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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Sharon Thompson v Everett Thompson (11/29/2019) sp-7421
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
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
SHARON THOMPSON, )
) Supreme Court No. S-17262
Appellant, )
) Superior Court No. 3NA-17-00007 CI
v. )
) O P I N I O N
EVERETT THOMPSON, )
) No. 7421 - November 29, 2019
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Naknek, Christina Reigh, Judge.
Appearances: Jacob A. Sonneborn, Law Office of Jacob
Sonneborn, Anchorage, and A. William Saupe, Ashburn &
Mason, Anchorage, for Appellant. Kara A. Nyquist,
Anchorage, for Appellee.
Before: Bolger, Chief Justice, Winfree, Stowers, Maassen,
and Carney, Justices.
CARNEY, Justice.
I. INTRODUCTION
A divorced wife challenges the superior court's child custody
determination, marital property division, and child support order. Because we conclude
that the court neither clearly erred nor abused its discretion when it awarded joint legal
and shared physical custody, we affirm the custody determination. But we vacate and
remand the child support order because it does not include sufficient findings to support
----------------------- Page 2-----------------------
the calculation of the parents' income. And we vacate and remand the property division
because the court improperly separated a fishing vessel fromthe rest of the marital estate.
Finally, we vacate and remand the attorney's fees award for consideration in light of the
court's recalculation of the marital estate and the parties' incomes.
II. FACTS AND PROCEEDINGS
A. Facts
Sharon and Everett Thompson married in 2011. They have two minor
children, a son born in 2011 and a daughter born in 2015.
Everett is a commercial fisherman living in Naknek. He owns two fishing
vessels, one of which he purchased and fully paid off before he and Sharon married; the
second vessel, the F/V N ORTHERN FLYER, was purchased during the marriage.
Everett and Sharon began dating in 2010; soon afterward Sharon moved
into Everett's home, which he had purchased in 2001, and which is situated on a Native
1
allotment that cannot be transferred to a non-Native buyer.
Although she worked in
various jobs before they married, Sharon stayed home with the children during much of
the parties' marriage. In financial documents filed in superior court Sharon indicated her
primary occupation was film production.
B. Proceedings
In April 2017 Sharon filed for divorce, seeking primary physical and sole
legal custody of their children. Everett answered the following month, asserting that he
should have sole legal and primary physical custody as well as interim possession of the
marital home. Sharon and Everett negotiated an interim custody agreement, which the
1 See former Alaska Native Allotment Act, 43 U.S.C. §§ 270-1 to 270-3
(repealed 1971); see also 43 U.S.C. § 1634(a)(1) (2012) (providing for approval of
allotment applications still pending upon repeal of Alaska Native Allotment Act and
passage of Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629h (2012)).
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court approved in December 2017. Their agreement provided for joint legal custody and
established a schedule for alternating physical custody every two days.
1. Hearings relevant to custody determination
a. January 2018
In mid-January 2018 Sharon petitioned for ex parte domestic violence
2
protective orders against Everett on behalf of herself and the children.
She alleged that
she had reason to believe their daughter may have been sexually abused while in
Everett's custody, though she did not allege that Everett had committed sexual abuse;
Sharon also alleged Everett had verbally and emotionally abused her. The court granted
Sharon a short-term protective order against Everett and granted her temporary custody
of the children. But the court did not issue protective orders on behalf of the children,
as it found Sharon had not established probable cause that Everett had committed a crime
3
of domestic violence against them.
Everett moved to modify the temporary custody order, under which his
visits with the children had to be supervised. He sought to return to the alternating
custody schedule in the parties' interim custody agreement.
A hearing was held over January 24 and 25 on Everett's modification
motion. Sharon and Everett agreed that the children had been in Everett's custody until
he had dropped them off at daycare on the morning of January 8, after which Sharon's
two days of custodial time started. Sharon testified that later on January 8 she had
observed that their daughter had unusual vaginal discharge and "a bright red . . . nick"
2 See AS 18.66.110 (governing ex parte and emergency protective orders).
3 See AS 18.66.110(a) (providing court shall issue ex parte protective order
if it finds that petition "establishes probable cause that a crime involving domestic
violence has occurred" and order is "necessary to protect the petitioner from domestic
violence").
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on her genital area. Sharon had taken her to a health clinic in Naknek the following day
for an examination, which revealed a three-millimeter laceration near the girl's vaginal
opening. Sharon also testified that shortly afterward she took the child to Dillingham for
a more thorough examination at a Child Advocacy Center (CAC), including swabs for
4 Everett testified that he had supervised the
DNA and sexually transmitted infections.
children during his custodial time and that "nothing happened in [his] care"; he
suggested that the girl's symptoms could have been caused by a yeast infection or by her
accidentally scratching herself. The court restored Everett's unsupervised visits with
the children, but allowed Sharon to retain temporary custody for the duration of the
short-term protective order.
The court held a hearing on Sharon's request for long-term protective
orders on January 30, 2018. Sharon reiterated what she had observed on her daughter
on January 8 and 9; Everett expressed skepticism that the symptoms were the result of
sexual abuse. The court denied long-term protective orders for Sharon and the children,
finding that Sharon had not established by a preponderance of the evidence that Everett
had committed an act of domestic violence against any of them.
b. June 2018
In late May 2018 Sharon moved to modify interim custody, alleging that
their daughter again appeared to have been sexually abused while in Everett's custody.
Sharon also revivedher previous sexual abuse allegation based on the DNA result, which
showed male DNA was present on the child but insufficient for analysis. Sharon accused
Everett of failing to respond to the abuse allegations appropriately and of "minimiz[ing]
them and repeatedly suggest[ing] that Sharon is the perpetrator." Everett opposed her
4
The DNA results had not yet come back at the time of the protective order
modification hearing.
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motion, asserting that Sharon was attempting to interfere with his custodial time by
alleging abuse; he emphasized that no Office of Children's Services (OCS) case or
criminal charges had been filed and that he had voluntarily submitted a sample of his
own DNA when asked to do so by law enforcement.
