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Tollefsen v. Tollefsen (6/11/99) sp-5133
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Notice: This opinion is subject to correction before publication in
the Pacific 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.
THE SUPREME COURT OF THE STATE OF ALASKA
MARY F. TOLLEFSEN, )
) Supreme Court No. S-8365
Appellant, )
) Superior Court No.
v. ) 3AN-96-4206 CI
)
GORDON ERIC TOLLEFSEN, ) O P I N I O N
)
Appellee. ) [No. 5133 - June 11, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Rene J. Gonzalez, Judge.
Appearances: Allison E. Mendel, Mendel &
Associates, Anchorage, for Appellant. Stacy K. Steinberg,
Robertson, Monagle & Eastaugh, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
FABE, Justice.
MATTHEWS, Chief Justice, dissenting.
I. INTRODUCTION
In this appeal, we review the superior court's
distribution of marital property and award of alimony in the
divorce of Mary and Gordon Eric Tollefsen. Mary contends that the
superior court's findings on the relevant statutory factors do not
support its division of the marital estate. She also argues that
the court awarded her inadequate alimony. While the superior
court's findings are thorough and its division of property may be
upheld as equitable, several aspects of the superior court's order
do not appear to reflect the superior court's goals in dividing the
property. We therefore affirm the superior court's findings of
fact and award of alimony but remand to account for the costs of
preparing and selling the real property awarded to Mary.
II. FACTS AND PROCEEDINGS
Mary and Gordon Eric (Eric) Tollefsen married in 1969.
They separated in May 1996, and Mary filed for divorce one month
later. Of their five children, only their youngest child, Travis,
remained a minor at the time of trial in July 1997.
Throughout the marriage, Eric was the primary wage
earner. At the time of trial, he was the Director of Human
Resources at Carr Gottstein Foods Co., earning approximately
$78,000 annually, and had been employed there for about twenty-five
years. Mary was primarily a homemaker until 1986. From 1986 to
1996, she worked for approximately eleven different employers. She
has never maintained a job for a significant period of time, due to
physical and mental health problems including depression, migraine
headaches, and, according to the superior court, "a disease known
as Ankylosing Sponylitis which apparently results in spinal
stenosis and some spinal cord compression." Mary is a high school
graduate and has had additional training through workshops.
Superior Court Judge Rene J. Gonzalez heard the case on
July 7-9, 1997. In its findings, the superior court observed that
approximately ninety percent of the marital estate was in real
property and retirement funds. The parties' marital assets
included the marital home (net equity $106,303), five rental
properties and a cabin (net equity $408,078), investment accounts
(net equity $46,728), and Eric's retirement accounts (net equity
$381,754). According to Eric, the rental properties generate
approximately $1,600 in monthly income.
The court awarded Mary assets with a net equity of
$327,170 (52.6% of the marital estate) and awarded Eric assets with
a net equity of $293,701 (47.4% of the marital estate). Mary
received an investment account worth $29,626, three rental
properties, and the marital home, which she had asked the court not
to award to her due to its state of ill-repair and high maintenance
costs. The court equally split Eric's retirement accounts between
each party. Finally, the court allocated $12,483 of the marital
debt to Mary and $13,669 of the marital debt to Eric. The court
also awarded Mary reorientation alimony in the amount of $1,000 a
month for twenty-four months.
Mary moved for reconsideration of the property division
and the award of spousal support, arguing that "the Court has
awarded her a collection of property and support which ensures that
in the short run, she will be completely unable to support
herself." The court denied the motion. Mary appeals.
III. DISCUSSION
A. Standard of Review
As the "superior court has broad latitude in making
property divisions in divorce proceedings,"[Fn. 1] we review the
division of property for abuse of discretion. [Fn. 2] We will find
an abuse of discretion only when we are "left with a definite and
firm conviction, after reviewing the whole record, that the
superior court erred in its ruling."[Fn. 3] The trial court's
decision about the equitable allocation of property will only be
set aside if it is clearly unjust. [Fn. 4] Awards of alimony are
also within the superior court's discretion and will be set aside
only if "unjust or unnecessary."[Fn. 5]
B. The Superior Court's Property Distribution Does Not
Accomplish the Goals Expressed in Its Findings.
