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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Thomson v. Thomson (5/19/2017) sp-7173

Thomson v. Thomson (5/19/2017) sp-7173, 394 P3d 604

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

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                       THE SUPREME COURT OF THE STATE OF ALASKA                                       

DAVID  F.  THOMSON,                                                   )  

                                                                      )     Supreme  Court  No.  S-16155  

                                 Appellant,                           )  


                                                                      )     Superior Court No.  1JU-06-00608 CI  

           v.                                                         )  


                                                                      )     O P I N I O N  


MARJORIE W. THOMSON,                                                  )  


                                                                      )     No. 7173 - May 19, 2017  

                                 Appellee.                            )  



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


                      Judicial District, Juneau, William B. Carey, Judge.  


                      Appearances: Michael A. D. Stanley, Juneau, for Appellant.  


                      Paul H. Grant, Juneau, for Appellee.  


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


                      and Carney, Justices.  


                      CARNEY, Justice.  



                      In  2006 a divorcing  couple agreed to  divide the husband's retirement  


benefit  based  on  its  present  value  and  implemented  the  division  with  a  Qualified  


Domestic Relations Order (QDRO).  In 2014, after the husband received an updated  


benefit projection that calculated the wife's share of the benefit using his salary at  


retirement instead of at divorce, he sought to modify the QDRO.  He asked the court to  


require that her benefit be based upon the same salary data used in the 2006 calculation.  

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

The superior court denied the motion.                               Because the settlement did not contain clear                        


language establishing the use of the earlier salary as required by                                        Hartley v. Hartley            ,  we  





           A.         The 2006 Divorce And Property Settlement  


                      David and Marjorie Thomson married in 1982 and permanently separated  


on December 31, 2004. Working with a mediator, they developed a property settlement  


agreement that was  incorporated  into  their  August 9,  2006  divorce  decree.                                                     David  


retained the marital home, so the property settlement assigned about 53% of the net  


estate to Marjorie to help her establish adequate housing for the couple's minor children.  


They agreed that this division "fairly allocate[d] the economic effect of their divorce" as  


required by AS 25.24.160(a)(4).  


                      Among the assets divided were retirement accounts belonging to both,  


including their StateofAlaska Public Employees' Retirement System(PERS) retirement  


accounts.  David was still working for the State and had accrued a little more than 20  


years of PERS service credit when the parties separated.  The parties agreed on a value  


for David's PERS account based on its present value as calculated by a third party  


company.  The company used David's most recent average earnings for 2003-2005 to  


calculate a projected benefit if he retired at the expected date of April 1, 2015.  It then  


determined that the March 2006 present value of his benefits was $286,882 and that the  


marital portion was $271,316.  That amount was based on the proportion of David's  


PERS  service  that  occurred  between  their  1982  marriage  and  their  separation  on  


December 31, 2004.  



                      205 P.3d 342, 350 (Alaska 2009).  

                                                                      -2-                                                                   7173  

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                    The parties allocated the agreed-upon value of David's PERS benefit along  


with the agreed values of their other assets between themselves in a chart of their marital  


assets.  Once they reached what they considered a fair distribution of the entire estate in  


dollar terms, they calculated what percentageofDavid's PERSbenefit was on Marjorie's  


side of the ledger.  


                    Based on these calculations, the property settlement agreement provided  


that Marjorie would receive 46.96% of "the marital portion of David's account" to be  


distributed  via  a  QDRO.                   The  settlement  also  provided  that  each  party  would  


"solely . . . retain other property acquired after their 31 December 2004 permanent  


separation. That property is agreed to be non-marital and neither party is making a claim  


to it."  The QDRO submitted by the parties said, in relevant part, that "Marjorie W.  


Thomson, as the Alternate Payee, shall receive from the Plan, from the final monthly  


retirement benefit which otherwise would be payable to the Member, 46.96% of the total  


monthly benefit which is based on credited service accrued from August 7, 1982 to  


December 31, 2004." (Emphasis in original.)  The court signed this QDRO along with  


the divorce decree and settlement on August 9, 2006.  


          B.        The Present Dispute Over The QDRO Distribution Amount  


                    In the fall of 2014 David obtained an updated projection of his PERS  


benefits from the state Division of Retirement and Benefits (DRB).   The projection  


estimated his benefits as of a retirement date of May 1, 2015 and showed how those  


benefits would be affected by the QDRO.  The benefits were calculated using David's  


average  earnings  for  his  final  three  years  of  employment,  2013-2015.                                     Due  to  his  


significantly increased salary and about ten additional years of credited service, David's  

                                                               -3-                                                         7173

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retirement benefit was projected at about 80% more than the 2006 projection.   Under  

the QDRO Marjorie would receive "nearly double" what David had expected based on  


the earlier projection.   When David questioned why the salary years from the 2006  


projection were not used to calculate Marjorie's payment, DRB reportedly responded  


that he might need to amend the QDRO to do so.  