The court held a hearing in early June on the modification motion. The
nurse practitioner who had examined the girl at the Naknek clinic in January testified that
she had observed an injury "consistent with penetration" and that Everett, who visited
the clinic shortly after the exam, had seemed more concerned about what Sharon had told
clinic staff than about the injury. The nurse practitioner also testified that she did not
know when the injury had occurred, but noted that "in children, injuries to the genitalia
usually heal within 72 hours." Everett testified that he "would take it very seriously" if
he believed his child had in fact been abused but that he had "no indication that
something may have been wrong with [her]" and had never seen signs of her being
sexually abused while in his care. He stated that he "still d[id] not believe that she was
sexually assaulted." He suggested that the laceration may have come from the child's
own fingernail and that the male DNA may have been transferred from her brother or
from someone with whom she had contact while in Sharon's custody.
A few days later the court issued an order modifying interim custody. The
court maintained the two-day alternating schedule for their son, but required that their
daughter spend nights with Sharon and only be with Everett from 9:00 a.m. to 7:30 p.m.
on his custodial days. The court also prohibited Everett from leaving the children in any
third party's care, aside from their daycare, during his custodial time.
2. Divorce proceedings
A five-day divorce and custody trial was held in early August 2018. In late
August the court issued its decree of divorce, child support order, and findings of fact
and conclusions of law.
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a. Custody determination
The court awarded Sharon and Everett joint legal and shared physical
custody of both children. It modified the custody schedule from alternating every two
days to alternating every three or four days. The court found that the timing and cause
of their daughter's injury had not been "conclusively establish[ed]" and that Everett had
credibly testified at trial that he appreciated the seriousness of sexual abuse allegations
and could respond appropriately. The court therefore found that both parents were
equally capable of meeting the children's needs.
b. Child support
Having determined that the parents would share custody, the court next
considered child support. The court based its determination of Everett's income for child
support purposes on his 2016 tax return, which it found provided "a reasonable
representation" of his fluctuating fishing income. Based on his tax return the court found
5
that Everett's adjusted annual income for child support purposes was $61,185. The
court reached this figure by applying the formula set forth in Alaska Civil Rule
90.3(a)(1): it subtracted the deductions listed on Everett's federal income taxes, added
income fromPermanent Fund and Native corporation dividends he received, and applied
6
"allowable deductions." The court found that Sharon's income from "her small
business, contract work[,] and a variety of part-time jobs" generally fluctuated between
$15,000 and $25,000 and determined that her adjusted annual income for child support
purposes was $19,808 based on "her work history, . . . degrees[,] and current
employment status." The court ordered Everett to pay $698 per month in child support.
5 See Alaska R. Civ. P. 90.3 (governing child support awards). Rule
90.3(a)(1) defines "adjusted annual income" as "the parent's total income from all
sources minus" certain listed deductions.
6 See Alaska R. Civ. P. 90.3(a)(1).
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It later amended this amount to $807 per month based on minor alterations to the custody
schedule after reconsideration.
c. Property division
The court then turned to dividing the marital estate. It found that although
Sharon's college degree and skills made her employable, Everett's earning capacity was
greater than hers due to his long-established fishing business. The court also noted that
Everett, as an Alaska Native, had healthcare coverage through Indian Health Services,
while Sharon did not.
The court found the house where the family had lived to be Everett's
separate property, though it awarded Sharon $5,000 for her contributions to its
renovation. The court also found that both of Everett's fishing permits and one of his
boats - which he had "purchased, paid off[,] and overhauled . . . prior to the
marriage" - were his separate property. The court determined that the second boat, the
F/V N
ORTHERN FLYER, was marital property because it had been purchased during the
marriage. However, because "Everett's extensive pre-marital experience in the fishery
provided him with the opportunity and resources to purchase" the boat, and because he
had contributed disproportionately to the "purchase, maintenance[,] and operation of the
vessel," the court awarded 70% of the equity in the F/VN ORTHERN FLYER to Everett and
30% to Sharon.
For the rest of the marital estate, the court found that balancing the equities
warranted awarding 55% to Sharon and 45% to Everett. Based on the property that each
party retained, the 55/45 division resulted in Everett owing Sharon an equalization
payment of $84,537.60. The court ordered Everett to make the equalization payment
within four years of the date of its order, with interest accruing at 5% annually.
d. Attorney's fees
Sharon had filed a motion for interim attorney's fees, arguing that her
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financial circumstances left her unable to litigate "on an equal footing" with Everett. She
later argued that she was entitled to an award of enhanced attorney's fees because of
Everett's "vexatious conduct." The court denied the request for enhanced fees, finding
that Everett and his counsel's conduct throughout the case did not "[rise] to the level . . .
that demands enhanced fees."
The court also found that its 55/45 division of the bulk of the marital estate
"place[d] the parties on equal ground to afford the litigation in this case" and declined
to issue a fee award separate from the property division.
Sharon appeals, challenging the custody determination, the child support
award, the property division, and the lack of an attorney's fees award.
III. STANDARD OF REVIEW
We have recognized superior courts' "broad discretion in child custody
decisions, and we will reverse only if findings of fact are clearly erroneous or if the
7 Clear error exists "when a review of the record
superior court abused its discretion."
leaves [us] with a definite and firm conviction that the superior court has made a
mistake."8 "An abuse of discretion exists where the superior court 'considered improper
factors in making its custody determination, failed to consider statutorily mandated
factors, or assigned disproportionate weight to particular factors while ignoring
others,' "9 or where "the superior court's decision denied a substantial right to or
7 Geldermann v. Geldermann, 428 P.3d 477, 481 (Alaska 2018) (quoting
Riggs v. Coonradt, 335 P.3d 1103, 1106 (Alaska 2014)).
8 Id. (alteration in original) (quoting Riggs, 335 P.3d at 1106).
9 Id. (quoting Riggs, 335 P.3d at 1106).
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substantially prejudiced a party." 10
11
"Child support awards are reviewed for abuse of discretion." However,
we review the underlying factual findings, "including findings regarding a party's
12 And "[w]hether the superior court applied the correct legal
income," for clear error.
standard to its child support determination is a question of law" reviewed de novo.13
"Whether there are sufficient findings for informed appellate review is a question of
law."14
Division of marital property involves three steps: "(1) deciding what
specific property is available for distribution, (2) finding the value of the property, and
(3) dividing the property equitably."15 "[C]haracterization of property as separate or
marital may involve both legal and factual questions."16 We review underlying factual
findings, including findings as to the parties' "contributions to the marital estate" and
10 Id. (quoting Ronny M. v. Nanette H. , 303 P.3d 392, 400 (Alaska 2013)).
11 Ruppe v. Ruppe , 358 P.3d 1284, 1289 (Alaska 2015) (quoting Heustess v.
Kelley-Heustess, 259 P.3d 462, 467 (Alaska 2011)).
