which was denied. A later order specified  


the amount of fees awarded.  

                                                                                                 -7-                                                                                                 7080  

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

                        Neil   appeals.     He   challenges   the   superior   court's   interpretation   of   the  

settlement agreement and its decisions to grant Nona's motion to compel and to award                                                             

her attorney's fees on the motion.              

III.	       STANDARDS OF REVIEW                  

                        "Contract   principles   govern   the   interpretation   of   property   settlement  


agreements incorporated in dissolution decrees."                                                                                                         

                                                                                           The proper meaning of a contract is  



a legal question.               We interpret a contract de novo; "[w]here 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." 


                        "We review discovery rulings and  awards of attorney's fees for abuse of  



discretion."              "A decision constitutes abuse of discretion if it is 'arbitrary, capricious,  



manifestly unreasonable, or . . . stems from an improper motive.' " 

IV.	        DISCUSSION  


            A.	         The Superior Court's Interpretation Of The Settlement Agreement  


                        Was Not Erroneous.  


                        Neil argues that the superior court erred in deciding that Nona was entitled  


to 25% of Venture North's commission from the Brice sale rather than 25% of Neil's  

            7           Mahan v.  Mahan, 347  P.3d  91,  94 (Alaska 2015)  (quoting  Villars v.  Villars,  

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

            8           Rockstad  v.  Erikson,   113  P.3d   1215,   1222  (Alaska  2005).  

            9           Mahan, 347 P.3d at 94 (quoting Villars, 277 P.3d at 768).  


            10          Kestner  v.  Clark,  182  P.3d  1117,  1121-22  (Alaska  2008)  (internal  citations  


            11          Roderer  v. Dash, 233 P.3d  1101, 1107 (Alaska 2010)  (quoting Shea v.  


State, Dep't of Admin., Div. of Ret. & Benefits, 204 P.3d 1023, 1026 (Alaska 2009)).  


                                                                           -8-	                                                                    7080

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

50%   interest   in   that   commission.     We   conclude   that   the   superior   court   correctly  

interpreted the parties' agreement.                  

                              1.	            The   text   and   structure   of   the   agreement  support   Nona's  


                              When interpreting a contract, a court "begin[s] by viewing the contract as                                                                                       

a whole and the extrinsic evidence surrounding the disputed terms, in order to determine                                                                                     

if those terms are ambiguous                                           - that             is, if they are reasonably subject to differing                                      



                                             Here, the relevant sentence of the parties' agreement states that "[i]n  


the event of a full or partial sale of one or both clients or assets of said existing clients  


on or prior to June 30, 2011, [Nona Gunn] shall be paid 25% of the net commission from  


each such sale."  The simple phrasing favors Nona's argument: it is Venture North that  


would receive a "commission," whereas its members would receive portions of that  


commission.   As the superior court noted at the evidentiary hearing, the agreement  


"doesn't say the net commission received by Neil Gunn [from] each sale. It says 'the net  


commission.' "  


                              Of course, the "interpretation of a contract term does not take place in a  



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


Neil argues that the structure of paragraph 14 supports his position because it frames the  


issue as the parties' disagreement "as to whether they have jointly accrued a 50% marital  


interest, or whether the husband alone has accrued a 50% interest" in Venture North,  


then states that the parties have reached agreement "[i]n connection with this specific  


asset."   He argues that Nona's "25% of the net commission from each such sale" is  

               12             Tesoro Alaska Co. v. Union Oil Co. of Cal.                                                          , 305 P.3d 329, 333 (Alaska                    

2013) (alteration in original) (quoting                                                 Hartley v. Hartley                        , 205 P.3d 342, 347 (Alaska                    


               13             Mahan, 347 P.3d at 95.  


                                                                                              -9-	                                                                                      7080

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

therefore correctly framed in terms of the marital asset under discussion - his 50% of                                                                                                                                         

Venture   North   -   rather   than   Venture   North's  commission.     But   there   is   nothing  

inconsistent in defining the marital asset as half the business, then valuing Nona's                                                                                                                            

interest in that asset by reference to something else - here, a share of the commissions                                                                                                          

received by the business during a specified period of time.                                                                                                 

                                   2.	               The superior court's factual findings are not clearly erroneous,                                                                                  

                                                     and the inferences it drew from those findings are supported by                                                                                                          

                                                     substantial evidence.   

