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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Shepherd v. Haralovich (10/26/2007) sp-6181
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
| BARBARA SHEPHERD, | ) |
| ) Supreme Court No. S- 11692 | |
| Appellant, | ) |
| ) Superior Court No. | |
| v. | ) 1JU-02-00025 CI |
| ) | |
| GEORGE HARALOVICH, | ) O P I N I O N |
| ) | |
| Appellee. | ) No. 6181 - October 26, 2007 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Patricia A. Collins, Judge.
Appearances: James E. Curtain, Juneau, and
Vance A. Sanders, Law Office of Vance A.
Sanders, LLC, Juneau, for Appellant. George
J. Haralovich, pro se, Juneau.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
PER CURIAM.
EASTAUGH, Justice, with whom CARPENETI,
Justice, joins, dissenting in part.
I. INTRODUCTION
Alleging that her income had declined following her
divorce from George Haralovich, Barbara Shepherd asked the
superior court to recalculate child support. Shepherds income
had declined in part because she had sold rent-producing property
that she had been awarded in the divorce. The superior court
found that Shepherds income was effectively the same as before.
When Shepherd moved for reconsideration, the trial court
considered that income Shepherd could realize from reinvesting
net proceeds from the rental property sale would compensate for
the small decline in her net income and denied reconsideration.
Shepherd appeals the denial of her reconsideration motion and,
among other things, argues that because she was not voluntarily
underemployed, it was error to impute any income to her. We
affirm the courts imputation of investment income because
imputation does not require underemployment. But we remand the
matter to the superior court to determine Shepherds federal tax
liability and recalculate her adjusted annual income to account
for that tax liability.
II. FACTS AND PROCEEDINGS
Barbara Shepherd and George Haralovich divorced in 2002
after a marriage of seventeen years. Shepherd was awarded
primary physical custody of the parties three children. The
divorce decree set Haralovichs base child support obligation at
$1,654 per month. As part of the divorce, Shepherd received the
family home and also received a rental property estimated in 2002
to be worth $235,000. The rental property carried two mortgages
totaling about $110,000. Shepherd sold the rental property for
$265,000 in 2003.
In July 2003 the oldest child moved away from home. In
December the court issued a new custody order for the two
children still at home which set out a week on/week off schedule.
In April 2004 the superior court issued a new child support order
ending Haralovichs child support obligation for the oldest child
and also changing the custody arrangement for the two remaining
children. Child support was based on one child living week
on/week off with both parents, while the other child resided
primarily with Shepherd.
The April 2004 order also noted that Shepherds January
2004 child support affidavit reflected less income than her 2002
affidavit, partly because she did not list any rental income in
2004. Shepherds 2002 affidavit had listed her gross income as
including $50,000 in wages, $21,288 in rental income, and $2,050
from other sources. The April 2004 order stated that the court
would rely on Shepherds 2002 affidavit in calculating income to
compute child support unless Shepherd submitted supplemental
information, including her full 2003 federal tax return, that
explained her decreased income. Based on Shepherds 2002
affidavit, in April 2004 the superior court determined that
Shepherds net income was $51,639 after allowable deductions.
In response to the April 2004 order, Shepherd submitted
an affidavit explaining that she had sold the rental property and
declaring that my income from rentals has gone from $21,288 to
zero. She did not submit a tax return or equivalent documents.
In July 2004 the superior court issued another order
regarding child support. The court used a January 2004 pay stub
to estimate Shepherds net income at $44,126; this was $7,513 less
than the amount set out in the April order. The $44,126 figure
did not include any income from rental property or any investment
income from funds generated by the sale of the rental property.
The superior court declared that [w]hile Ms. Shepherd indicates
that she sold her income-producing property, the court assumes
that she could have continued to receive that income and/or that
she re-invested those funds in such a way that is as or more
financially advantageous as was previously the case. The
superior court in its July order thus seemed to impute $7,513 in
investment income to Shepherd. The court indicated that in
calculating child support it would use an adjusted annual income
figure of $51,639 for Shepherd. The superior court noted that
Shepherd had still not submitted her 2003 federal tax return and
all attachments or any explanation under oath as to the amount
and disposition of the proceeds of the income-producing property.
