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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Hixon v. Sarkesian (11/18/2005) sp-5958

Hixon v. Sarkesian (11/18/2005) sp-5958

     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

ELIZABETH M. S. HIXSON, )
) Supreme Court No. S- 11489
Appellant,)
) Superior Court No.
v. ) 1JU-90-514 CI
)
MICHAEL S. SARKESIAN, ) O P I N I O N
)
Appellee. ) [No. 5958 - November 18, 2005]
)
          Appeal  from the Superior Court of the  State
          of  Alaska, First Judicial District,  Juneau,
          Larry C. Zervos, Judge.

          Appearances:  Elizabeth M. S. Hixson, pro se,
          Juneau.   Loren  Domke,  P.C.,  Juneau,   for
          Appellee.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh,  and  Fabe, Justices.   [Carpeneti,
          Justice, not participating.]

          MATTHEWS, Justice.


I.   INTRODUCTION
          Elizabeth  Hixson appeals the denial of her  motion  to
modify  the child support obligations of her ex-husband,  Michael
Sarkesian.   Sarkesian  lives and works in  Switzerland.   Hixson
contends  that  a fluctuation in the exchange rate between  Swiss
francs  and  U.S.  dollars  constitutes  a  material  change   in
circumstances   for    modification  under  Alaska   Civil   Rule
90.3(h)(1).  Because we agree that the superior court  needed  to
follow both the methodology specified in Rule 90.3(h)(1) and  the
same  methodology  it  previously used to calculate  support,  we
reverse and remand.
II.  FACTS AND PROCEEDINGS
          Elizabeth  Hixson  and  Michael Sarkesian  divorced  in
1991;  they had two children from the marriage.1  After an appeal
of the divorce decree, the parties reached a settlement agreement
in 1995 to set child and spousal support, and to resolve property
distribution  issues.2  The parties adopted the  superior  courts
findings and conclusions on child support made before the appeal.
          Sarkesian  has lived in Switzerland since  the  divorce
and  is  paid  in  Swiss francs.3  The superior court  calculated
support  by  converting  Sarkesians income  in  Swiss  francs  to
dollars and multiplying his annual adjusted income in dollars  by
twenty-seven  percent, the amount specified for  support  of  two
children  in  Rule 90.3(a)(2).  Support was set at $2,138.80  per
month.
          In  August  2000  Sarkesian moved to modify  his  child
support   because  a  decline  in  income  reduced  his   support
obligation   by   more  than  fifteen  percent,  satisfying   the
presumption  for  modification in Civil  Rule  90.3(h)(1).4   The
superior  court agreed that his income was lower both because  he
no  longer received bonuses and because of a substantial  decline
in  the  value  of the franc as compared to the dollar.5   Hixson
argued on appeal that the superior court erroneously applied Rule
90.3s income cap.6  We agreed Sarkesian was entitled to reduction
in  child  support but concluded that support should be based  on
Sarkesians  actual income of $85,015.41, not on the income  cap.7
On  remand, the superior court set child support at $1,912.85 per
month  by converting Sarkesians income in Swiss francs to dollars
and  multiplying  his  annual  adjusted  income  by  twenty-seven
percent.
          In   2003  Hixson  moved  to  modify  Sarkesians  child
support, contending that fluctuations in the exchange rate  would
result  in increasing Sarkesians support obligation by more  than
fifteen  percent, meeting the presumption for modification.   The
superior  court  denied the modification,  concluding  that  even
accepting  Hixsons exchange rate of 1.33336 Swiss francs  to  the
dollar,  the  benefit to Sarkesian led to only an  eight  percent
increase  in  his support obligation.  Hixson filed a  motion  to
reconsider, which was denied. She appeals.
III. DISCUSSION
          Hixson  and Sarkesian agree that Sarkesians  income  in
Swiss  francs  is essentially unchanged since child  support  was
last modified in 2001.8  Their dispute centers on whether and how
fluctuations  in  the  exchange  rate  should  be   assessed   in
determining whether to modify child support.9
          Civil  Rule 90.3(h)(1) permits modifications  of  final
child  support  awards  upon a showing of a  material  change  in
circumstances.   Moreover, [a] material change  in  circumstances
will be presumed if support as calculated under this rule is more
than  15  percent  greater or less than the  outstanding  support
order.10  Support awards are set based on a percentage of  income
approach.   When  one  parent has primary custody  of  two  minor
children, support is usually set at twenty-seven percent  of  the
non-custodial parents annual adjusted income.11
          The  superior court viewed the exchange rate as  income