                                   The   superior   court   also   considered   extrinsic   evidence   in   reaching   its  

decision. "Where the superior court considers extrinsic evidence in interpreting contract                                                                                                                       

terms, . . . we will review the superior court's . . . inferences drawn from that extrinsic                                                                                                                   


evidence for support by substantial evidence,"                                                                                  which means "such relevant evidence  



as a reasonable mind might accept as adequate to support a conclusion." 


                                                     a.               Nona's interest in Venture North  


                                   The superior court found that Nona could have been awarded half the  


marital interest in Venture North (that is, 25% of the company) at trial, and that "[i]f this  


had occurred she would have been entitled to her 25% share for as long as Venture North  



earned commissions."                                                                                                                                                                                                           

                                                                  Instead, Nona agreed to a gradual step-down of her interest in  

                  14	              Mahan, 347 P.3d at 94 (quoting                                                         Villars, 277 P.3d at 768).                          



                                   Seybert v. Cominco Alaska Exploration, 182 P.3d 1079, 1089 (Alaska  


2008) (quoting DeYonge v. NANA/Marriott, 1 P.3d 90, 94 (Alaska 2000)) (internal  

quotation marks omitted).                    

                  16               Neil agreed at the evidentiary hearing and in his arguments to this court  


that, had the case gone to trial, Nona could have received half of the marital 50%  


membership interest in Venture North. Venture North is a limited liability company, and  


interests in limited liability companies are personal property, AS 10.50.370, which may  


be assigned "in whole or in part."  AS 10.50.375(a).  While Neil's counsel contended at  



                                                                                                             -10-	                                                                                                     7080

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

the company, "reducing [her claim for commissions] from 25% to 20% after 18 months                                                                                                                                                                                                                                                                                                                                                        

 and to zero after three years."                                                                                                                                By doing so she "took the risk that she might not receive                                                                                                                                                                                                                 

 any   commission   received   by   Venture   North   from   a   sale   of   an   'existing   client.'   "   

According to the superior court, these circumstances - Nona's waiver of a claim that  

 could have been much more valuable in the long run - supported her interpretation of                                                                                                                                                                                                                                                                                                                                                                                 

the agreement:                                                                    that she settled for a chance at a larger share if the commissions were                                                                                                                                                                                                                                                                                              

 quick to materialize. Neil argues that the superior court erred by taking into account the                                                                                                                                                                                                                                                                                                                                                                      

possibility that Nona would have a continuing interest in the company because his                                                                                                                                                                                                                                                                                                                                                                               

membership interest in Venture North was separately valued at $1,500 and assigned to                                                                                                                                                                                                                                                                                                                                                                                   

him by agreement; he contends that the provisions at issue must therefore be interpreted                                                                                                                                                                                                                                                                                                                                

 as discussing only the value of future commissions, not the value of the marital interest                                                                                                                                                                                                                                                                                                                                                

in the company.                                                                          

                                                                        But the parties' agreement was specifically premised on their failure to                                                                                                                                                                                                                                                                                                                      

 agree   on  "whether   the   husband   alone   has   accrued   a   50%   interest   in   the   business  

 operations  and  potential profits of Venture Group North."                                                                                                                                                                                                                                                               (Emphasis added.)                                                                                           We see   

no reason why they could not agree to assign different values, or different methods of                                                                                                                                                                                                                                                                                                                                                                                

 determining value, to "potential profits" on the one hand and every other aspect of                                                                                                                                                                                                                                                                                                                                                                                

 "business operations" on the other; this appears to be what they did.                                                                                                                                                                                                                                                                                                                