                      David  then  moved  to  amend  the  QDRO  to  have  Marjorie's  benefit  


calculated using the salary years from the 2006 projection.   He argued that such an  


amendment would "conform [it] to the parties' property settlement and effectuate the  


agreed distribution of David's PERS benefit." He argued that the parties had relied upon  


the 2003-2005 salary data when they divided their assets.   According to David, the  


settlement  language  and  QDRO  demonstrated  that  Marjorie's  payment  had  to  be  


calculated based on the 2006 figures "so that her share would be limited to the 'marital  


portion' of his account."  He further argued that using the 2014 figures would allow her  


to benefit from non-marital property he had acquired after their divorce, contrary to their  


settlement agreement.  


                      Marjorie responded that Hartley v. Hartley barred David's interpretation  


of the settlement and his proposed amendment of the QDRO:  "Absent clear language  


to the contrary in a property division agreement, a court should base the division of  


retirement benefits on the employee spouse's high-three salary years at the time of  




                      The superior court agreed with Marjorie and found the Hartley rationale  


"persuasive and controlling in this instance."  It further stated that "no language in the  


           2          David   had   remarried,   so   this   80%   increase   in   his   projected   benefit  

accounted for a survivor benefit for his new wife. Without the survivor benefit, the 2014                                                

projected benefit was more than two and a half times the 2006 projection.                                                     

           3          Hartley, 205 P.3d at 350.  


                                                                      -4-                                                               7173

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

QDRO or in the property agreement . . . requires a different conclusion" and denied the                                                                                                                          

motion   to   amend.     David   moved   for   reconsideration,  arguing   that   the   court   had  

overlooked evidence of the parties' intent and that its decision would result in Marjorie                                                                                                          

receiving more of the marital estate than the parties had agreed.                                                                                                     The superior court                   

denied the motion because the agreement did not contain the clear and unambiguous                                                                                                     

language required by                                  Hartley.   

                                 David appeals.   

III.             STANDARD OF REVIEW                             

                                 "When the parties have reached a settlement as to property division, '[w]e                                                                                                

apply basic contract interpretation principles to interpret a property division agreement                                                                                                      



incorporated into a divorce decree.' "                                                           "We treat the interpretation of contract language  



as a question of law and interpret the language de novo." 

IV.              DISCUSSION  

                                 Interpretation of the parties' property settlement agreement is the central  


issue before us. Interpretation of such an agreement is governed by contract principles,6  


which require us "to give effect to the reasonable expectations of the parties."7                                                                                                                          If the  


contract language is not ambiguous, "we decide the meaning of the contract as a matter  


                 4               Herringv. Herring                              ,373P.3d521,528(Alaska2016) (alteration                                                                      in original)  

(quoting  Cook v. Cook                                   , 249 P.3d 1070, 1077 (Alaska 2011)).                                         

                 5               Id. (alteration omitted) (quoting Cook, 249 P.3d at 1077).  Though David  


also raises a question of fact - the parties' intent - only David introduced extrinsic  


evidence, and the superior court made no factual findings for us to review.  


                 6                Villars v. Villars, 277 P.3d 763, 768 (Alaska 2012) (citing Zito v. Zito, 969  


P.2d 1144,1147 n.4 (Alaska 1998)).  


                 7               Id. (quoting Knutson v. Knutson, 973 P.2d 596, 600 (Alaska 1999)).  


                                                                                                         -5-                                                                                                7173

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


of law."           "An ambiguity exists only where the disputed terms are reasonably subject to                                                                   

differing interpretation after viewing the contract as a whole and the extrinsic evidence                                                            

surrounding the disputed terms."                               9  


                          In Hartley we established a rule governing how courts interpret property  

                                                                                                   10    In that case a divorcing couple  


agreement provisions that divide retirement assets. 

agreed to divide a retirement account without specifying the salary years to be used in  

calculating the benefit amount.11   The husband objected to the superior court's adoption  


of a QDRO that explicitly based the calculation on his three highest paid salary years at  


retirement.12             We concluded that the "marital foundation theory"13  was "generally the  


most equitable" approach to dividing retirement benefits and held that, "[a]bsent clear  


language to the contrary  in a property division agreement, a court should base the  


             8           Krushensky v. Farinas                       , 189 P.3d 1056, 1060 (Alaska 2008) (citing                                         Keffer  

v.  Keffer, 852 P.2d 394, 397 (Alaska 1993)).                           