12 Shanigan v. Shanigan, 386 P.3d 1238, 1240 (Alaska 2017) (quoting
Wilhour v. Wilhour, 308 P.3d 884, 887 (Alaska 2013)).
13 Geldermann, 428 P.3d at 482 (alteration in original) (quoting Limeres v.
Limeres, 320 P.3d 291, 295 (Alaska 2014)).
14 Horne v. Touhakis, 356 P.3d 280, 282 (Alaska 2015) (quoting Hooper v.
Hooper, 188 P.3d 681, 685 (Alaska 2008)).
15 Engstrom v. Engstrom, 350 P.3d 766, 769 (Alaska 2015) (quoting Beals v.
Beals, 303 P.3d 453, 458 (Alaska 2013)).
16 Id. (quoting Beals, 303 P.3d at 458-59).
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"inten[t] to transmute separate property into marital property," for clear error.17 Legal
conclusions are reviewed de novo.18
"[V]aluation of assets 'is a factual determination
19 "We review the trial court's third step, the equitable
that we review for clear error.' "
allocation of property, for an abuse of discretion" and "will reverse only if the division
20
[was] clearly unjust."
Trial courts have "broad discretion" over attorney's fees awards in divorce
actions, and we will reverse an award of attorney's fees only if it is "arbitrary, capricious,
manifestly unreasonable, or stems from an improper motive."21
IV. DISCUSSION
A. The Superior Court Did Not Err By Awarding Joint Legal And
Shared Physical Custody.
The superior court is entitled to broad discretion in making a child custody
determination, provided it considers the appropriate statutory and other factors and does
22
not consider inappropriate ones. Alaska Statute 25.24.150 sets forth a non-exclusive
list of factors the court must take into account:
(1) the physical, emotional, mental, religious, and social
17 Hall v. Hall, 426 P.3d 1006, 1009 (Alaska 2018) (alteration in original)
(first quoting Beals, 303 P.3d at 459; then quoting Hanson v. Hanson, 125 P.3d 299, 304
(Alaska 2005)).
18 Engstrom, 350 P.3d at 769.
19 Id. (quoting Beals, 303 P.3d at 459).
20 Id. (alteration in original) (first quoting Beals, 303 P.3d at 459; then quoting
Ethelbah v. Walker, 225 P.3d 1082, 1086 (Alaska 2009)).
21 Ruppe v. Ruppe, 358 P.3d 1284, 1289 (Alaska 2015) (quoting Stevens v.
Stevens, 265 P.3d 279, 284 (Alaska 2011)).
22 See Geldermann v. Geldermann, 428 P.3d 477, 481 (Alaska 2018).
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needs of the child;
(2) the capacity and desire of each parent to meet these needs;
(3) the child's preference if the child is of sufficient age and
capacity to form a preference;
(4) the love and affection existing between the child and each
parent;
(5) the length of time the child has lived in a stable,
satisfactory environment and the desirability of maintaining
continuity;
(6) the willingness and ability of each parent to facilitate and
encourage a close and continuing relationship between the
other parent and the child, except . . . [where] one parent
shows that the other parent has sexually assaulted or engaged
in domestic violence against the parent or a child, and that a
continuing relationship with the other parent will endanger
the health or safety of either the parent or the child;
(7) any evidence of domestic violence, child abuse, or child
neglect in the proposed custodial household or a history of
violence between the parents;
(8) evidence that substance abuse by either parent or other
members of the household directly affects the emotional or
physical well-being of the child;
[23]
(9) other factors that the court considers pertinent.
The court "need not mention each factor by name"; best interests findings are sufficient
so long as they provide "a clear indication of the factors [that the court] considered
important in exercising its discretion" or enable this court on review to ascertain what
considerations were involved from the record.24
23 AS 25.24.150(c).
24
Mengisteab v. Oates, 425 P.3d 80, 87 (Alaska 2018) (alteration in original)
(continued...)
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Sharon argues the court erred as to the second statutory factor: the parents'
25
respective capacity to meet the children's needs.
She contends that the court applied
an incorrect standard of proof by requiring " 'conclusive' proof of the abuser's identity"
rather than evaluating each parent's capacity to ensure the children's safety under a
26 (Emphasis in original.) She asserts that by
preponderance of the evidence standard.
applying this allegedly heightened standard of proof, the court erroneously concluded
that any sexual abuse, if it occurred, may not have occurred during Everett's custodial
time or as a result of his failure to protect his daughter. She argues that evidence at trial
established that it was "a virtual certainty" that the child was sexually abused while in
Everett's custody. She contends that the court also clearly erred when it credited
Everett's testimony at trial that he would be able to respond appropriately to sexual abuse
allegations in the future. She argues that it was thus clear error to find both parents
equally able to provide for the children's physical, emotional, mental, religious, and
social needs.
Everett does not directly address Sharon's argument about the standard of
proof for the sexual abuse allegations, but he suggests the evidence could not have
established the timing and causes of their daughter's injury even under a preponderance
standard: he argues that Sharon presented "[n]o evidence . . . that could substantiate
when the injury to [the girl] occurred, whether it occurred solely during [Everett's
custodial] time, or who was the perpetrator." He asserts that his initial apparent disregard
for the possibility of sexual abuse was because he was given only "inconclusive
24 (...continued)
(quoting Caroline J. v. Theodore J., 354 P.3d 1085, 1092 (Alaska 2015)).
25
AS 25.24.150(c)(2).
26 See id.
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information" about her injury, and that he became "convinced that [the girl] had been
injured" as soon as he read the CAC report, which he claims he received one day before
trial. And he argues that in the absence of testimony from "anyone at CAC or OCS, or
any investigators" about the girl's injury, the court was correct to determine that there
was no evidence to establish the timing of the injury or prove that it occurred because of
Everett's failure to properly supervise his daughter.