                                                                        Neil also argues that, because the superior court found that more than 50%                                                                                                                                                                                                                                                                                                       

 of the work on the Brice sale was done after separation, the parties must have intended                                                                                                                                                                                                                                                                                                                                           

that Nona receive less than half of Neil's share of the commission.                                                                                                                                                                                                                                                                                                               He analogizes to                                                                    

 "active   appreciation"   - in                                                                                                                           which   separate   property's   increase   in   value   during   the  



 oral argument that the LLC's operating agreement may have affected Neil's ability to  


 assign half his share to Nona, there is no evidence of that in the record.  

                                                                                                                                                                                                                               -11-                                                                                                                                                                                                                      7080

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


marriage can itself become marital property                                                         - and argues that this case is one of                                        

"active depreciation," in which work occurring after separation needs to be subtracted                                                 

from the value of the marital asset before it is divided.                                                           

                                                                                                                                             18       In that case, a  

                            To support this argument Neil cites                                             Young v. Kelly                  .                                     

husband and wife worked together on a fishing boat.19                                                              Eight years after they divorced,  


the federal government created the individual fishing quota (IFQ) program, and the  


husband received quota shares based on his five highest "landing" years, one of which  


had been during the marriage.20   The wife argued that because a marital year had been  


used  to  determine  the  IFQ  shares'  value,  a  portion  of  the  shares  must  be  marital  


property.21              We held, however, that the wife had no marital interest in the IFQ shares  


because "[t]he 'real value' at issue . . . [was] the value [the wife's] work added to the  


value of the IFQ shares[, and] that value was not created until the IFQ program came into  


existence, eight years after the marriage ended."22                                                        Young is inapposite:  while the IFQ  


program did not yet exist when the marriage in  Young ended, it is undisputed that  


Venture North was a marital asset acquired during Neil and Nona's marriage, and the  


only question was how that marital asset should be valued.  In answering that question,  


the parties could reasonably rely on anticipated commissions.  


              17            See,   e.g.,   Harrower   v.   Harrower, 71 P.3d 854,                                                    857-58   (Alaska 2003)   

("Active appreciation occurs when marital funds or marital efforts cause a spouse's                                                                                

separate property to increase in value during the marriage.").                                         

              18            334 P.3d 153 (Alaska 2014).  


              19            Id. at 154.  


              20            Id.  

              21            Id. at 155-56.  


              22            Id. at 160.  


                                                                                      -12-                                                                                 7080

----------------------- Page 13-----------------------

                                                          We conclude that the superior court did not clearly err when it found that                                                                                                                                                                                                                                  

the parties intended Nona to give up a continuing interest in Venture North in exchange                                                                                                                                                                                                                                                      

 for a 25% share of the commissions received from certain sales within a limited time                                                                                                                                                                                                                                                                             


                                                                                       b.                           Neil's lack of control over Venture North's commission                                                                                                                                                                                                           

                                                          Neil also argues that the superior court, in finding Nona entitled to 25% of                                                                                                                                                                                                                                       

Venture North's commission, failed to consider that Neil did not control the company,                                                                                                                                                                                                                                                      

 and that his share of the commission could have been reduced during the period covered                                                                                                                                                                                                                                                             

by the agreement by the addition of new members to the LLC.                                                                                                                                                                                                                    He contends that under                                                        

Nona's   interpretation  he   could   be   forced   to   pay   her   25%   of   a   commission   under  

 circumstances in which he was entitled to receive less than 50% of it himself, whereas                                                                                                                                                                          

 if Nona's entitlement was based on his share only, he could carry out the agreement                                                                                                                                                                                                                                                    

 (giving Nona 25% of his share) regardless of how Venture North's commission was                                                                                                                                                                                                                                                                                    

 distributed among the members.                                                                                                               

                                                          This theoretical argument is unconvincing, as it ignores the "goals sought                                                                                                                                                                                                                     

to    be    accomplished[]    and    surrounding    circumstances   when    the    contract    was  