          under the definition in the Rule 90.3 commentary: [Income from
all  sources]  should be interpreted broadly to include  benefits
which  would  have been available for support if the  family  had
remained  intact.12   The court calculated  the  benefit  of  the
exchange-rate shift to Sarkesian by determining how much the  new
exchange rate saved Sarkesian on purchases of dollars used to pay
child  support.  Then the court calculated the difference between
the outstanding support order and a new order based on Sarkesians
annual  adjusted income plus the exchange-rate savings.   Because
Sarkesians  support  obligation  would  increase  by  only  eight
percent,  which  was not a material change of circumstances,  the
court denied modification.
          Hixson  argues the courts method was inconsistent  with
both  Rule  90.3(h)  and the courts past practice  in  her  case.
Hixson argues that evaluating Sarkesians child support either  in
dollars  or Swiss francs meets the fifteen-percent threshold  for
modification  if the court multiplies Sarkesians annual  adjusted
income  by twenty-seven percent and compares this amount  to  the
outstanding  support award.  Sarkesian argues that  the  superior
court erroneously viewed the exchange rate as income, and further
contends  that  his  support should not be modified  because  his
income in Swiss francs is largely unchanged.
          We  agree that the method used was erroneous because an
exchange-rate  fluctuation  is not  income  under  Rule  90.3(a).
Although  not  exclusive,  the list  in  the  commentary  largely
denotes  money received through work or investments, or from  the
government.13  Exchange-rate fluctuations do not fit into any  of
these categories, even though they clearly can affect income.
          Even  though  exchange-rate fluctuation is not  income,
Sarkesians  argument  that  the  exchange  rate  should  not   be
considered  in  deciding whether to modify support  lacks  merit.
Rule  90.3(h)(1)  requires comparison of support  orders,  rather
than annual adjusted incomes:  A material change of circumstances
will be presumed if support as calculated under this rule is more
than  15  percent  greater or less than the  outstanding  support
order.14  Sarkesian concedes that a parents foreign income must be
converted  into  dollars before support can be calculated.   When
comparing  support  in two different time periods,  the  exchange
rate  used  to convert foreign income into dollars  is  not  held
constant.   Therefore, calculated support may  change  even  when
annual  foreign income does not.  Applying the exchange  rate  in
this  fashion does not create a system based on cost  of  living,
rather  than income, as Sarkesian contends.  Although the  amount
of  support  that  Sarkesian pays in dollars may  change  due  to
shifts  in  the  exchange rate, he still has available  the  same
percentage of his income in Swiss francs for purposes other  than
child support.
          We  also  reject Sarkesians arguments that  considering
the  exchange  rate in deciding whether to modify  support  would
lead  to  frequent relitigation of support and pose a problem  in
deciding  whether the shift is permanent or temporary.   Frequent
relitigation of support is unlikely because support is  based  on
the  non-custodial parents annual income and can be modified only
upon a showing of a material change of circumstances.  Therefore,
          support  is usually modified no more than once a  year.
Additionally,  the  court would not have to  decide  whether  the
exchange rate used for conversion is permanent or temporary under
Curley  v.  Curley.15  The court could use  an  average  currency
exchange  rate  over  an  appropriate period,  or  a  rate  on  a
specified date.
          Finally,  we  note that this result complies  with  the
parties agreement and the courts past practice in this particular
case.16   The  parties  agreed on the  methodology  to  calculate
support  in  1995  when  they incorporated  the  superior  courts
findings  of  fact  and conclusions of law  in  their  settlement
agreement.    The  superior  court  set  support  by   converting
Sarkesians income in Swiss francs to dollars and multiplying  his
annual  adjusted income in dollars by twenty-seven  percent,  the
amount  specified for support of two children in Rule 90.3(a)(2).
The  superior  court followed this same method when  it  modified
support  in August 2000 and, on remand, in May 2003.  We conclude
that this same method is required now.17
IV.  CONCLUSION
          We REVERSE the order denying the motion to modify child
support  and REMAND for further proceedings consistent with  this
opinion.
_______________________________
     1    Hixson v. Sarkesian, 66 P.3d 753, 756 (Alaska 2003).