In general, each parent in a custody proceeding must establish by a
preponderance of the evidence that the parent's proposed custody plan would serve the
children's best interests, including that his or her plan can adequately provide for the
27 In its findings on this factor, the superior court stated: "The
children's needs.
evidence does not conclusively establish when, how[,] or where [the girl] was injured,
so the court cannot assume it happened as a result of Everett's failure to protect [her]."
This may suggest, as Sharon argues, that the court was looking for "conclusive" proof
of the source and timing of the girl's injuries rather than applying a preponderance
standard.
But evidence in the record leaves open the possibility that the girl's injuries
could have occurred during either parent's custodial time. The nurse practitioner who
examined the girl on January 9 stated that injuries to the genital area in children usually
heal within 72 hours. Both parents had custody of the children during the 72 hours prior
to the examination. And both parents testified at the domestic violence protective order
hearings that they had supervised their daughter and that nothing had happened to her
27 See Snider v. Snider, 357 P.3d 1180, 1189 & n.34 (Alaska 2015)
("[N]either parent has 'a greater burden than the other in attempting to obtain custody
in a dissolution proceeding.' " (quoting Johnson v. Johnson, 564 P.2d 71, 75 (Alaska
1977))). An exception applies if the court finds that one parent has committed acts of
domestic violence that would give rise to a rebuttable presumption against custody, see
AS 25.24.150(g), but the court here explicitly found that neither parent had done so.
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while she was in their care. Given the competing testimony, and absent any clearer
evidence of the timing of the girl's injury, it was not error to conclude that Sharon had
not established by a preponderance of the evidence that it occurred during Everett's
custodial time.
Furthermore, the court's ultimate finding that both parents could provide
equally well for the children's needs rested on its determination that "Everett credibly
testified [at trial] that he now understands the seriousness of [sexual abuse] allegations
and knows how to respond when his children may be the subject of abuse." Although
Everett's trial testimony on this point reflected a change from his testimony in previous
hearings, the court appeared to credit Everett's testimony that he had initially received
incomplete information about the possible abuse and had only been provided the full
medical records shortly before trial.
This finding is not clearly erroneous, especially given the substantial
28
deference we accord factual findings that "are based primarily on oral testimony."
Other than the reference to "conclusive" evidence on the specific question of the source
of the girl's injury, there is no indication the court applied anything besides a
preponderance standard when it evaluated the facts presented. It also weighed the
parents' competing trial testimony, and it determined that Everett would be as able to
protect his daughter's safety as Sharon.
Trial courts, not appellate courts, bear the primary responsibility for
"judging the credibility of witnesses and weighing conflicting evidence."29 That is
exactly what the court did here: it weighed conflicting evidence about Everett's
28 Berry v. Berry , 277 P.3d 771, 778 (Alaska 2012) (quoting Ebertz v. Ebertz ,
113 P.3d 643, 646 (Alaska 2005)).
29 Id. (quoting Ebertz, 113 P.3d at 646).
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understanding of the sexual abuse allegations, made a credibility determination, and
awarded custody based on that determination. We therefore affirm the superior court's
award of joint legal and shared physical custody.
B. There Are Insufficient Findings To Support The Calculation Of
Incomes And Child Support Award.
Sharon argues that the superior court clearly erred in its calculation of
Everett's income for child support purposes. She challenges the court's use of his 2016
tax return rather than more recent income information; its failure to include over $8,000
she claims he received in payments for boat storage, fishing nets, and artwork sales; and
its subtraction of "allowable deductions" from Everett's income without an explanation
of what they were. She also argues the court erred by overestimating her income and by
using information from different time periods - 2016 for Everett and 2015 to 2017 for
Sharon - to calculate income for each parent.
Everett responds that the superior court was within its discretion to select
his 2016 tax return as a basis for calculating his income; that his income from artwork
sales, boat storage, and fishing nets was properly excluded because it was derived from
one-time or infrequent events; and that the court's calculation of Sharon's income was
supported by the evidence at trial.
Civil Rule 90.3(a)(1) defines "adjusted annual income" for child support
purposes as the parent's "total income from all sources" minus certain deductions,
including mandatory deductions like taxes and union dues, voluntary contributions to a
retirement account, child or spousal support from other relationships, work-related child
30 The commentary explains that
care expenses, and health insurance premiums.
"[i]ncome from self-employment . . . includes the gross receipts minus the ordinary and
30 Alaska R. Civ. P. 90.3(a)(1).
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31
necessary expenses required to produce the income." The superior court may exercise
32
"broad discretion in determining what to include in its income calculation." An
ongoing child support award "should be based on the income the parent is expected to
33
receive" for the applicable period under the award.
1. Although it was not error to rely on Everett's 2016 tax return to
calculate his income, the superior court made inadequate
findings to support the deductions allowed.
The commentary to Civil Rule 90.3 specifies that child support should be
"calculated as a certain percentage of the income which will be earned when the support
is to be paid."34
This determination is "necessarily . . . somewhat speculative" and "may
35
be especially difficult when the obligor has had very erratic income in the past." The
36
and it
superior court has discretion to identify "the best indicator of future earnings,"
37
may but is not required to, "average the obligor's past income over several years."
31 Alaska R. Civ. P. 90.3 cmt. III.B.
32 Holmes v. Holmes, 414 P.3d 662, 667 (Alaska 2018).
33 Swaney v. Granger, 297 P.3d 132, 139 (Alaska 2013).
34 Alaska R. Civ. P. 90.3 cmt. III.E.
35 Id.
36 Morris v. Horn, 219 P.3d 198, 206 (Alaska 2009).
37 Id.; cf Zimin v. Zimin, 837 P.2d 118, 123 (Alaska 1992) (upholding income
determination that rejected obligor's proposed ten-year average and instead based
support award on his one-year projected earnings); and Keturi v. Keturi, 84 P.3d 408,
413 (Alaska 2004) (upholding income determination based on four-year average).
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First, the superior court explained its reliance on Everett's 2016 tax return:
Everett believably testified that he delivered 150,000
pounds of fish in 2016. According to the 2016 tax return, the
gross revenue for those fish was $259,490. Everett testified
that the catch in 2017 was slightly lower (140,000 pounds)
and in 2018 was significantly higher (230,000 pounds). His
gross revenue from fishing in 2015 was $175,110. Income in
the fishing industry will be affected by a variety of factors
and is not consistent each year. Everett may have other
sources of income each year - such as income from his
artwork, boat storage and selling fishing gear - but that
income will also fluctuate each year. Because of the ongoing
potential shift in income, the court finds the income and
information from the 2016 tax return is a reasonable
representation of Everett's . . . self-employment income.