Mary argues that the trial court's division of the
marital estate should be reversed as clearly unjust because the
court failed to consider how its findings related to her short-term
needs and expenses. Alaska Statute 25.24.160(a)(4)(A)-(I) governs
the division of marital property in a divorce proceeding and sets
forth the factors the superior court must consider in allocating
property. These factors include the length of the marriage, the
earning capacity of the parties, and the circumstances and needs of
each party. [Fn. 6] Although an even division of marital property
is presumed to be equitable, [Fn. 7] "[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 this transition."[Fn. 8] Furthermore, in making
an equitable division of the property, the superior court must
state the facts forming the basis of the division and address the
relevant statutory factors. [Fn. 9]
In accordance with the controlling statute, the superior
court stated with precision the findings on which it based its
division of property. It found that Mary was "clearly the
economically disadvantaged party"and that the "economic effects of
the divorce have fallen much more heavily on Mary than on Eric."
The court further noted that "[e]ven if Mary [were] able to work
full time, which clearly she is not, her maximum earning potential
would be far below Eric's." As a result, the court found that "an
unequal division of the marital estate in Mary's favor [was]
warranted,"and awarded Mary assets with total net equity of
$327,170, representing 52.6% of the marital estate. Thus, as Mary
concedes, the superior court made findings on all of the relevant
statutory factors.
Still, Mary contends that the superior court did not
address how she "could even exist on the properties awarded to her"
and that the division "clearly could not meet [her] reasonable
needs." She focuses principally on two alleged oversights by the
superior court. First, in awarding Mary the family home, the court
did not discuss how Mary was to make the monthly mortgage payment,
which the court had previously recognized as approximately $1,800.
Second, although the superior court acknowledged that "necessary
repairs"were required to prepare each of the rental properties for
sale and that "[t]he family residence is also in need of
substantial repairs and completion of a remodeling project before
it can be sold,"the court did not make any provision for Mary to
be able to prepare the house or other properties for sale. The
estimated cost of repairing the marital home alone ranged from
$12,000 to $20,000.
Both the mortgage and repair costs will burden Mary
significantly in the short term given her limited access to cash.
In particular, the investment accounts of approximately $29,700
[Fn. 10] and the reorientation alimony of $1,000 a month do not
cover the $12,000 to $20,000 in repair costs for the marital home,
the $1,800 monthly mortgage payment, and the $12,000 of consumer
debt allocated to her. [Fn. 11] She alleges that her cash reserves
will be exhausted within six months.
Eric counters that the court's award to Mary closely
resembles the property division she sought at trial. Eric asserts
that Mary sought 55.53% of the marital estate and $1,000 monthly
alimony. Mary does not dispute this claim; rather, she merely
states that "[t]his is only partially true"because she sought a
greater share of the cash assets and particularly requested that
the marital home not be awarded to her.
In deciding to award over 50% of the marital property to
Mary, the court sought to achieve an equitable distribution and to
account for Mary's needs. The trial court did not overlook the
$1,800 mortgage payment Mary contests because it premised its
decision on the sale of the marital home and other real estate.
Thus, although the court did not create a budget for Mary, its
findings contemplated that proceeds from the sale of real property
would meet Mary's needs and that the $1,000 alimony award would
provide assistance during this transitional period.
But the superior court also expressly recognized the need
for "substantial repairs"to the marital home and other real
property before Mary could sell them. Moreover, the court
understood that the readily accessible liquid assets were very
limited and that 90% of the estate consisted of real property and
retirement funds. Finally, the court noted that "Mary is going to
need a transitional period to sell property which will be awarded
to her which may not be appropriate to her current needs or
financial status." Despite these findings, the superior court
failed to take into account the costs of necessary repairs for the
marital home or other properties awarded to Mary or the commissions
and closing costs that she will incur in completing the sales.
While the trial court had considerable discretion over
how to carry out its findings in the property distribution, its
failure to make any provision for the costs of repair and sale
prevented the property division from meeting the court's stated
goal of an unequal property split in Mary's favor. The trial court
specifically found that the marital home required "substantial
repairs and completion of a remodeling project before it can be
sold." (Emphasis added.) The parties agreed that after repair and
sale, the house would have a net equity of $106,303. There is
nothing in the record to support the conclusion that Mary would be
able to recoup, through increased market value, any part of the
money she invests in preparing the house for sale. If the repairs
cost the estimated $20,000, and Mary were able to make them, her
recovery from the house sale would be only $86,303, less
commissions, rather than the $106,303 intended by the court. Thus,
the superior court's property distribution would actually leave
Mary with less than half of the marital estate, despite the trial
court's stated intent that she receive a larger share of marital
property than Eric. [Fn. 12]
Ordinarily, the trial court need not consider the factors
of sale costs and commissions for real property awarded to one
party because both parties will encounter such expenses in any
sales of real property awarded to them, thus balancing out their
net awards. Here, however, the trial court premised its division
of marital property on Mary's sale of the real property awarded to
her, while no finding contemplated that Eric would have to sell the
real property awarded him. And the alimony award does not provide
Mary with the present means to prepare the property for sale or to
make the ongoing house payment of $1,800, which the court
recognized she could not afford.