The court announced that barring a request for reconsideration
and submission of that information, it would issue a support
order based on the prior calculation.
Shepherd then moved for reconsideration and submitted
her affidavit attaching her 2002 and 2003 federal tax returns.
Her 2003 tax return reflected a taxable wage income of $44,421
and a $95,393 capital gain from the sale of the rental property.
She stated in her affidavit that the rental property was not
producing enough income to justify [her] holding it long-term.
She also stated that the sale was made necessary by a poor
financial position partially caused by Haralovichs failure to pay
child support. She asserted that she did not re-invest any
proceeds of the sale in a way that would provide her a regular
income.
In September 2004 the superior court issued a third
order, addressing Shepherds reconsideration motion. Based on the
financial information newly submitted by Shepherd with her
reconsideration motion, the superior court calculated her
adjusted net annual income at $50,730. The superior court noted
that this figure was only $909 less than the net income of
$51,639 it had used in the two prior orders. The superior court
denied Shepherds motion for reconsideration; it reasoned that
although her annual wages were $909 less than the court had
previously assumed (excluding the $95,000 capital gain1), it is
reasonable to assume that at least some portion of the proceeds
of the sale of the rental property would be invested in such a
way as to net at least $909 per year. The superior court
therefore concluded that [t]he $51,639 net annual income listed
in Shepherds 2002 Civil Rule 90.3 affidavit appears to be at
least that income that best reflects [Shepherds] current income
and/or income producing ability.
Shepherd appeals from the September order denying her
reconsideration motion.
III. STANDARD OF REVIEW
We review a trial courts denial of a motion for
reconsideration for abuse of discretion.2 We review decisions to
impute income for abuse of discretion.3 Whether a trial court
has abused its discretion depends on whether we are left with a
definite and firm conviction, after reviewing the whole record,
that the trial court erred in its ruling.4 But [w]hether the
trial court used the correct method of calculating child support
is a matter of law, therefore we give no deference to the trial
courts decision.5 We apply our independent judgment when
reviewing a lower courts interpretation of statutes and other
related legal questions.6
IV. DISCUSSION
A. The Superior Court Did Not Abuse Its Discretion by
Considering the Income-Producing Capability of Funds
from the Sale of the Rental Property.
Shepherd argues that the superior court erred by
imputing income to her and that income may only be imputed to a
parent who voluntarily and unreasonably is unemployed or
underemployed. 7 Shepherd argues that as a matter of law the
trial court must make a determination of voluntary and
unreasonable unemployment or underemployment before imputing
income.
We first observe that there is some question whether
the superior courts final order denying reconsideration, issued
in September, actually imputed any income to Shepherd. This
uncertainty may stem from the three orders issued by the superior
court. The April order imputed no income to Shepherd and was
based on Shepherds earlier statement that she had received
approximately $21,000 in rental income. The July order may have
imputed income of about $7,500 to Shepherd, but that order was
superseded by the September order issued after Shepherd moved for
reconsideration. Shepherd appeals the September order denying
reconsideration.
In its April 2004 order, the superior court relied on
Shepherds 2002 child support affidavit and provided that child
support would be based on her net income of $51,639. The
superior court denied reconsideration in its September order
because it found that Shepherds financial information indicated
her current income was $50,730. Therefore, the superior courts
final order imputed, at most, $909 of investment income to
Shepherd, the difference between $50,730 and the $51,639 referred
to in the April 2004 order.
It is probable, however, that the superior courts
consideration of potential investment income is not an imputation
at all. If imputation is appropriate, a court typically finds
the specific income to be imputed to the parent and uses this
figure to calculate child support.8 The superior court here
simply looked to the earning power of at least some portion of
the proceeds from the rental property sale, and assumed they
would net at least $909 per year, in order to confirm that there
was no significant difference between the income figure the court
had used in its July order and the income figure described in
Shepherds reconsideration motion.
This was an appropriate way for the superior court to
decide whether to grant Shepherds motion for reconsideration.
There was a difference of only $909 between the prior net income
figure and the net income figure revealed in Shepherds
reconsideration affidavit. Shepherds 2003 tax return listed the
gross sales price of the rental property as $265,000. Given that
the court had previously been informed that there were existing
mortgages of approximately $110,000 on the property, it was
reasonable to think that some net proceeds from the sale of the
property could have been safely reinvested and that the
investment income would more than compensate for the relatively
small difference in net income.