(Footnotes omitted.) Nothing in Rule 90.3 precludes the court from selecting a
benchmark year to determine annual income, and given that Everett's catch size and
gross revenue in his 2016 tax return did not appear abnormally high or low compared to
other years, it was reasonable for the court to base its expected income determination on
the 2016 tax return.
Second, because income calculations for a future period must be based on
38 it was not error for the court to exclude infrequent or
the parent's expected income,
one-time sources of income, such as the sale of artwork and fishing nets. Everett
testified that his income from artwork sales varies from year to year and that he sells
fishing gear and rents out boat storage space infrequently. We "give 'particular
deference' to the trial court's factual findings when they are based primarily on oral
testimony, because the trial court, not this court, performs the function of judging the
38
Swaney v. Granger, 297 P.3d 132, 139 (Alaska 2013).
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39
credibility of witnesses." We therefore find no error in the court's treatment of
Everett's artwork and gear sales.
However, the superior court's decision does not contain sufficient findings
to support its calculation of deductions allowed from Everett's income. The court
determined Everett's total income to be $80,817, and then found that his adjusted annual
income "[a]fter allowable deductions" was $61,185. But as Sharon points out, the
court's findings and conclusions contain no explanation of how it arrived at a total figure
of nearly $20,000 for "allowable deductions."
Rule 90.3(a)(1) lists certain mandatory deductions that must be subtracted
from a parent's total income to determine that parent's adjusted annual income; these
include, for instance, taxes, union dues, mandatory and voluntary retirement or pension
plan contributions, court-ordered child and spousal support from other relationships,
40 But without findings
work-related childcare expenses, and health insurance premiums.
that indicate which of these items were included in the deductions from Everett's total
income, we have no basis on which to assess whether the court's ultimate determination
of his income was clearly erroneous.41 We therefore remand for the court to make the
necessary findings with regard to Everett's income.
39 Berry v. Berry , 277 P.3d 771, 778 (Alaska 2012) (quoting Ebertz v. Ebertz ,
113 P.3d 643, 646 (Alaska 2005)).
40 Alaska R. Civ. P. 90.3(a)(1)(A)-(F).
41 See, e.g., Horne v. Touhakis, 356 P.3d 280, 284 (Alaska 2015) (remanding
where "lack of specific findings" precluded appellate review of imputed income
determination in child support modification order); Olmstead v. Ziegler, 42 P.3d 1102,
1107 (Alaska 2002) ("The trial court is required to enter sufficiently detailed findings of
fact to allow for meaningful appellate review.").
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2. The superior court did not make adequate findings to support
its calculation of Sharon's income or the applicable deductions.
When a parent is self-employed, the commentary to Civil Rule 90.3 defines
that parent's income as "the gross receipts minus the ordinary and necessary expenses
42
required to produce the income."
Here the superior court found that Sharon's income
"fluctuated between $15,000 and $25,000 before and during the marriage" and that it
derived from multiple "sources including her small business, contract work[,] and a
variety of part-time jobs." It determined Sharon's total annual income for child support
purposes to be $23,100, and her adjusted annual income after deductions to be $19,808.
But based on the available evidence, this appears to overestimate Sharon's
income. The income history on her 2016 Social Security statement shows that her
taxable earnings between 2005 and 2015 averaged roughly $10,656 per year. Her 2015
tax return lists a gross income of $30,949 from self-employment and expenses of
$17,455, yielding a net income of $13,494. Her 2016 tax return shows that she grossed
$2,500 that year, with a net loss after expenses. And she testified that her gross income
for 2017 was $21,655. The superior court stated that its income determination for
Sharon was based on "her work history, her degrees[,] and current employment status,"
but the court's findings do not explain how it determined her income or what, if any,
43
expenses it took into account.
42 Alaska R. Civ. P. 90.3(a)(1)(A)-(E).
43 We note that not all expenses that may be deducted for federal tax purposes
necessarily qualify as "ordinary and necessary" expenses for purposes of Rule 90.3.
See Alaska R. Civ. P. 90.3 cmt. III.B ("Ordinary and necessary expenses do not include
amounts allowable by the [Internal Revenue Service] for the accelerated component of
depreciationexpenses, investment tax credits, or anyotherbusiness expenses determined
by the court to be inappropriate.").
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If the court determines that a parent is "voluntarily and unreasonably . . .
unemployed or underemployed," the rule permits the court to impute income based on
the parent's employment history and qualifications as well as available job
44 The trial court must make findings sufficient for our review that justify
opportunities.
imputing income, such as that the parent is capable of earning more than his or her
current income or that higher-paying jobs are actually available.45
The superior court's estimationofSharon'sincomeseems toimpute income
higher than that supported by the evidence.46 To the extent that it did, its decision lacks
the findings necessary to justify imputation. The decision to impute potential income to
a parent who "voluntarily and unreasonably is unemployed or underemployed" must be
based on "the parent's work history, qualifications, and job opportunities."47 We have
required findings about the parent's education and qualifications or about available job
opportunities to enable meaningful review.48 Here the court found that Sharon and
Everett were both "relatively young . . . and in good health," and that while Sharon's
earning capacity was lower than Everett's, "[s]he does have a college degree and skills
that make her employable." While these findings indicate that the court considered
44 Alaska R. Civ. P. 90.3(a)(4) & cmt. III.C.
45 Frederickson v. Button, 426 P.3d 1047, 1058-1060 (Alaska 2018)
(approving implied finding of unreasonableness based upon evidence presented); see
also Petrilla v. Petrilla, 305 P.3d 302, 307 (Alaska 2013); O'Connell v. Christenson, 75
P.3d 1037, 1040-41 (Alaska 2003).
46 If the evidence demonstrated a prima facie case of voluntary unreasonable
underemployment, then the burden of rebutting that evidence would be Sharon's.
Frederickson, 426 P.3d at 1059.