In summary, although the superior court expressly found
that Mary was the economically disadvantaged party, the court's
failure to make provision for the costs of repairs and sale of the
real property awarded to Mary defeated its stated goal of awarding
her the greater share of the marital estate.
C. The Superior Court Awarded Adequate Alimony.
Mary also argues that the trial court's award of $1,000
monthly reorientation alimony for twenty-four months is inadequate.
Under AS 25.24.160(a)(2), a trial court may award alimony "as may
be just and necessary . . . [to] fairly allocate the economic
effect of divorce." The trial court's award of alimony must "be
accompanied by adequate findings, particularly with respect to the
financial needs and abilities of both parties."[Fn. 13] "The
purpose of reorientation alimony is to allow the requesting spouse
an opportunity to adjust to the changed financial circumstances
accompanying a divorce."[Fn. 14]
In this case, the trial court made findings about the
necessity of reorientation alimony. The court intended the award
to aid Mary "so that she may organize the considerable non-liquid
and other property being distributed to her from the marital
estate." The court further noted her poor health, her lack of
earned income, and her questionable employability. Moreover, the
court appears to have based the period of reorientation alimony --
twenty-four months -- on Mary's request. Indeed, Mary concedes
that she sought $1,000 a month of reorientation alimony for two
years.
Nevertheless, Mary maintains that the amount of her
request for alimony can only be understood in the context of her
proposed property division and that because the court awarded her
less property than she sought, she needs a larger award of alimony.
Perhaps a larger monthly alimony payment over a shorter period
would have better suited Mary's short-term needs. But the court's
award of reorientation alimony mirrored Mary's request. Moreover,
we have directed the trial court to adjust its property
distribution to further the goals articulated in its findings. In
light of these circumstances, the trial court did not abuse its
discretion in setting the alimony award.
IV. CONCLUSION
We AFFIRM the superior court's findings of fact and its
award of alimony. But we VACATE the court's property division and
REMAND for adjustment to account for the costs and commissions Mary
will incur for the sales of the real property awarded to her.
MATTHEWS, Chief Justice, dissenting.
In my view the property division ordered by the trial
court is not an abuse of discretion or clearly unjust. Further, I
see no reason to conclude that the property division contradicts
the court's objective of awarding a property division in Mary's
favor. I would therefore affirm the judgment in its entirety.
Mary received assets with a net equity of $327,170, plus
one half of the marital property in retirement plans, another
$174,742 according to her brief. Eric received net assets of
$293,701, plus the other half of the marital property in retirement
plans. The trial court stated that Mary was relatively econom-
ically disadvantaged when compared to Eric and "that an unequal
division of the marital estate is warranted in this case as
follows: [the court then listed the assets awarded Mary including
their fair market value and net equity]." The court did not state
that any specific division in terms of percentages was intended.
The majority opinion concludes that the trial judge mis-
valued the real estate awarded Mary because it did not account for
the cost of necessary repairs. [Fn. 1] The majority further
concludes that the court should also have deducted closing costs
and sales commissions from these properties. [Fn. 2]
In my view the trial judge cannot fairly be faulted for
determining net equity as he did. Several reasons support this
conclusion.
First, the net values found by the trial court were
exactly those listed in a document Mary submitted during the trial.
If deductions were necessary for repairs and sales costs she should
have so indicated. Her failure to assert the alleged inaccuracy of
these values or their need of further adjustment until after the
trial (when the properties were awarded to her) should preclude her
from making this claim on appeal.
Second, fair market value represents an "as is, where is"
concept. The fair market value of a house in need of repair will
be lower than that of an otherwise identical house needing no
repairs. Because fair market value is the value of property in its
present condition, I see no reason to assume that the values
submitted by Mary and determined by the trial court were not
already discounted because the properties needed repairing.