The superior court therefore did not abuse its
discretion in concluding in September that the $51,639 net income
figure the court used in the April and July orders to calculate
child support reflects [her] current income and/or income
producing ability. The court did not use the net of the sale
proceeds to impute income. In deciding the reconsideration
motion, the court instead appears to have relied on the net
proceeds only to conduct a reality check to determine whether
there was a significant difference between Shepherds income as
previously determined in April and her income as represented in
her motion for reconsideration, and thus to determine whether
Shepherds Civil Rule 77 reconsideration motion should be granted.
In any event, it would not have been an abuse of
discretion to impute some investment income to Shepherd from the
sale proceeds of the rental property. Her primary argument, that
investment income can only be imputed to a parent who voluntarily
and unreasonably is unemployed or underemployed, misreads Alaska
Civil Rule 90.3.
Alaska Civil Rule 90.3(a)(4) states:
The court may calculate child support based
on a determination of the potential income of
a parent who voluntarily and unreasonably is
unemployed or underemployed. . . . Potential
income will be based upon the parents work
history, qualifications, and job
opportunities. The court also may impute
potential income for non-income or low income
producing assets.
(Emphasis added.) Also indicates that imputing income from
underproducing assets differs from imputation based on
underemployment. In effect, Rule 90.3(a)(4) provides that a
court may impute employment income when there is unreasonable
underemployment and may impute investment income when there is a
non-income or low-income producing asset. The rule does not
expressly or implicitly condition imputation of investment income
on unemployment or underemployment.
Shepherd cites several cases discussing the
unemployment or underemployment of parents9 and asserts that
[t]he unifying theme in these opinions is . . . that income may
only be imputed to a parent who voluntarily and unreasonably is
unemployed or underemployed. 10 These cases are not on point
because they only discuss employment income and do not discuss
underperforming assets. Shepherd cites nothing to suggest that
the voluntarily and unreasonably . . . underemployed finding that
Rule 90.3 requires before imputing employment income is also
required if income is to be imputed from underperforming assets.
Moreover, our decisions indicate that it is not
necessary to find underemployment before imputing asset income.
In Laybourn v. Powell, we held that the superior court properly
imputed income to Laybourn based on his efforts to disguise
actual earnings and conceal assets, even though there was no
finding that he was underemployed or unemployed.11 We noted that
underreporting income or hiding assets is functionally equivalent
to voluntary underemployment.12 We did not discuss whether a
finding of deliberate underemployment is necessary for imputation
of income from assets (and presumably the parties had not argued
this), but we had no difficulty affirming an imputation of income
to someone who was fully employed but hiding assets.
In Ogard v. Ogard, we noted that where an obligor
parent has reduced his or her income by liquidating income-
producing assets and applying the proceeds to the mortgage on his
or her dwelling, a trial court might have good cause to impute
earnings.13 The American Law Institute (ALI) recommends
imputation of asset income without regard to whether the parent
is underemployed. The Institutes Principles of the Law of Family
Dissolution: Analysis and Recommendations states that [i]n
calculating a parents income, the court may . . . (b) impute an
ordinary rate of return to an asset that yields less than an
ordinary rate of return.14 The ALI further explains that a court
should impute an ordinary rate of return on a stock portfolio
producing little or no income even for someone who is employed
and earns a substantial salary.15
Given Rule 90.3(a)(4)s statement that [t]he court also
may impute potential income for . . . low income producing assets
and our precedents, it would not have been error to impute
investment income to Shepherd without first finding deliberate
underemployment.