47 Alaska R. Civ. P. 90.3(a)(4).
48 See, e.g., Horne v. Touhakis, 356 P.3d 280, 284 (Alaska 2015).
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Sharon's qualifications and job opportunities in calculating a higher income for child
support purposes than her work history might indicate, the court made no specific
findings on the particular skills or qualifications Sharon's degree and experience gave
her, or on the availability of jobs matching those qualifications in Naknek. The court
made no findings that Sharon was unreasonably or voluntarily under- or unemployed,
finding only that she "stayed home with the children for much of the couple's
relationship."
Finally, as with Everett, the court did not explain its calculation of
deductions from Sharon's income. Its order stated only that "[a]fter applying allowable
deductions, Sharon's annual adjusted income is $19,808." We therefore remand for the
court to make the findings necessary to support both its income calculation for Sharon
and any deductions it applies.
We note, however, that the court is not required to use earning histories
from exactly the same time period for Sharon and Everett, as Sharon argues. Given that
each parent's income is variable and derives from different sources, it is within the
superior court's discretion to determine what past periods provide the best indicator of
49 But its income calculations must be supported by
each parent's future income.
sufficiently detailed findings.50
C. It Was An Abuse Of Discretion To Divide The Fishing Vessel
Unequally In Everett's Favor, And The Equalization Payment And
Attorney's Fees Award Must Be Reconsidered In Light Of This.
Equitable division of marital assets in a divorce proceeding involves three
steps: "(1) deciding what specific property is available for distribution, (2) finding the
49 See Morris v. Horn, 219 P.3d 198, 206 (Alaska 2009).
50 See Olmstead v. Ziegler, 42 P.3d 1102, 1107 (Alaska 2002).
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51
value of the property, and (3) dividing the property equitably." Generally "only marital
property is subject to division upon divorce," and separate property may be invaded
52 While "[a]n
"only 'when the balancing of the equities between the parties requires it.' "
equal division of marital property is presumptively just,"53 the court may deviate from
an equal division based on the factors enumerated in AS 25.24.160:
(A) the length of the marriage and station in life of the parties
during the marriage;
(B) the age and health of the parties;
(C) the earning capacity of the parties, including their
educational backgrounds, training, employment skills, work
experiences, length of absence from the job market, and
custodial responsibilities for children during the marriage;
(D) the financial condition of the parties, including the
availability and cost of health insurance;
. . . .
(G) the circumstances and necessities of each party;
(H) the time and manner of acquisition of the property in
question; and
(I) the income-producing capacity of the property and the
value of the property at the time of division.[54]
51 Fletcher v. Fletcher, 433 P.3d 1148, 1152 (Alaska 2018) (quoting
Engstrom v. Engstrom , 350 P.3d 766, 769 (Alaska 2015)).
52 Kessler v. Kessler, 411 P.3d 616, 618 (Alaska 2018) (quoting
AS 25.24.160(a)(4)).
53 Pfeil v. Lock, 311 P.3d 649, 652-53 (Alaska 2013) (quoting Berry v. Berry,
978 P.2d 93, 96 (Alaska 1999)).
54 AS 25.24.160(a)(4). These factors are also referred to as the "Merrill
factors," since AS 25.24.160(a)(4) codified and expanded the factors we listed in Merrill
(continued...)
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These factors are not exhaustive; a court "may consider 'any other factors it deems
relevant' to dividing the property," provided "the division is 'just' and 'fair.' " 55
Sharon contends that the superior court made several errors in its property
division: it treated one of Everett's fishing boats, the F/V N
ORTHERN FLYER, differently
than the rest of the marital estate despite the fact that the boat was marital property; it
inequitably divided the rest of the estate; and it improperly allowed Everett four years
to make the equalization payment that it ordered. Everett responds that the decision to
award him more of the equity in the F/V N ORTHERN FLYER than in the rest of the marital
estate was justified by Sharon's minimal involvement in his fishing business. He argues
that it was equitable for the court to divide the rest of the marital estate 55/45 in Sharon's
favor, with the slightly unequal division enabling her to litigate on an equal footing. And
he contends that allowing himfour years to make the equalization payment properly took
into account his fluctuating income and lack of liquid assets.
ORTHERN FLYER should
1. Based on the court's findings, the F/VN
have been divided on the same or similar terms as the rest of the
marital estate.
Unless an exception applies, property acquired by a spouse prior to the
marriage is considered separate property; property acquired by a spouse during the
56
marriage is marital property.
Ordinarily, " 'all assets acquired by the parties during
54 (...continued)
v. Merrill, 368 P.2d 546, 547-48 n.4 (Alaska 1962). See Cartee v. Cartee, 239 P.3d 707,
712 n.9 (Alaska 2010).
55 Pfeil, 311 P.3d at 653 (quoting Cartee, 239 P.3d at 712-13).
56 Kessler, 411 P.3d at 618.
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57
their marriage are marital property' except for gifts and inheritances." The parties do
not dispute that Everett purchased the F/V N ORTHERN FLYER, a commercial fishing
vessel, during their marriage. They and the court valued this vessel at $255,000. The
court divided the equity in the vessel 70/30 in Everett's favor, though it divided the rest
of the marital estate 55/45 in Sharon's favor. Sharon argues that there was no basis to
divide the vessel differently than the rest of the marital estate, while Everett argues that
the uneven split properly took into account Sharon's lack of involvement in his fishing
business, as well as the fact that his fishing experience enabled him to purchase and
maintain the vessel.
While marital property may be unequally divided, such a division must be
58 The court abuses its discretion
equitable based on the factors in AS 25.24.160(a)(4).
if it "considers improper factors, fails to consider statutorily mandated factors, or gives
too much weight to some factors."59 Because Alaska favors addressing parties' financial
needs through property division rather than alimony, "[w]hen a couple has sufficient
assets, the spouse with the smaller earning capacity can and should receive a larger share
in the property distribution to aid him or her in [the post-divorce] transition."60
Here the superior court found that the F/V N ORTHERN FLYER was part of
the marital estate, finding that its use "in the commercial fishery, alone, is not a valid
exception to a finding of marital property." The court also found that, although a fishing
57 Beals v. Beals , 303 P.3d 453, 460 (Alaska 2013) (quoting Johns v. Johns ,
945 P.2d 1222, 1225 (Alaska 1997)).
58 See Pfeil, 311 P.3d at 653; AS 25.24.160(a)(4).
59 Cartee, 239 P.3d at 714 (quoting Long v. Long, 816 P.2d 145, 150 (Alaska
1991) (addressing abuse of discretion in custody determinations)).