Indeed, Eric stated in the trial court, "the house was appraised
'as is' and the 'as is' value was used at trial." I do not read
his brief on appeal as contradicting this position and I am unaware
of any agreement that does so.
Third, Eric also received substantial real estate under
the property division. He received three properties with a net
value of $243,756, whereas Mary received four properties having a
net value of $270,627. All the properties were valued in
accordance with Mary's in-trial submission. The trial court found
that two of the properties awarded Eric (valued together at
$166,256) required repairs before they could be sold. If the
majority's assumption that the fair market value of the properties
did not reflect their repair needs is correct, repair costs would
also have to be deducted from the values assigned to the properties
awarded Eric. Likewise, if values for Mary's properties are to be
net of sales costs, Eric's properties should be valued on the same
basis. Would deducting costs of needed repairs and costs of sale
from Eric's properties as well as Mary's achieve the trial court's
objective of a property division favoring Mary? That depends on
the costs of repair and sale for each property. We lack this
information and it apparently was not presented at trial. Thus we
cannot conclude that the distribution failed to achieve the trial
court's objective of awarding property to Mary having a greater
value than that awarded to Eric.
Any quest for exactitude in valuing real estate will
necessarily fail. Value is at best a matter of informed opinion,
and informed opinions differ, sometimes substantially. About all
one can expect is that values will fall within a reasonable range
and, when numerous properties are being valued for comparative
purposes, that the same criteria for value are used for each
property. The trial court's decision meets these expectations. I
would not disturb it.
FOOTNOTES
Footnote 1:
Lang v. Lang, 741 P.2d 1193, 1195 n.4 (Alaska 1987) (citation
omitted).
Footnote 2:
See Richmond v. Richmond, 779 P.2d 1211, 1213 (Alaska 1989)
(citation omitted).
Footnote 3:
Lang, 741 P.2d at 1195 n.4 (citation omitted).
Footnote 4:
See id.
Footnote 5:
Richmond, 779 P.2d at 1215 (citation omitted).
Footnote 6:
AS 25.24.160(a) provides:
(a) In a judgment in an action for divorce or
action declaring a marriage void or at any time after judgment, the
court may provide
. . . .
(4) for the division between the parties of
their property, including retirement benefits, whether joint or
separate, acquired only during the marriage, in a just manner and
without regard to which of the parties is in fault; however, the
court, in making the division, may invade the property, including
retirement benefits, of either spouse acquired before marriage when
the balancing of the equities between the parties requires it; and
to accomplish this end the judgment may require that one or both of
the parties assign, deliver, or convey any of their real or
personal property, including retirement benefits, to the other
party; the division of property must fairly allocate the economic
effect of divorce by being based on consideration of the following
factors:
(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;
(E) the conduct of the parties, including
whether there has been unreasonable depletion of marital assets;
(F) the desirability of awarding the family
home, or the right to live in it for a reasonable period of time,
to the party who has primary physical custody of children;
(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.
Footnote 7:
See Lundquist v. Lundquist, 923 P.2d 42, 53 (Alaska 1996).
Footnote 8:
Dixon v. Dixon, 747 P.2d 1169, 1173 (Alaska 1987) (citations
omitted).
Footnote 9:
See Money v. Money, 852 P.2d 1158, 1160 (Alaska 1993)
(citations omitted).
Footnote 10:
Given that almost $2,000 of the investment account funds are
in an IRA, the amount available to Mary is actually closer to
$27,700.
Footnote 11:
Mary further contends that the taxes and insurance on the
marital home "could reasonably be expected to exceed $8,000."
Footnote 12:
Neither party discussed estimates of the necessary repairs for
the other properties, but the problem would be similar. The trial
court also did not factor closing costs or sales commissions, all
of which will significantly reduce Mary's net recovery from all the
properties.
Footnote 13:
Davila v. Davila, 876 P.2d 1089, 1094 (Alaska 1994).
Footnote 14:
Richmond v. Richmond, 779 P.2d 1211, 1215 n.6 (Alaska 1989)
(citation omitted); see also Money v. Money, 852 P.2d 1158, 1164
(Alaska 1993).
FOOTNOTES (Dissent)
Footnote 1:
Slip Op. 9-10.
Footnote 2:
Slip Op. at 10.
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