                                                     23   Although it is possible that Neil could have received less than 50% of the  


 commission from the Brice sale if circumstances had changed, that has no bearing on the  


 case before us.  Nowhere in the record is there any evidence that the parties considered  


the possibility of a reduction in Neil's membership interest or its effect on his share of  


 a commission.  Even if the parties had considered such a scenario, the fact that Neil  


might receive a smaller share of Venture North's commission would not have prevented  


                             23                           Zamarello v. Reges                                                                   , 321 P.3d 387, 393 (Alaska 2014) (quoting                                                                                                                                                      Miller v.   

Handle Constr. Co.                                                                     , 255 P.3d 984, 988-89 (Alaska 2011)) (internal quotation marks                                                                                                                                                                                                    


                                                                                                                                                                                   -13-                                                                                                                                                                          7080

----------------------- Page 14-----------------------

him from promising to pay Nona an amount based on the full commission that arguably                                                                                     


reflected what she was owed at the time of the divorce.                                                                        


                                           c.            The structure of the LLC for tax purposes  


                             The parties' agreement requires Neil to "provide a true and accurate copy  


of the Venture North Group, LLC federal tax return" to Nona.  The superior court noted  


that  both  parties  relied  on  this  provision  as  supporting  their  interpretation  of  the  


agreement, but the court concluded that the provision was not "helpful in determining  


the reasonable expectations of the parties as to the amount of commission Nona was to  


receive."  Instead, the court found that the "evidence suggest[ed] an intent that neither  

party disputes; i.e., that the percentage Nona was to receive was to be based on the net  


commission after taxes rather than the gross commission received by Venture North."  


(Emphasis in original.)  


                             Neil contends, however, that Venture North's structure for tax purposes  


supports his position.  He explains that Venture North, as an LLC,  is a pass-through  


entity that does not pay income taxes; instead, its members are taxed personally on  


distributions from the company.  Neil argues that if Nona's share were to be calculated  


on  Venture  North's  commission,  determining  the  "net  commission"  would  require  


determining the individual tax rates of each member - a task that would be practically  


difficult given that the other members were not parties to the divorce action.  Therefore,  


he  argues,  Nona's  interpretation  cannot  reflect  the  parties'  intent,  and  "[t]he  only  


              24             See   Burns   v.   Burns,   157   P.3d   1037,   1039-40   (Alaska   2007)   ("[The  

husband] also maintains that the agreement would be unconstitutional if it required him                                                                                           

to remain a dentist for five                                   years.    But as [the wife] agreed at oral argument, [the                                                         

husband] need not remain a dentist as long as he pays spousal support based on a                                                                                                       

percentage of imputed income based on his past earnings as a dentist.").                                                              

                                                                                         -14-                                                                                  7080

----------------------- Page 15-----------------------


reasonable way to interpret 'commission' is . . . that it refers to the commission Neil  


receives through his fifty percent interest in Venture North Group."  


                    The  parties  did  not  further  define  the  term "net  commission"  in  their  


agreement.  Nona contends that the net commission received by the company - what  


she argues was the basis of the agreement - is not affected by the tax liabilities of  


members, paid individually on their distributed shares.  She posits that the term "net  


commission" could reflect deductions other than taxes, such as "expenses incurred to  


earn the commission." She further argues that the LLC's tax structure supports her claim  


to a larger share; if the parties had agreed that the amount due Nona would be based on  


Neil's share of the commission alone, his individual tax returns would have been all she  


needed to verify this information, making the mandated disclosure of Venture North's  


returns unnecessary.  We find Nona's arguments persuasive, and we conclude that the  


superior court did not err in deciding that the LLC's tax structure did not support Neil's  