60 Dundas v. Dundas, 362 P.3d 468, 480 (Alaska 2015) (second alteration in
original) (quoting Day v. Williams, 285 P.3d 256, 261 (Alaska 2012)).
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----------------------- Page 25-----------------------
enterprise, if "treated like a typical business," might "be categorized as separate property
and the vessel [as] a business asset," there was "no evidence that Everett had a business
license or that his fishing business was an incorporated entity." The court nevertheless
awarded 70% of the equity in the F/VN
ORTHERN FLYER to Everett: "Everett's extensive
pre-marital experience in the fishery provided him with the opportunity and resources
to purchase the F/V N ORTHERN FLYER. An equitable distribution must acknowledge
Everett's contributions to the purchase, maintenance and operation of the vessel."
Given that the court found the F/VN ORTHERN FLYER to be marital property
and determined that an equitable division would award Sharon 55% of the marital
estate - findings Everett does not dispute - a different division of the fishing vessel
would only be warranted if Everett demonstrated that an exception applied or that the
relevant statutory factors justified treating the vessel differently from the rest of the
61 But he does not assert, and the court did not find, that the F/VN ORTHERN FLYER
estate.
was a gift or inheritance and thus an exception to the rule that property acquired during
62 Nor is the boat a personal or nontransferable asset such as an
the marriage is marital.
educational degree or unmarketable professional goodwill belonging to one spouse that
would properly be excluded from the marital estate.63 It is a tangible asset acquired
61 See Dragseth v. Dragseth , 210 P.3d 1206, 1212 (Alaska 2009) ("The party
seeking to establish that the property is separate always bears that burden of proof."
(quoting Schmitz v. Schmitz , 88 P.3d 1116, 1128 (Alaska 2004))).
62 See Beals, 303 P.3d at 460.
63 See Richmond v. Richmond, 779 P.2d 1211, 1213-14 (Alaska 1989)
(holding that law practice belonging to one spouse had no marketable professional
goodwill and thus should not be divided as part of marital estate), overruled in part on
other grounds by Hansen v. Hansen, 119 P.3d 1005, 1010 & n.16 (Alaska 2005); Nelson
v. Nelson, 736 P.2d 1145, 1146 (Alaska 1987) (holding that professional degreeobtained
(continued...)
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during the marriage, and it is therefore subject to division according to the factors in
AS 25.24.160(a).
And Everett did not demonstrate that the statutory factors favored him.
Most of the court's findings on the statutory factors either weigh equally for both parties
or favor Sharon. The court first found that both spouses were "relatively young . . . and
in good health" at the time of divorce and that "they had already established their
respective professions" when they married - findings that would seem to support an
64 But the court also found that Sharon's earning capacity was
equal property division.
significantly lower than Everett's and likely would be for some time; that she had stayed
home to care for the children for much of the marriage, including during Everett's fishing
trips; and that Everett had healthcare coverage through Indian Health Services while
65 Additionally, the court found that
Sharon would have to pay for private insurance.
even though Sharon had never served as a crew member, "her assistance around the
fishing season contributed to the fishing business"; Everett had on at least one occasion
paid her a $5,000 crew share. And as Sharon points out, the fishing vessel will continue
to generate income for Everett in the future.66 These factors would seem to support
63 (...continued)
by one spouse is not marital property subject to division upon divorce).
64 See AS 25.24.160(a)(4)(A)-(B) (listing as factors "the length of the
marriage," the spouses' "station in life" during marriage, and "the age and health of the
parties").
65 See AS 25.24.160(a)(4)(C), (D), (G) (listing as factors parties' respective
earning capacities in light oftheir education, qualifications, and childcareresponsibilities
duringmarriage; parties' financial condition "includingtheavailabilityand cost of health
insurance"; and "the circumstances and necessities of each party").
66 See AS25.24.160(a)(4)(I) (listing as factor "theincome-producingcapacity
(continued...)
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deviating in Sharon's favor from an equal division - which the court did with the rest
of the marital estate.
The only factor in Everett's favor was the fact that his fishing expertise and
67 But
income were what allowed him to purchase and generate income from the vessel.
even if one spouse's qualifications allow a couple to acquire an asset, that fact does not
by itself alter the marital character of that asset. In the case of corporate good will, for
instance, we have held that "earning capacity attributable solely to the expertise, talents
and personality of one spouse" may properly be part of the marital estate,68 provided that
the goodwill is marketable and could be sold to a prospective buyer.69 We have also
noted that an unequal property division can be used to compensate one spouse for
providing support that allows another to increase his or her earning capacity, such as by
70 Sharon contributed to Everett's earning capacity by
earning a professional degree.
caring for the children and providing shore support while he fished; her support may
have helped make possible the purchase of the fishing vessel in the first place. And
66 (...continued)
of the property").
67 See AS 25.24.160(a)(4)(H) (listing as factor "the time and manner of
acquisition of the property in question").
68 Richmond, 779 P.2d at 1213, overruled in part on other grounds by
Hansen, 119 P.3d at 1010 & n.16.
69 Hansen, 119 P.3d at 1010 ("If the goodwill is not marketable, then no value
for goodwill should be considered in dividing the marital assets."); accord Moffitt v.
Moffitt, 749 P.2d 343, 347 (Alaska 1988).
70 Nelson v. Nelson, 736 P.2d 1145, 1146-47 (Alaska 1987) (holding that
while "professional degree is not property subject to division," spouse's contributions
to increase in earning potential of spouse who earned degree "may justify a favorable
award of property to the supporting spouse").
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Everett did not present evidence that would justify either treating the F/V N
ORTHERN
FLYER as separate property or deviating so greatly from the division applied to the rest
of the marital estate. In fact, the court specifically discounted the credibility of some of
Everett's testimony about his fishing business and the extent of Sharon's assistance with
it.
We also note that although the court decided on a 55/45 split of the rest of
the marital estate in Sharon's favor, its 70/30 division of the F/V N ORTHERN FLYER
resulted in Sharon being awarded roughly $87,137 of the total estate and Everett
receiving roughly $139,695 - an approximately 62/38 split in Everett's favor. Given
the court's findings on the parties' respective earning capacities and the paucity of
evidence that would justify treating the fishing vessel differently from the rest of the
marital property, this division was clearly unjust.
