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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Wagner v. Wagner (1/13/2017) sp-7145

Wagner v. Wagner (1/13/2017) sp-7145

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                       THE SUPREME COURT OF THE STATE OF ALASKA                                       

RICHARD  L.  WAGNER,                                             )  

                                                                 )          Supreme  Court  No.  S-15989  

                                Appellant,                       )  


                                                                 )          Superior Court No. 4FA-10-01286 CI  

                      v.                                         )  


                                                                 )         O P I N I O N  


FELICIA A. WAGNER,                                               )  


                                                                 )         No. 7145 - January 13, 2017  

                                Appellee.                        )  




                        ppeal  from  the  Superior  Court  of  the  State  of  Alaska,  


                      Fourth Judicial District, Fairbanks, Michael P. McConahy,  



                      Appearances:               Richard  L.  Wagner,  pro  se,  Fairbanks,  


                      Appellant.          Felicia  A.  Wagner,  pro  se,  Portland,  Oregon,  




                      Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  


                      and Carney, Justices.  


                      MAASSEN, Justice.  



                      A woman's premarital student loan was consolidated with other student  


loans incurred during marriage. Her husband argued at the couple's divorce trial that he  


should  not  be  responsible  for  the  consolidated  loans  because  they  contained  the  


premarital debt and because his wife had wasted loan  proceeds by gambling.   The  


superior court, however, held the parties equally responsible for the loans, finding that  

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it was impossible to extricate the premarital loan from                                                                                                the consolidated loans and that the                                                     

amounts were all marital debt primarily used                                                                                            to   support  the   family   while the wife                                                      

attended school.                                It further found that the husband had failed to prove a waste of marital                                                                                                           


                                      The husband argues on appeal that these findings were erroneous and that                                                                                                                              

the superior court was biased against him.                                                                                      Concluding that the court's findings are                                                                     

supported by the evidence and that there is no merit to the bias allegation, we affirm the                                                                                                                                                    

superior court's judgment.                     

II.                FACTS AND PROCEEDINGS                      

                                      Felicia and Richard Wagner married in 1993, separated in 2009, and filed                                                                                                                            

for divorce in February 2010. In June 2011 the superior court determined that Richard's                                                                                                                                    

failure   to   appear   at   the   couple's   divorce   trial   was   voluntary  and   unexcused,   and  


proceeded without him.                                                                                                                                                                                                         

                                                                        Richard appealed; we reversed and remanded for the superior  



court to determine whether Richard could show good cause for his failure to appear.                                                                                                                                                           On  


remand the superior court found that Richard's reasons for missing trial were "feeble"  


and "would not be good cause to excuse a represented party," but because he was self- 


represented it granted him a new trial.  


                                      At the second trial Richard was represented by counsel and Felicia was not.  


The issues were limited. Richard argued that he should not be liable for Felicia's student  


loans, including one that was premarital and several that  were obtained during the  


marriage.  Although these loans were consolidated during the marriage, he argued that  


he should not be liable for the premarital portion and that Felicia had wasted much of the  

                   1                   Wagner  v.   Wagner,  299  P.3d   170,   171-72  (Alaska  2013).  

                   2                  Id.  at   176.  

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marital loan proceeds by her online gambling.                                                                                                                                                                                       According to Felicia, however, the loan                                                                                                                                         

proceeds   were   used   primarily   to   pay   the   family's   rent   while   they  lived   in   student  


                                                                  Thesuperior court                                                                        concluded that                                                           Felicia's consolidated student loans                                                                                                                                         were  

 entirely marital debt.                                                                                     Lacking evidence about how to "track, back out, or otherwise                                                                                                                                                                                                                

quantify the value" of the premarital portion, the court was unable to determine "what,                                                                                                                                                                                                                                                                                                                 

if any, of the total loan amount in the context of the subsequent refinancing during the                                                                                                                                                                                                                                                                                                                                 

course of the marriage[] is non-marital."                                                                                                                                                                