Shepherd also briefly argues that investment income
should not be imputed because she did not unreasonably and
voluntarily forgo income-producing assets. She contends that
selling the rental property was reasonable and that given her
then-extant economic circumstances, it would be difficult to
conclude that selling the property was actually voluntary. The
voluntary and unreasonable requirements set out in Rule 90.3 for
imputation expressly apply only to unemployment and
underemployment.16 Thus, in Ogard, we noted that the trial court
could impute earnings if a parent sold income-producing assets in
order to reduce mortgage payments.17 Such a reinvestment would
not be unreasonable, but selling one investment to offset
liabilities would presumably improve the parents financial
situation, and it is not obvious why it would be reasonable to
decrease that parents share of child support based on the loss of
the asset. Also, the issue is not whether it was unreasonable
for Shepherd to sell the property. It is whether, having sold
the property, Shepherd could fail to use any of the net sales
proceeds to generate income. Shepherd has not squarely disputed
that issue. She did not demonstrate below that the sales
proceeds were exhausted or that the superior court erred in
stating that it is reasonable to assume that at least some
portion of this money will be invested in such a way as to net at
least $909 per year. Given the evidence before the court on
reconsideration, the court could reason that it would have been
unreasonable to use none of the sales proceeds to generate some
nominal replacement income.
Shepherd argues in the alternative that even if the
superior court did not err by imputing some investment income, it
erred in determining the amount of Shepherds adjusted income for
child support purposes. Shepherd asserts that the net rental
income of approximately $21,000 would have been reduced by the
cost of a handyperson because she could not have performed
building maintenance herself. She also asserts that the $21,000
figure she listed for 2002 was wrong because it was for all of
the parties rental properties, not just the rental property
awarded to her. Hence [t]o impute future income from property
Ms. Shepherd did not then own is simply unsupported by case law,
this record, or common sense. Third, she asserts that the rental
income should have been averaged over a two- or three-year
period. These three contentions are all based on her assumption
that the superior court imputed rental income to Shepherd. But
the court did not impute rental income. At most, the superior
court imputed income from some portion of the net sale proceeds.
Finally, Shepherd argues that the court erred in
considering the proceeds from the sale of the rental property
because they resulted from a one-time sale and were not regular
income. Rule 90.3, Commentary III(A) suggests treating capital
gains as income only if they represent a regular source of
income. The superior court did not treat the one-time capital
gain as income; the court only considered the net sale proceeds
insofar as they could have been reinvested to provide a source of
regular income. The commentary to Rule 90.3 III(A) states that
one-time gifts and inheritances should not be considered as
income, but interest from the principal amount should be
considered as income. By implication, there is nothing wrong
with treating investment income from a one-time capital gain as
income.
B. It Was Error To Calculate Child Support Based on the
Assumption that Shepherd Would Have No Federal Income
Tax Liability.
In calculating allowable deductions for child support
determination purposes, the superior court assumed that Shepherd
would pay no federal income taxes on her income. The superior
court noted in its September order:
In 2002, Ms. Shepherd owed no federal income
taxes. In 2003, she owed $14,335 in federal
income taxes. However, these high taxes are
tied to her sale of the rental property and
receipt of $95,393 in capital gains. . . .
Since her actual tax liability for 2002 was
zero, that number (zero) appears to most
closely approximate actual projected federal
income tax liability.
A threshold question is whether the correctness of the
trial courts assumption in calculating child support that there
would be no federal income tax liability has been raised and
argued sufficiently so as to be properly before us on appeal. In
her brief, Shepherd raises the question whether the record
supports the trial courts calculation of imputed income and
points out that she sought reconsideration of the trial courts
decision, submitting both her 2002 and 2003 income tax returns
and attachments from both returns. And in her statement of the
case, Shepherd contends that she explained to the trial court
that she did not have tax liability for 2002 because that year
she incurred significant legal expenses in relation to properties
at issue in the divorce. She indicated that the legal expenses
were deductible for federal tax purposes in tax year 2002 only.
No one challenged this valid deduction. Shepherd further
maintains in her brief that she informed the trial court that she
used the proceeds from the sale [of the rental property] to pay
$14,335 in federal taxes for 2003. Shepherd then points out that
[t]he trial court failed to mention or discuss why Ms. Shepherd
did not incur income tax liability for 2002: the one-time
expense of legal services related to the preservation of her
income-producing property. Instead, it used the aberration of
property sale-related taxes in 2003 to justify no tax liability
or deductions in 2004.