                               d.	       The parties' statements when placing the agreement on  


                                         the record  


                    The superior court also relied on a discussion of the settlement in 2010  


when the parties placed their agreement on the record, finding that it supported Nona's  


position.        The  court  noted  in  particular  the  statement  of  Nona's  counsel  that  the  


agreement would entitle his client to "25% of the 'net after-tax commission received  


from that sale or sales,' " not limiting it to the amount of the commission received by  


Neil.      Neil  claims  that  the  superior  court's  inference  is  not  supported  by  the  full  


discussion, in which Nona's counsel also said that she had "discounted essentially what  


she would be taking from any eventual sale." (Emphasis appellant's.)  He contends that  


Nona's share would not be "discounted" (from the presumptive 50/50 sharing of the  

                                                               -15-	                                                        7080

----------------------- Page 16-----------------------

marital asset) unless she took less than he did, meaning that she must have agreed to take                                                                                                                                                                                                                                                                                                                                        

25% of Neil's 50% interest rather than 25% of Venture North's commission.                                                                                                                                                                                                                                                                                                                                 

                                                                    Neil is correct that, because he and Nona were entitled to equal shares of  

the Brice commission if it was earned before July 1, 2011, Nona's interest was not                                                                                                                                                                                                                                                                                                                                                   

 "discounted" during that time.                                                                                                                             But we disagree that the full discussion supports Neil's                                                                                                                                                                                                    

 interpretation.   After saying that Nona "ha[d] discounted essentially what she would be                                                                                                                                                                                                                                                                                                                                                  

taking from any eventual sale," her counsel went on to describe that discount in terms                                                                                                                                                                                                                                                                         

 of the step-down provisions:  from 25% to 20% to zero over the course of three years.                                                                                                                                                                                                                                                                                                                                                                      

Her counsel summed up:                                                                                                           "So there's a break in here as far as a discount for additional                                                                                                                                                                                                    

work that might have to be done. The parties cannot guarantee and there is no guarantee                                                                                                                                                                                                                                                                                                               

that there will be any proceeds whatsoever."                                                                                                                                                                                        

                                                                    This language supports the superior court's findings about the parties'                                                                                                                                                                                                                                                                    

 intent.     As  reasonably   read,   Nona's   counsel's   remarks   identified   the "discount"                                                                                                                                                                                                                                                                                                                                          as  

Nona's willingness to forgo any continuing interest in Venture North and to assume the                                                                                                                                                                                                                                                                                                                                                  

risk that she would receive a smaller percentage of any commission as time went by and,                                                                                                                                                                                                                                                                                                                                           

ultimately, no commission at all if sales did not materialize in the three years after                                                                                                                                                                                                                                                                                                                                       

 divorce (as in fact happened with regard to Great Northern).                                                                                                                                                                                                                                                     To the extent the superior                                                                 

 court  relied   on   the   discussion   in   2010   as   supporting   Nona's   interpretation   of   the  

 agreement, it did not clearly err.                                                                                                              

                                                                    3.	                               The superior court did not err in interpreting the settlement                                                                                                                                                                                                                          


                                                                    "Because the superior court's . . . inferences drawn from extrinsic evidence                                                                                                                                                                                                                                                          

 are   otherwise   supported   by   substantial   evidence,   and  because   the   plain   text   of   the  

                                                                                                                                                                                                                                                                                                                                                     25 the superior court  

 [settlement] agreement supports the superior court's interpretation,"                                                                                                                                                                                                                                                                                                                                                       

                                  25                               Mahan  v.  Mahan,  347  P.3d  91,  97  (Alaska  2015).  

                                                                                                                                                                                                                  -16-                                                                                                                                                                                                                                7080  

----------------------- Page 17-----------------------

did not err in finding that the agreement entitles Nona to 25% of the net commission                                                                                                                                                

received by Venture North from the Brice sale.                                                                                                   We affirm the superior court's decision                                                        

of this issue.                            

