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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Korn v. Korn (5/10/2002) sp-5571

Korn v. Korn (5/10/2002) sp-5571

     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,
     e-mail corrections@appellate.courts.state.ak.us.

            THE SUPREME COURT OF THE STATE OF ALASKA


PAULA KORN,                             )
                              )    Supreme Court No. S-9809
             Appellant,                  )
                              )    Superior Court No.
     v.                       )    3AN-98-9539 CI
                              )
LARRY KORN,                                         )         O P
                         I N I O N
                              )
             Appellee.             )    [No. 5571 - May 10, 2002]
________________________________)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Karen L. Hunt, Judge.

          Appearances:  Peggy A. Roston, Law Office  of
          Peggy  A.  Roston, Anchorage, for  Appellant.
          Robert C. Erwin and Roberta C. Erwin, Erwin &
          Erwin, LLC, Anchorage, for Appellee.

          Before:   Fabe,   Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          BRYNER, Justice.


I.   INTRODUCTION

          I.   This appeal arises from the divorce of Paula and Larry

Korn.   In dividing the couples marital property, the trial court

included on Paulas side of the ledger $14,400 in interim  spousal

support that she had received from Larry and $45,000 in estimated

rental  value  imputed  to Paula because she  had  lived  in  the

marital residence rent-free for eighteen months after separation.

Because interim spousal support and imputed rental value are  not

actually marital property and the trial court did not explain why

it   counted   them   as   marital  property,   we   remand   for

reconsideration and additional findings.

II.  FACTS AND PROCEEDINGS

          In  September  1998 Paula Korn filed for  divorce  from

Larry Korn, her husband of more than thirty-four years.  The next

month  the  couple permanently separated; Paula remained  in  the

marital  residence  and received twelve monthly  interim  spousal

support payments of $1,200 from Larry.  The superior court held a

trial  on  disputed  property  questions  and  issued  its  final

decision dividing the couples marital property in June 2000.  The

decision  awarded Paula a slightly greater share of  the  marital

estate   than  Larry,  basing  this  allocation  on  the  parties

disparate income and earning potential.

          The final decision included a table that listed marital

assets  and  showed  how the court had distributed  them.   Among

other  assets  listed  on Paulas side of the  ledger,  the  table

showed  her  as  receiving  $14,400 in  interim  spousal  support

payments   (twelve  monthly payments of $1,200)  and  $45,000  in

estimated  rental value imputed to Paula for living rent-free  in

the  marital residence after separating from Larry.  The decision

did  not  explain the courts reasons for treating these items  as

marital property and assigning them to Paula.

           Paula appeals, challenging these rulings.

III. DISCUSSION

          I.   A trial court must follow a three-step process when dividing

a couples marital property.  First, the court must determine what

property   is  marital  and  thus  available  for  distribution.1

Second,  the  court must place a monetary value  on  the  marital

property.2   Last, the trial must determine how to  allocate  the

marital property most equitably.3  Here, Paulas arguments concern

the first step of this process  identifying marital property.  We

first consider her challenge to the superior courts treatment  of

interim spousal support as a marital asset; we then consider  her

argument concerning imputed rental value.

          Our  cases  often  have distinguished  between  spousal

          support and marital property.  In Lewis v. Lewis we remanded a

trial courts division of marital property because the trial court

failed to explain why it had merged interim support payments into

the  allocation and distribution of marital property.4   We  held

that  alimony  is  in no way a property settlement,  but  is  the

provision  made for the support of the wife.5  We confirmed  this

ruling in Jones v. Jones: declining to rule that the trial  court

erred  in  refusing to take interim support into account  in  its

order  dividing  the  marital property,  we  observed  that  such

action  would  have been inconsistent with our holding  in  Lewis

concerning  the  role of interim support in  the  allocation  and

distribution of marital property.6  In Ulsher v. Ulsher we denied

a  plaintiffs contention that alimony should be factored into the

division of the marital estate, holding that [p]ayments  that  do

not  divide  property cannot be considered  part  of  a  property

division.7   And  in  McDougall v. Lumpkin we vacated  the  trial

courts  distribution  of marital property  because  the  property

division  may  have  been used to balance the  legally  unrelated

alimony award.8

          As these cases indicate, spousal support is not marital

property.   Yet  here  the  trial court  treated  Paulas  interim

support  as  marital  property.  The court did  not  explain  its

reasons  for doing so.  Lacking any findings to justify  treating

interim  support as marital property, we must vacate this portion

of  the  decision and remand for reconsideration  and  additional

findings.9

          The  trial  court  also placed on Paulas  side  of  the

ledger  a  rental value of $45,000   the courts estimate  of  the

amount  that  should be imputed to Paula for living rent-free  in

the  marital residence for eighteen months after separating  from

Larry.   But the courts decision to treat unrealized rents  as  a

marital asset raises several concerns.

          Because  the  parties had never previously  rented  out

their  residence and evidently had no plans to rent it, the  home

          had no clearly established rental value.  And though the trial

court  apparently estimated the homes rental value from its  fair

market  value, the court failed to specify how it calculated  one

value from the other.  The court simply wrote:

          Plaintiff  has  been living in the  residence
          paying  the utilities since separation.   She
          had  no  opinion  as  to  the  rental  value;
          defendants  opinion of the  rental  value  is
          $3500[  ]  per  month.  Given the  stipulated
          value  of  the  residence, a stream-of-income
          analysis would indicate rental value is  more
          likely  to  be  $2500  per  month.   She  has
          received   $45,000  rental  value  from   the
          residence since separation.
          