Shepherd further maintains in her brief that [t]he
trial court also rejected the use of standard deductions since
Ms. Shepherd itemizes deductions and has three exemptions for
income tax purposes. The court believed that since Ms. Shepherds
tax liability for 2002 was zero, that amount should be used as it
appears to most closely approximate actual projected federal
income liability. Based on this flawed analysis, Shepherd
complains, the trial court concluded that the $51,639 net annual
income Ms. Shepherd represented as adjusted net income in her
2002 ARCP 90.3 affidavit appears to be at least that income that
best reflects current income and/or income producing ability and
thus denied Ms. Shepherds motion for reconsideration. Although
these arguments are made under the heading of statement of the
case, rather than in the argument section of Shepherds brief, we
conclude that they are adequate to raise the claim on appeal.
But Shepherd also argues two major legal points in the
argument section of her brief: (1) that the trial court erred in
imputing rental income, and (2) that, even if income could be
imputed, the record failed to support the courts calculation of
the amount of her imputed income. In addressing the second
point, her alternative claim of computational error, Shepherd
specifically argues:
[S]hould the court be otherwise inclined to
impute non-existent net rental income, it
should average that income. As demonstrated
by Ms. Shepherds 2002 and 2003 federal tax
returns, rental income from the Grant Street
property varied from $8,904 (in 2002) to 0 in
2003, for a two-year annual average of
$4,452. Since the property was sold in 2003,
though, Ms. Shepherd will receive no rental
proceeds from it in 2004, or hereafter and a
three year average would yield an average
annual rental income of $2,968.
This argument squarely addresses the computational flaw that
Shepherd describes in her statement of facts: the superior
courts failure to recognize that Shepherds 2002 zero federal tax
liability was a one-time event. Shepards argument for averaging
hinges on the validity of her claim that the 2002 tax deduction
was non-recurring. While Shepherds argument does not draw this
connection explicitly, the point is implicit, and her minimal
treatment of it seems unsurprising given that the reason for the
zero tax liability in 2002 has apparently never been questioned.
In responding to a question from this court at oral
argument, Shepherd maintained that the superior courts September
order was erroneous because the court assumed Shepherds normal
federal income tax liability was zero. For all of these reasons,
we conclude that the issue of Shepherds tax liability is properly
before us, and we therefore turn to the merits. Under Civil Rule
90.3(a)(1)(A)(I), federal income tax is to be deducted from a
parents gross income in order to determine the parents adjusted
annual income. We have previously directed that federal income
tax liability should be deducted from imputed income.18
Therefore, we remand this case to the trial court to determine
the amount that should be deducted from Shepherds income. On
remand, the trial court may take into account the actual tax
liability of Shepherd as reflected in her tax returns.
V. CONCLUSION
For the reasons stated above, the superior courts
imputation of investment income is AFFIRMED but the case is
REMANDED so that the trial court may determine the amount of
Shepherds federal income tax liability and recalculate Shepherds
adjusted annual income to account for that tax liability.
EASTAUGH, Justice, with whom CARPENETI, Justice, joins,
dissenting in part.
The court reasons that the superior court erred in
assuming that appellant Shepherd would pay no income taxes.1
Because such an error could affect the child support award,2 the
court remands for determination of appellants income tax
liability.3
I respectfully dissent from the part of the courts
opinion that remands for that determination. Appellants lawyers
have not argued any such error on appeal and the pro se appellee
has not addressed the topic. The court concludes that appellant
Shepherd adequately raised the income tax question on appeal,4
but in my view, she did not raise the issue at all, either
explicitly or implicitly. We should therefore not consider the
income tax liability topic, much less grant relief to appellant
on this unpreserved issue.
It may seem hypertechnical to require an appellant to
argue an issue explicitly. After all, the appellant here
probably raised the issue in the superior court, and this court
apparently considers the issue to be so clear that its merits can
be resolved with only four lines of discussion5 and without
benefit of appellate briefing. But there are good reasons for
requiring appellants to argue an issue explicitly, or at least
implicitly.
Our appellate rules specify how litigants must present
issues and we have applied those standards in treating as waived
issues that were not adequately briefed. Thus, Appellate Rule
212(c), labeled Substantive Requirements, specifies that the
appellants brief shall contain, among other items, a statement of
issues presented for review, a statement of the case describing
the procedural history and relevant facts, an argument section,
and a short conclusion stating the precise relief sought.