     2    Id.

     3    Id.

     4    Id.

     5    Id.

     6    Id. at 757.

     7    Id. at 758-59.

     8     Sarkesians gross income in Swiss francs is  unchanged,
but because of an increase in taxes, his adjusted income in Swiss
francs has declined slightly.

     9     Although  the  standard  of review  for  decisions  on
motions to modify child support is generally abuse of discretion,
we review this decision de novo because it involves a question of
law  based on undisputed facts.  Karpuleon v. Karpuleon, 881 P.2d
318, 320 n.3 (Alaska 1994).

     10    Civil Rule 90.3(h)(1) provides in full:

               A  final  child  support  award  may  be
          modified upon a showing of a material  change
          of circumstances as provided by state law.  A
          material  change  of  circumstances  will  be
          presumed if support as calculated under  this
          rule  is more than 15 percent greater or less
          than  the  outstanding  support  order.   For
          purposes  of this paragraph, support includes
          health  insurance payments made  pursuant  to
          (d)(1) of this rule.
          
     11    Alaska R. Civ. P. 90.3(a).

     12     Alaska R. Civ. P. 90.3 cmt. III(A) (2004-05).  We use
the   commentary  as  guidance  to  interpret  the  civil  rules.
Rusenstrom v. Rusenstrom, 981 P.2d 558, 562 (Alaska 1999).

     13     Alaska  R. Civ. P. 90.3 cmt. III(A) (2004-05),  which
states in part:

          Income includes, but is not limited to:
          
            1.  salaries and wages (including  overtime
          and   tips);       2.   commissions;       3.
          severance pay;      4. royalties;  5. bonuses
          and  profit  sharing;       6.  interest  and
          dividends,    including    permanent     fund
          dividends;      7. income derived from  self-
          employment    and    from    businesses    or
          partnerships;   8. social  security;       9.
          veterans benefits;  10. insurance benefits in
          place   of  earned  income  such  as  workers
          compensation or periodic disability payments;
          11.     workers     compensation;         12.
          unemployment  compensation;    13.  pensions;
          14.  annuities;      15. income from  trusts;
          16.   capital  gains  in  real  and  personal
          property transactions to the extent that they
          represent  a regular source of income;    17.
          spousal support received from a person not  a
          party  to  the  order;       18.  contractual
          agreements;     19.  perquisites  or  in-kind
          compensation  to  the extent  that  they  are
          significant   and  reduce  living   expenses,
          including   but  not  limited   to   employer
          provided  housing and transportation benefits
          (but   excluding  employer  provided   health
          insurance benefits);     20. income from life
          insurance or endowment contracts;  21. income
          from interest in an estate (direct or through
          a   trust);       22.  lottery  or   gambling
          winnings  received either in a  lump  sum  or
          annuity;   23. prizes and awards;    24.  net
          rental  income;      25. disability benefits;
          26.  Veteran Administration benefits;     27.
          G.I.     benefits    (excluding     education
          allotments);     28.   National   Guard   and
          Reserves  drill pay; and  29.  Armed  Service
          Members base pay plus the obligors allowances
          for  quarters,  rations, COLA  and  specialty
          pay.
          
     14    Alaska R. Civ. P. 90.3(h)(1) (emphasis added).

     15    588 P.2d 289, 291 (Alaska 1979) (finding that a change
in  circumstances  must  be more or less  permanent  rather  than
temporary).

     16     See  Flannery v. Flannery, 950 P.2d 126, 132  (Alaska
1998)  (concluding that court must make efforts  to  respect  the
parties  contractual obligations and expectations because parents
original  agreement sets the baseline for considering motions  to
modify based on changed circumstances).

     17     Hixson argues that support can be calculated and paid
in  either  dollars  or Swiss francs.  We conclude  that  support
should  be set in dollars so as to be consistent with the parties
agreement.