                                                                  The superior court also found that Richard had failed to prove that Felicia                                                                                                                                                                                                                                                          

wasted marital assets. The court credited Felicia's testimony that the student loans were                                                                                                                                                                                                                                                                                                                        

used for marital purposes, including her tuition and the couple's rent, noting that the                                                                                                                                                                                                                                                                                                                                  

parties did not otherwise earn enough during the marriage to support themselves.  The                                                                                                                                                                                                                        

court held each party responsible for half the loans' principal and half their interest.                                                                                                                                                                                                                                                                                                                                      

                                                                  Richard appeals the superior court's decision not to subtract the premarital                                                                                                                                                                                                                                         

loan from the consolidated loans and challenges the court's conclusion that Felicia did                                                                                                                                                                                                                                                                                                                                  

not waste marital assets by gambling.                                                                                                                                                     He also raises for the first time an argument that                                                                                                                                                                          

the superior court was biased against him.                                                                                                                                                                       

III.                             STANDARDS OF REVIEW                                                                               

                                                                  A trial court's "equitable division of marital assets involves three steps:                                                                                                                                                                                                                                                                                                 

 (1)   determining what property is available for distribution, (2) finding the value of the                                                                                                                                                                                                                                                                                                                             


property, and (3) dividing the property equitably."                                                                                                                                                                                                                                                                                                   

                                                                                                                                                                                                                                                                           We review the first and second  


 steps, which involve factual findings "as to the parties' intent, actions, and contributions  

                                 3                               Limeres v. Limeres, 320 P.3d 291, 296(Alaska2014) (citing Beals v. Beals,  


 303 P.3d 453, 458 (Alaska 2013)).  


                                                                                                                                                                                                               -3-                                                                                                                                                                                                                      7145  

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to the marital estate" and the "valuation of property," for clear error.                                                                                   We review the              


third step, "the equitable allocation of property," for abuse of discretion.                                                                                               

                                                                                                                                                                     A property  


division is an abuse of discretion if it is clearly unjust; it will also be set aside if it is  



based on a clearly erroneous factual finding or mistake of law. 


                             "We review de novo the question of whether a judge appears biased, which  



is assessed under an objective standard." 

IV.	           DISCUSSION  


               A.	           The Superior Court Did Not Clearly Err When It Found That Felicia's  


                             Premarital Loan Was Transmuted Into Marital Debt Through Loan  



                             Richard first challenges the superior court's decision that responsibility for  


Felicia's student loans should be shared equally.  Felicia obtained student loans from a  


number of sources; these included a 1992 premarital loan with a principal amount of  

               4             Id . (citing           Beals, 303 P.3d at 459).                               The first step may also involve legal                                   

questions with regard to the characterization of property as marital or separate,                                                                                            id., but   

no such questions are raised in this case.                                    

               5	            Id. (citing Beals, 303 P.3d at 459).  


               6             Jones v. Jones, 942 P.2d 1133, 1136 (Alaska 1997) (first citing McDaniel  


v. McDaniel, 829 P.2d 303, 305 (Alaska 1992); then citing Malone v. Malone, 587 P.2d  


 1167, 1167 (Alaska 1978) (per curiam); and then citing Wanberg v. Wanberg, 664 P.2d  


568, 570 (Alaska 1983)).  


               7             Sagers v. Sackinger, 318 P.3d 860, 863 (Alaska 2014).  


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               8                                                                                                      9  

$1,313,  federal loans during the marriage totaling $27,272,                                                            and a state loan during the                    


marriage of $29,610.                                                                                                                                      

                                               In July 2004 she  consolidated several of these loans, including  



the premarital loan, into two new loans.                                            Richard argues that the superior court erred  


when it held him liable for the part of the consolidated loans he says is attributable to  


Felicia's premarital debt.  


                           Generally, a spouse is not liable for the other spouse's premarital debts or  



                         "Whether an initially nonmarital debt transmutes into a marital liability is  



a  question  of  intent  and  acceptance."                                             But  "[d]ebt  incurred  during  marriage  is  


presumptively marital; the party claiming otherwise must show that the parties intended  

             8             In March 1993, when                            repayment of this loan was scheduled to begin,                                        

Felicia owed $1,480.16 including interest; future interest was at eight percent. The 2004                                                                          

loan consolidation paid off $928.42, which was apparently all that remained of the debt.                                                                                      

             9             As of February 2011, $46,738 was owed on the consolidated federal loans.  


             10            By March 2009 the estimated outstanding principal and interest of the  


Alaska Commission on Postsecondary Education loan was $46,341.29.  By February  


2011 the estimate had dropped to $41,642, presumably because Felicia's wages and  


Permanent Fund Dividend were being garnished to pay the loan.  