             9            Villars, 277 P.3d at 768-69 (quoting N. Pac. Processors, Inc. v. City &  


Borough of Yakutat, Alaska, 113 P.3d 575, 579 (Alaska 2005)).  


             10           205 P.3d 342, 349-50 (Alaska 2009).  


             11          Id. at 345-46.  


             12          Id. at 346.  


             13           "This theory reasons 'that a post-divorce merit increase is based upon the  


employee's entire history of service to the employer.  In other words, the post[-]divorce  


increases are built upon a foundation of prior marital efforts' and therefore the increases  


are not  separate property.  . . . [T]his approach [is]  'better policy' because  it  'avoids  


undervaluation of contributions made early in a marriage' and 'gives more dollars to the  


spouse who assisted in the development of the employee's career, and less dollars to the  


spouse who was the passive beneficiary of that career after it was established.' "  Id. at  



at   171,   183  (3d  ed.  2005)).  

                                                                                -6-                                                                         7173

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division of retirement benefits on the employee spouse's high-three salary years at the                                                     

time of retirement."             14  

                      David's PERS is a defined benefit plan.  Under a defined benefit plan, a  


                                                                                                    15   The payment's amount  

retired employee "is entitled to a fixed periodic payment."                                                                          


generally dependsontheemployee's prior salary and length of service.16  David's benefit  


is based on his years of service and his highest average monthly salary at the time of  




                      The Thomsons decided to distribute the marital portion of David's benefit  


using  the  "deferred  distribution"  method,  which  distributes  "the  benefits  actually  


received in the future."17  A deferred distribution of benefits is implemented via a QDRO,  


which does not add to or modify an agreement to distribute benefits but "simply enforces  


                                                                                              18   Here the parties agreed that  

a court order calling for division of retirement benefits."                                                                                


Marjorie was entitled to 46.96% of the marital portion of David's PERS benefit and  


implemented the agreement via a QDRO.  David now disputes what average monthly  


salary should be used to calculate Marjorie's share of the benefit.  


                      The Hartley rule governs the interpretation of the Thomsons' settlement  


agreement, as the superior court rightly concluded.  David briefly objects that Hartley  


should not apply because it had not been decided at the time of settlement. But Hartley 's  


           14         Id.  at 349-50.   

           15         Id.  at 347 (quoting            Comm'r, Internal Revenue v. Keystone Consol. Indus.,                            


Inc., 508 U.S. 152, 154 (1993)).  

           16         Id.  

           17         Id. at 348.  


           18         Zito  v.  Zito,  969  P.2d  1144,  1146  (Alaska  1998)  (citing  Wahl  v.  Wahl,  945  

P.2d   1229,   1232  (Alaska   1997)).  

                                                                      -7-                                                               7173

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

interpretive rule does not depend on the parties' awareness of it, as demonstrated by                                                     


Hartley  itself.                                                                                                                     

                           Without clear language requiring the use of David's 2003-2005 salary  


data, Marjorie's share must be calculated based on David's actual benefit, using his  


highest salary data at retirement. David also argues that several specific phrases provide  


the "clear language" requiring the use of the 2003-2005 salary data.  We disagree and  


address each of his arguments in turn.  


                      David argues that the settlement's express statement that Marjorie has a  


46.96% interest in the "marital portion" of David's PERS account and the QDRO's  

                                         20  that her interest is "based on credited service accrued from  


corresponding statement 

August 7, 1982 to December 31, 2004" prohibit using his post-separation salary to  


calculate her benefit.  He argues that these statements not only limit Marjorie's share to  


the years of service credit accrued during the marriage but also to a benefit calculated  


based on his salary level during the marriage.   But neither the meaning of the term  


"marital portion," nor the dates used in the QDRO to calculate Marjorie's share, support  


David's claim.  


                      The standard meaning of "marital portion" or "marital share" in Alaska  


involves application of the coverture fraction,  which "is calculated by dividing the  


number of years worked during the [marriage] by the total number of years worked."21  


           19         Hartley, 205 P.3d at 347-50.         



                      Although both parties discussthetermsoftheQDRO, therelevantlanguage  


under Hartley is that of the settlement agreement. See Hartley, 205 P.3d at 350. See also  


Zito, 969 P.2d at 1146.  