We therefore vacate the court's award of 70% of the equity in the
ORTHERN FLYER to Everett and remand the property division to the superior court
F/V N
so that the marital estate, including the F/V N ORTHERN FLYER, may be equitably divided
pursuant to AS 25.24.160(a)(4).
2. The equalization payment must be recalculated in light of our
decision on the property division.
The court's decision to divide the F/V N ORTHERN FLYER's equity 70/30 in
Everett's favor and the remainder of the marital estate 55/45 in Sharon's favor resulted
in Everett owing Sharon an equalization payment of $84,537.60. But because we vacate
the property division on the ground that the fishing vessel should not have been treated
differently than the other marital assets, the value of the equalization payment will
necessarily change on remand. We therefore remand so that the equalization amount can
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be calculated in light of an equitable division that comports with this opinion. 71
Assuming that the equalization amount determined on remand continues
to be a sum too large for Everett to make in a single payment, the superior court has
discretion to order a multi-year payment schedule. In establishing such a schedule, the
court must pay careful attention to each party's financial circumstances, including any
potential hardship Sharon may suffer from the delay in receiving the equalization
72 The superior court gave Everett four years to make the equalization payment,
payment.
with interest accruing at 5% per year. But without a prescribed schedule of regular
payments, the court left it to Everett's good will, and desire to avoid interest payments,
to ensure that Sharon received the equalization payment in less than four years.
Particularly since the court declined to award Sharon attorney's fees because it preferred
to place the parties on equal litigation footing by means of the property division, the
failure to establish a payment schedule was error.73
71 Because we reverse the property division based on the superior court's
treatment of the F/V N ORTHERN FLYER, and because a new property division on remand
will affect the total amounts Sharon and Everett will receive, we do not reach Sharon's
argument that the 55/45 division of the rest of the estate was inequitable.
72 Fortson v. Fortson, 131 P.3d 451, 459 (Alaska 2006) (holding that an
eighteen month pay period was appropriate); see also Hunt v. Hunt, 698 P.2d 1168, 1191
(Alaska 1985) (holding that the superior court did not abuse its discretion for a three-year
payout period).
73 See, e.g., Rosenberg v. Rosenberg, No. S-16968, 2019 WL 3715062, *3-4
(Alaska Aug. 7, 2019) (upholding payment schedule and accrual of interest for
equalization payment).
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----------------------- Page 30-----------------------
3. Attorney's fees must be revisited in light of our decision on the
property division.
Attorney's fee awards in divorce cases lie "within the broad discretion of
the trial court and will not be disturbed on appeal unless [they are] 'arbitrary, capricious,
74
or manifestly unreasonable.' "
While "[a] prevailing party in a civil case is normally
75
entitled to an award of attorney's fees," in divorce cases, awards of attorney's fees are
generally based not on prevailing party status but on the spouses' relative earning
76
capacities and economic positions. Because "[t]he purpose of awarding attorney's fees
in divorce proceedings is to level the playing field," the court must consider "not only
earning capacities and separate resources, but also the distribution of marital assets
77 A court may also order a party who has acted in bad faith or vexatiously to pay
itself."
enhanced attorney's fees.78
If awarding enhanced fees, the court must first determine
appropriate fees based on each parties' economic status and then increase the award
79
based on a party's misconduct.
74 Berry v. Berry, 277 P.3d 771, 779 (Alaska 2012) (quoting Ferguson v.
Ferguson, 195 P.3d 127, 130 (Alaska 2008)).
75 Johnson v. Johnson, 239 P.3d 393, 399 (Alaska 2010); see Alaska R. Civ.
P. 82(a).
76 See Berry, 277 P.3d at 779 (quoting Johnson, 239 P.3d at 399).
77 Id. (alteration in original) (quoting Dragseth v. Dragseth, 210 P.3d 1206,
1212 (Alaska 2009)).
78 Id. at 799-80 (quoting Edelman v. Edelman, 61 P.3d 1, 5-6 (Alaska 2002)).
79 Id. (quoting Edelman, 61 P.3d at 5-6).
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----------------------- Page 31-----------------------
The court found that "Everett has had a significantly higher earning
capacity" than Sharon, but declined to issue an award of attorney's fees, finding that the
ORTHERN FLYER) put Sharon
55/45 division of the marital estate (excluding the F/V N
and Everett "on equal ground to afford . . . litigation." The superior court also rejected
Sharon's request for an enhanced fee award, finding that Everett's conduct did not rise
to the level of bad-faith or vexatious conduct that would warrant enhanced fees.
Because the court addressed attorney's fees through the property division,
and because we vacate and remand the property division, the court must also reconsider
attorney's fees on remand. A property division that comports with this opinion may also
adequately address the issue of fees.
However, we point out that the structure of the attorney's fees decision
issued by the superior court left Sharon, in practice, unable to litigate on an equal
footing. The court gave Everett four years to make the equalization payment, ordering
that interest would accrue at 5% per year but not requiring specific installments or partial
payments to be made earlier. In the meantime, although the court had already found that
Sharon "could not litigate the divorce on fairly equal footing without contributions from
Everett," Sharon retained only $2,599 in marital assets based on the court's division of
property, while Everett retained $219,233. As a practical matter, therefore, the court's
use of the property division to address attorney's fees left Sharon without funds to afford
litigation on an equal footing unless Everett decided to make at least part of the
equalization payment immediately.
Equitable division of marital assets is one factor to consider in an attorney's
fees award. But where significant economic disparity exists between the spouses, and
where the property division may not be effectuated for a significant period of time,
relying solely on the property division to address attorney's fees unfairly burdens the
spouse with lower earning capacity and fewer assets and thwarts the purposes of the
-31- 7421
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exceptions set forth in AS 25.24.160. In these circumstances, the court's failure to
consider the practical effect of neither awarding separate attorney's fees nor requiring
a payment schedule for the equalization payment was an abuse of discretion.
V. CONCLUSION
Because the superior court's findings with regard to the parents' capacity
to provide for their children's needs were not clearly erroneous, we AFFIRMthe custody
determination. We VACATE and REMAND the child support award for further
findings to explain the calculations of the parents' income. We also VACATE and
REMAND the property division, and the decision on attorney's fees that relies on it, to
be recalculated in light of this opinion.
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