          Moreover, counting unrealized rents as a marital  asset

tends to conflict with the usual rule requiring marital assets to

be  valued  as  close  as practicable to  the  date  of  trial.10

Whatever asset-like value Paula might have obtained from her post-

separation  use  of the marital residence, it is clear  that  she

consumed the value as it was received, and no such marital  asset

actually  existed  when  the  trial  court  divided  the  marital

property.

          Although  we  have  sometimes  recognized  that  orders

dividing  marital  property may recapture a marital  assets  pre-

trial  loss  in  value, we have held that  such  orders  must  be

supported  by  findings  that the assets  value  was  dissipated,

wasted,  or  converted to a non-marital form  by  the  party  who

controlled the asset during the period of separation.11  We  also

occasionally have held that trial courts may credit a spouse  for

making  payments  of post-separation income to  preserve  marital

property.12    And in one such case, Rodriguez v.  Rodriguez,  we

recognized  that the spouses post-separation use of the  property

could offset this credit, since any benefit [the spouse] may have

imparted  to  the  marital estate was offset by  the  benefit  he

received  from the estate by living rent-free.13   Yet  in  these

cases,  too,  we  have  required trial  courts  to  make  factual

findings  on  whether a credit is appropriate.14  But  here,  the

trial  court made no findings to explain why it decided to impute

          rental value to Paula or how it arrived at the value it imputed.

          Nor  is it apparent that the court considered the  need

for  such  a  finding.   As already mentioned,   neither  imputed

rental  value nor interim spousal support is actually  a  marital

asset.    Hence,  any allowance for these items in  the  property

decision should have been reflected in the third step of property-

division  process  as an adjustment to the equitable division  of

marital  assets that actually existed.15  Yet by listing  imputed

rental  value and interim spousal support on Paulas side  of  the

ledger,  the court identified these items as real marital assets,

thereby  confusing  the  first and third steps  of  the  process.

Collapsing  the three-step process in this way could easily  have

distracted  the  trial  courts  attention  from  the   need   for

additional  findings.  For while the property decision ostensibly

awarded  this  property  to  Paula,  the  decisions  real  effect

clouded by listing the items as marital assets whose award to one

party  or  the  other  generally requires  little  particularized

explanation   was to charge Paula for having used imputed  rental

value  and  for having received non-marital payments  from  Larry

charges  that  dramatically  reduced Paulas  equitable  share  of

actual marital assets, and so required careful explanation.

          In  short, without knowing why the court decided  these

points  as  it  did, we cannot determine whether  the  individual

adjustments were justified or whether the final property division

was  equitable  as  a whole.   Accordingly, we  must  vacate  the

superior  courts decision and remand the case for reconsideration

and appropriate findings.16

IV.  CONCLUSION

          The  superior courts order dividing the parties marital
property  is  VACATED, and this case is REMANDED  for  additional
proceedings as directed in this opinion.
_______________________________
     1     McDougall v. Lumpkin, 11 P.3d 990, 992 (Alaska  2000).
We  generally review the trial courts classification of  property
for  abuse  of  discretion,  but  when  an  items  classification
presents  a  question  of  law,  we  apply  our  own  independent
judgment.  Id.

     2     Id.  This is a factual determination, which we reverse
only if clearly erroneous.  Id.

     3     Id.   We  review a trial courts equitable division  of
property  for an abuse of discretion and will affirm  unless  the
division is clearly unjust.   Id.

     4    785 P.2d 550, 554 (Alaska 1990).

     5     Id.  (quoting In re Marriage of Reilly, 577 P.2d  840,
843-44 (Mont. 1978)).

     6    835 P.2d 1173, 1176-77 (Alaska 1992).

     7    867 P.2d 819, 821-22 (Alaska 1994).

     8    11 P.3d 990, 995 (Alaska 2000).

     9     See  Lang  v. Lang, 741 P.2d 1193, 1195, 1196  (Alaska
1987) (remanding for findings to explain why trial court included
interim   support  payments  in  final  distribution  of  marital
property,  because court must provide sufficiently  detailed  and
explicit findings to give this court a clear understanding of the
basis of the trial courts decision, and to enable it to determine
the  ground  on  which  the  trial court  reached  its  decision)
(internal quotations omitted).

     10    McDaniel v. McDaniel, 829 P.2d 303,  306 (Alaska 1992)
(quoting Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991)).

     11     Green  v.  Green,  29  P.3d 854,  859  (Alaska  2001)
(internal quotations omitted).

     12     See,  e.g., Berry v. Berry, 978 P.2d 93,  96  (Alaska
1999);  Dodson  v.  Dodson,  955 P.2d  902,  912  (Alaska  1998);
Harrelson  v. Harrelson, 932 P.2d 247, 253 (Alaska 1997);  Ramsey
v. Ramsey, 834 P.2d 807, 809 (Alaska 1992).

     13    908 P.2d 1007, 1013 (Alaska 1995).

     14     Berry, 978 P.2d at 96; see also Cox v. Cox, 882  P.2d
909,  919-20 (Alaska 1994) (noting absence of findings on whether
post-separation  payments  of  marital  expenses  should   change
property distribution and remanding for such findings).

     15     Moreover,  such an adjustment should have  recognized
that,  at  most, Larrys credit could be no more than one-half  of
the  value  Paula received by living rent-free in the house,  for
she  was  a half owner.  Cf. Wood v. Collins, 812 P.2d  951,  958
(Alaska  1991) (holding that ousted domestic partner was entitled
to  half  the rental value of the former couples condominium  for
the post-separation period).

     16     If  the superior court determines after reconsidering
the   issues   of   rental   value  and  interim   support   that
reconsideration  of  other  issues  or  of  the  entire  property
decision  might  be warranted, the court may, in its  discretion,
broaden the scope of the proceedings on remand.