                     B.	                 We Remand The Award Of Attorney's Fees For A Determination                                                                                                                     

                                         Whether Neil's Position In Discovery Was Substantially Justified.                                                                                                                        

                                         Neil contends that the superior court abused its discretion when it awarded                                                                                                                         


Nona attorney's fees for having to bring a motion to compel discovery.                                                                                                                                                                               

                                                                                                                                                                                                                                      Neil argues  


that the parties agreed to a more limited production than what Nona initially demanded;  


that he provided information he reasonably believed would satisfy their agreement; and  


that Nona filed her motion to compel without informing him first that the discovery he  


provided was insufficient.  Nona responds that the award of attorney's fees was proper  


because Neil's disclosures were deficient and he provided more information only after  


she filed her motion to compel.  


                                         Alaska Rule of Civil Procedure 37(a)(4)(A) provides that, if a motion to  


compel is granted or discovery is provided after the motion is filed, "the court shall, after  


affording an opportunity to be heard, require the party or deponent whose conduct  


necessitated the motion . . . to pay to the moving party the reasonable expenses incurred  


in making the motion, including attorney's fees."  The rule also provides, however, that  


an award of fees is not appropriate if "the opposing party's nondisclosure, response or  

                     26                  Neil also argues that it was error to grant the motion to compel, but he does                                                                                                                                      

not identify any prejudice other than the award of fees.                                                                                                                 Even if it was error to grant the                                                      

motion, the error would be harmless absent the fee award.                                                                                                                            See Peterson v. Swarthout                                                          ,  

214 P.3d 332, 342-43 (Alaska 2009) ("[The wife] argues that Judge Cutler should not   

have granted [the husband's] motion to compel. . . . [B]ut this mistake did not prejudice                                                                                                                                                    

 [the wife] . . . .                     Granting the motion was harmless error.").                                                                                                     We therefore address only                                            

the fees issue.           

                                                                                                                               -17-	                                                                                                                      7080

----------------------- Page 18-----------------------


 objection was substantially justified."                                                             We have not explicitly addressed substantial                 

justification under Civil Rule 37(a)(4), but the United States Supreme Court, discussing                                                                                                      

 the analogous federal rule, has held that an action is substantially justified "if there is a                                                                                                                       

 'genuine dispute,' or 'if reasonable people could differ as to [the appropriateness of the                                                                                                                     

 contested action].' "                           28  

                                  The factual background for the superior court's award of fees in this case  


 appears to be undisputed.   Nona served her discovery requests in November 2013.  


 Although Neil's initial position was that she was not entitled to discovery, and although  


 he filed a motion for a protective order on that ground in early December, the parties  


 nonetheless communicated about whether some limited production would be sufficient  


 to resolve the dispute. In their initial exchange on the subject, Nona's attorney stated that  


 he saw "cooperation on these issues as a possibility" and that the discovery dispute could  


be resolved if Neil would "provide documentation that would show (1) whether the other  


business [Great Northern] was sold and the timing of such a sale, (2) the actual amount  


 actually received by Venture North for the Brice sale, and when, and (3) [Neil's] tax  


 returns for the other two years in question."  The attorneys' follow-up email exchange  


 in January 2014 confirmed this limited production as the basis of the parties' agreement.  


Nona's attorney concluded, "I am agreeing that if you will produce the things listed  


                 27               Alaska R. Civ. P. 37(a)(4)(A).                                               

                 28              Pierce v. Underwood, 487 U.S. 552, 565 (1988) (alteration in original)  


 (citations omitted) (quoting Fed. R. Civ. P. 37(a)(4) advisory committee's note to 1970                                                                                                                   

 amendment; Reygo Pac. Corp. v. Johnston Pump Co., 680 F.2d 647, 649 (9th Cir.1982)).  


 Stated another                      way, "[m]akingamotion,                                         or opposing a motion, is 'substantially justified'                                            

 if the motion raised an issue about which reasonable people could genuinely differ on                                                                                                                           

                                                                                                                                                                                   HARLES  ALAN  

 whether a party was bound to comply with a discovery rule."                                                                                                          8B C 


 WRIGHT, ARTHUR R. MILLER ET AL                                                         ., F    EDERAL  PRACTICE  & P                                   ROCEDURE   2288 (3d ed.                                