             11            Debt consolidation pays off the original loans and creates a new loan based  


on the balance of the original loans. See Debt Consolidation, BLACK'S LAW DICTIONARY  


(10th ed. 2014); Doug Rendleman & Scott Weingart,                                                             Collection of Student Loans: A                             

Critical Examination, 20 WASH. & L                                        EE  J. C      IV. R     TS. & S       OC. J   UST. 215, 259-61 (2014),  


             12            AS 25.15.050.  




                           Ginn-Williams v. Williams, 143 P.3d 949, 956 (Alaska 2006), superseded  


in part on other grounds by statute, Gulf Opportunity Zone Act of 2005, Pub. L. No.  


 109-135,  404(a), 119 Stat. 2577, 2633-34 (codified as amended at 26 U.S.C.  152(e)),  


as recognized in Dodge v. Sturdevant, 335 P.3d 510, 511 n.5 (Alaska 2014).  

                                                                                   -5-                                                                            7145

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it to be separate."                      In  Richter v. Richter                     , for example, a couple borrowed money from                                           

the husband's mother to pay off the wife's student loans; upon divorce the husband                                                                                 


argued that his wife should bear sole responsibility for repaying the debt to his mother.                                                                                             


We rejected the husband's argument because "[t]he loan from [the husband's mother]  


was acquired during the parties' marriage and therefore became presumptively marital  



                  The husband did not prove that the couple intended the loan to remain separate;  



he was thus unable to overcome the presumption that the loan was a marital debt. 


                            The consolidated loans in this case, too, were incurred during the marriage  



and were "presumptively marital debt."                                               It was therefore Richard's burden to prove that  


the couple intended to keep separate the amount of the consolidated loans, if any, that  


could be attributed to the premarital debt. But apart fromgenerally denying that he knew  


anything about Felicia's student loans - an assertion the superior court found not  


credible  -  Richard  did  not  present  evidence  that  the  couple  intended  part  of  the  


consolidated  loans  to  remain  separate  debt  of  Felicia's.                                                                  Nor  did  he  provide  an  


evidentiary basis on which the court could calculate what that separate amount might be.  


The  superior  court  did  not  clearly  err  when  it  found  that  the  full  amount  of  the  


consolidated loans was marital debt.  

              14            Richter v. Richter                   , 330 P.3d 934, 938 (Alaska 2014).                          



                            Id. at 938-40.  



                            Id. at 939.  



                            Id. at 939-40.  

              18            See id.        at 939.   

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              B.	           The Superior Court Did Not Abuse Its Discretion When It Equally                                                                        

                            Allocated Responsibility For The Marital Debt.                                                

                            Richard next challenges the superior court's conclusion that he failed to                                                                           

prove that Felicia wasted marital assets on gambling.                                                            Equal division of marital assets                       


and liabilities is presumptively correct,                                                                                                                                        

                                                                                    but the superior court may vary this formula in  


order to reach an equitable distribution; a party's waste of marital assets may be one  

                                  20                                                                                                                                    21  


reason  to  vary.                          Although  marital  waste  typically  occurs  post-separation,                                                                      we  


concluded in Jones v. Jones  that gambling losses incurred during marriage could be  



treated as waste if "there has been unreasonable depletion of marital assets."                                                                                  But proof  



of  gambling  alone  does  not  establish  waste.                                                        We  have  cautioned  judges  against  


applying their own personal "value judgments concerning the nature of discretionary  



spending during a marriage";                                     "[w]hat seems wasteful to one party may be a treasured  

              19            Limeres v. Limeres                      , 320 P.3d 291, 296 (Alaska 2014) (citing                                               McLaren v.   