           21         Engstrom v. Engstrom, 350 P.3d 766, 770 (Alaska 2015) (quoting Hansen  


v. Hansen, 119 P.3d 1005, 1015 (Alaska 2005)) ("Determining the [retirement health]  


benefits' marital portion requires calculation of the 'coverture fraction.' ").   Accord  


Faulkner v. Goldfuss, 46 P.3d 993, 1003 (Alaska 2002) ("The marital share of a pension  



                                                                     -8-                                                              7173

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

David's   proposed   definition   of   "marital   portion"   would   limit  a   former   spouse's  

retirement benefits to the salary level earned during the marriage, but he has cited no                                                     

cases supporting this additional meaning.                            22  


                      The QDRO's listing of the marriage and separation dates provides no  


reason to reevaluate the meaning of "marital portion" in the agreement.  It indicates the  


time period used to calculate the marital portion of the benefit.   The QDRO's dates  


establish  the  numerator  of  the  coverture  fraction,  while  David's  total  period  of  

                                                                                                      23   This understanding of  


employment would establish the denominator once he retired. 

the QDRO's use of the dates is bolstered by other language in the QDRO explicitly  


indicating that David's final benefit - calculated according to his three highest paid  


salary years at retirement -will be used in calculating Marjorie's share: Marjorie "shall  


receive . . . 46.96%  of the total monthly benefit which is based on credited service  


accrued" during the marriage.24  (Emphasis added.)  


           21         (...continued)  


is typically determined by the coverture fraction . . . ."); Wainwright v. Wainwright, 888  


P.2d 762, 763 (Alaska 1995) ("The marital portion of the pension will be determined by  


a so-called coverture fraction of 75/240.   Seventy-five is the number of months of  


Robert's qualified employment during the marriage.  Two hundred and forty will be the  


total number of months of qualified employment at the time of vesting.").  

           22         Cf. Faulkner, 46 P.3d at 1003 n.36 (using "marital share" to refer to a  


portion of the actual benefit at retirement).  


           23         See Engstrom, 350 P.3d at 770.  


           24         In addition, the dates of marriage do not correspond to the salary years  


David claims are required.   The QDRO correctly states that the parties permanently  


separated at the end of 2004, but David argues Marjorie's benefit must be calculated  


based  on  his  average  salary  in  2003-2005  - fully  one-third  of  which  is  after  the  


marriage.  The parties used the permanent separation date, December 31, 2004, as the  


end of the marriage for property division purposes. See Hanlon v. Hanlon, 871 P.2d 229,  



                                                                      -9-                                                              7173

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

                              David also argues that a settlement clause excluding from division any                                                                                       

property acquired after separation establishes that Marjorie is not entitled to receive a                                                                                                       

benefit calculated using his post-separation salary.                                                               That paragraph states:                             "The parties   

agree solely to retain other property acquired after their 31 December 2004 permanent                                                                                      

separation. That property is agreed to be non-marital and neither party is making a claim                                                                                             

to it."        David argues that calculating Marjorie's monthly payment using his salary at                                                                                                    

                                                                                                                                           25     But by its terms, this  

retirement is inconsistent with this portion of the agreement.                                                                                                                             

paragraph applies to "other property" acquired after separation.  (Emphasis added.)  It  


therefore does not apply to the marital portion of David's PERS account, which was by  


definition  acquired  before  separation  and  was  discussed  earlier  in  the  agreement.26  


               24             (...continued)  


231 (Alaska 1994). David explains in his brief that this use of post-separation salary was  


acceptable because the coverture fraction was applied to ensure Marjorie received only  


a share of the marital portion.  This is precisely the reason that Marjorie's actual benefit  


can becalculatedusingpost-separation salary withouther receivingmorethan theparties  


agreed on in the settlement agreement.  

               25             David also argues that "PERS service credit that [he] accrued since the  


parties' divorce undeniably constitutes non-marital property under this Paragraph 6."  


However, Marjorie has never argued that she should be entitled to the years of service  


credit David accrued after their separation, nor did the court's order allow her to receive  


any  benefits  from those  years of  service  credit.                                                                The  use of  the  coverture  fraction  


prevents that.  Service credit and salary are separate elements of the benefit calculation.  


               26             As we have explained, the marital foundation theory establishes that the  


increased value of the marital portion of a retirement benefit remains marital property,  


so the clause does not establish that the increased value based on David's higher post- 


separation salary is separate property.  See Hartley v. Hartley, 205 P.3d 349-50 (Alaska  



                                                                                             -10-                                                                                       7173

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

Therefore this provision does not contain "clear language" requiring the use                                                              of the earlier     

salary years.          27  

                         Because the settlement does not contain the clear language required by  


Hartley, we conclude that the superior court did not err when it denied David's motion.  


We therefore do not reach David's other claims regarding the parties' intent.  


V.           CONCLUSION  

                         The order of the superior court is AFFIRMED.  


             27          See id. at 350.  


                                                                             -11-                                                                            7173  

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