                                                                                                       -18-                                                                                                7080

----------------------- Page 19-----------------------

 herein, we will review the materials and determine whether we need anything else. . . .                                                                                                                                                 

If I do not receive these materials shortly                                                                    , I will be forced to file a motion to compel."   

 (Emphasis added.) Withinafewdays                                                                  Neil's counsel hand-delivered materialsostensibly   

 responsive to Nona's compromise demands:                                                                                 Neil's tax returns for 2011 and 2012, a                                                                  

 letter on Brice letterhead stating the amount of Venture North's commission, and a Great                                                                                                                             

Northern biennial report reflecting that the company had not changed ownership.                                                                                                                                               In  

 early February, however, with no more correspondence about discovery in the interim,                                                                                                                             


Nona filed her motion to compel.                                                               

                                    On  these  facts,  it  is  difficult  to  see  why  Neil's  position  was  not  


 "substantially justified" for purposes of avoiding an award of fees under Civil Rule  


 37(a)(4)(A).30  ThedocumentsNeil provided appeared tosatisfy thegeneral requirements  


 repeatedly specified in the parties' efforts toward compromise.  Nona's attorney, in his  


 final substantive communication about the matter, stated that he would "review the  


 materials and determine whether [he] need[ed] anything else" and that "if [he did] not  


 receive these materials shortly," he would file a motion to compel, implying that he  


                  29                Nona's counsel represented at oral argument that before the motion to                                                                                                                       

 compel   was   filed   the   parties   discussed   alleged   continuing   deficiencies   in   Neil's  

 disclosures at one or more status hearings, but the record does not show any hearings                                                                                                                         

 occurring between Nona's filing of her discovery requests and the superior court's grant                                                                                                                                

 of the motion to compel.                                            

                  30                At  oral  argument  Nona's  attorney  argued  that  the  award  of  fees  was  


justified because Neil had failed to provide documentation of the total price of the Brice  


 sale.  Although Neil did not provide this information, there is no indication that Nona  


 reasonably  expected  it;  when  the  attorneys  discussed  compromising  the  discovery  


 dispute, Nona asked for information about "the actual amount actually received by  


 Venture North for the Brice sale, and when," later phrased as "the full amount of the  


 commission on the Brice sale," information Neil provided.  The full price of the Brice  


 sale was not a part of Nona's demands.  


                                                                                                              -19-                                                                                                       7080

----------------------- Page 20-----------------------

 would not file the motion without first advising Neil of a deficiency and giving him the                                                                                                                                                                                                                                                                                                                                                                                                           

  opportunity to correct it.                                                                                                                      

                                                                               The superior court did not explain its decision to award fees to Nona, and                                                                                                                                                                                                                                                                                                                                                                

 we cannot discern its rationale from the record.                                                                                                                                                                                                                                           We remand the issue to the superior                                                                                                                                         

  court for an expressdetermination whether Neil's position                                                                                                                                                                                                                                                                                 indiscovery was substantially                                                                     

justified.   If upon reconsideration the superior court concludes that Neil's position was                                                                                                                                                                                                                                                                                                                                                                                                     

  substantially justified, it has the discretion to modify its decision. We retain jurisdiction                                                                                                                                                                                                                                                                                                                                                     

  on this issue.                                                               

 V.                                     CONCLUSION  

                                                                               The superior court's decision that Nona is entitled to 25% of Venture                                                                                                                                                                                                                                                                                                                    

 North's commission on the Brice sale is AFFIRMED.                                                                                                                                                                                                                                                                             The issue of attorney's fees on  

 the motion to compel is remanded for further proceedings consistent with this opinion,                                                                                                                                                                                                                                                                                                                                                                                 

  and we retain jurisdiction.                                                                                                                              

                                                                                                                                                                                                                                                 -20-                                                                                                                                                                                                                                      7080

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