McLaren, 268 P.3d 323, 332 (Alaska 2012)).                                      

              20            See Merrill v. Merrill, 368 P.2d 546, 547 n.4 (Alaska 1962) (enumerating  


factors for the trial court to consider); see also AS 25.24.160(a)(2)(E); Jones v. Jones,  


942 P.2d 1133, 1139 (Alaska 1997).  


              21	           Jones, 942 P.2d at 1139.  


              22            Id. ; AS 25.24.160(a)(2)(E). "Unreasonable depletion" typically requires a  


showing that a party used marital property with an intent to deprive the other spouse of  


his or her proportionate share of the property during a time when the marriage was  


breaking down.  Jones, 942 P.2d at 1140.  


              23            Jones, 942 P.2d at 1139-40 & n.7.  


              24            Id. at 1139.  


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source of solace to another, and it should generally not be for a judge to say which is                                                                                 



                           Richard bore the burden of proving that Felicia wasted marital assets by  



                          He testified that he was unaware of the amount of the loans, that Felicia  


used the proceeds to fund her gambling addiction, and that he was unaware of the extent  


of her gambling losses until he was preparing for trial.  Felicia countered that Richard  


was "spending the rent money out of the joint account on gambling," but she also  


testified that the student loans were used to pay rent while the couple lived in student  


housing, "and [Richard] was well aware of that."  


                           The  superior  court's  written  findings  considered  both  Richard's  and  


Felicia's testimony about the marital loans and concluded that Felicia's testimony about  


how the money was used was more credible, especially in light of the parties' tax returns,  


low income, receipt of public assistance, and use of student housing during part of the  



marriage.  Factual and credibility assessments are the responsibility of the trial court, 


and we see no clear error in the superior court's findings.  The superior court did not  


abuse its discretion when, on the basis of those findings, it allocated the marital student  


loan debt equally.  

             25           Id.  

             26           Brandal v.              Shangin,   36 P.3d                    1188,  1194  (Alaska 2001)                              ("[T]he party   

seeking deviation from the [equal division of marital property] bears the burden of                                                                                    

showing that the property division is clearly unjust." (citing                                                         Julsen v. Julsen                , 741 P.2d     

642, 645 (Alaska 1987))).           

             27           Lentine  v.  State,  282  P.3d  369,  375-76  (Alaska  2012)  (quoting In  re  


Adoption of A.F.M. , 15 P.3d 258, 262 (Alaska 2001)).  


                                                                                   -8-                                                                           7145

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                  C.                The Superior Court Did Not Demonstrate Bias Against Richard.                                                                                                  

                                    Finally, Richard argues that the superior court demonstrated bias against                                                                                                      

himwhen it "refused to allocate the premarital student loan debt to [Felicia], even though                                                                                                                          

neither party disputed this debt belonged to [her]," and when it failed to sua sponte                                                                                                                               

 schedulean additional evidentiary                                                        hearing once it concluded "that this premarital student                                                                   

loan debt was too difficult to calculate" on the existing record. But "judicial bias should                                                                                                                          


not be inferred merely from adverse rulings";                                                                                                                                                                       

                                                                                                                              besides, we uphold the superior court's  


allocation decision.  And the court was not required to give Richard another chance to  


prove at a post-trial evidentiary hearing what he failed to prove at trial - even if Richard  



had asked for such a chance, which he did not do. 


                                    Our own review of the record "fails to reveal any unfairness in the conduct  



of the [proceedings]" or any instances of bias.                                                                               Richard's arguments appear to be "little  



more than evidence of [his] general dissatisfaction with the court's rulings,"                                                                                                                                     and we  


conclude that they are without merit.  

V.                CONCLUSION  


                                    The judgment of the superior court is AFFIRMED.  

                  28               Kinnan v. Sitka Counseling                                                  , 349 P.3d 153, 160 (Alaska 2015) (quoting                                                      

Khalsa v. Chose                             , 261 P.3d 367, 376 (Alaska 2011)).                                         

                  29                Indeed, Richard's counsel admitted in closing argument that "[w]e cannot  


determine how much additional" debt in interest and penalties might be associated with  


the premarital student loan.  


                  30                Ward v. Urling, 167 P.3d 48, 58 (Alaska 2007) (alteration in original)  


(quoting Long v. Long, 816 P.2d 145, 156 (Alaska 1991)).  


                  31               Id . (citing Lacher v. Lacher, 993 P.2d 413, 422 (Alaska 1999)).  


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