Appellate Rule 212(c)(1)(I) provides that the argument section
shall contain the contentions of the appellant with respect to
the issues presented, and the reasons therefor, with citations to
the authorities, statutes, and parts of the record relied on.
(Emphasis added.) We do not treat the argument requirement
lightly. We have held that [w]here a point is not given more
than a cursory statement in the argument portion of a brief, the
point will not be considered on appeal.6 Even pro se litigants
must adhere to this standard even though we tend to be more
expansive in interpreting their arguments.7
We adopted Rule 212 not to satisfy an esthetic interest
in the cosmetic appearance of briefs, but to make sure that the
issues we decide are truly in controversy, that we do not
overlook issues the parties have raised, and that we have the
benefit of the parties thoughts about the facts and law bearing
on issues we are deciding. Some elemental rigor in describing
the issues for decision also helps with the doctrines of law of
the case and res judicata.
Due process is the ultimate foundation for the
preservation requirement. Ruling against an appellee on an issue
the appellant has not raised deprives the appellee of notice and
an opportunity to be heard. Doing so can be especially
prejudicial to pro se appellees, who lose both the opportunity to
decide whether to hire counsel to address the (unraised) issue
and the opportunity to address the issue themselves.
There are various reasons why an appellant might not
brief a particular issue. An appellant might decide to focus on
particularly compelling contentions, and to ignore others. The
primary, if not only, theme of Shepherds appeal is that it was
error to impute rental income to Shepherd. Appellants Brief at
1,13-14,15,16, 21, 22, 23, 24, 25. Counsel could have reasoned
that this was a compelling theme, given undisputed evidence that
Shepherd had been awarded only one rental property, that she sold
in 2003. And evidence she sold only it because appellee failed
to pay child support supported her assertion that she did not
unreasonably or voluntarily forgo rental income, thus making
imputation inappropriate. Appellants Brief at 19-20, 23-24.
There is good reason to think appellants counsel chose not to
argue the tax issue.8 An appellant might also choose to avoid an
issue in order to limit the appellees responsive arguments and
minimize discussion of unflattering evidence or legal
propositions, or to limit the issues to be litigated on remand.
Of course, a party might not raise an issue through
simple oversight. But even if an appellants lawyer is negligent
in failing to brief a meritorious issue or a pro se appellant
fails to discuss an issue, we regard it as unraised.9 It does
not matter why the issue is not raised; we do not decide issues
not raised by the parties.10
This is a particularly unworthy case for considering an
unraised issue and using it to grant relief to appellant. Two
lawyers co-signed Shepherds substantial opening and reply briefs,
and her oral argument exceeded the usual time allotted.
Haralovich, by comparison, filed only an eight-page pro se brief,
much of which discusses matters of little relevance to the issues
on appeal. He argued for only nine of his allotted fifteen
minutes. Here Shepherd had the burden of going forward on appeal
and demonstrating both legal error and prejudice. If, as I
think, she did not raise the issue, the pro se appellee is being
treated unjustly.
Do Shepherds briefs raise the issue? No. Not
explicitly. Not implicitly. And certainly not adequately.
The issue and argument parts of Shepherds two briefs do
not list, describe, or discuss any error in calculating the
income tax deduction. It would therefore seem that prolonged
review of the appellants briefs is not needed to confirm that
Shepherd has not asked us to reverse on the theory the superior
court miscalculated the income tax deduction in awarding child
support. If Shepherd were asking us to do so, one would expect
the argument part of her brief to clearly and directly assert
that the superior court erred by failing to deduct Shepherds tax
liability and by assuming there was zero tax liability, and that
reversal is therefore required. This argument can be easily
made. It is factually and legally simple. Although she made no
such argument on appeal she raised the issue in the superior
court. The argument there could have been clearer, but she
asserted that it was error to assume Shepherd had no income tax
liability. This confirms that her lawyers, who co-signed her
appellate briefs and also represented her in the superior court,
knew how to raise the issue when they wanted to.
The courts opinion reviews Shepherds opening brief at
some length and concludes that the issue was raised, at least
implicitly.11 A casual reader unfamiliar with Shepherds briefs
and her actual arguments might assume from the courts description
of her opening brief that Shepherd actually argued the issue.
Only a reader familiar with that brief would know what part of
the brief contains the passages quoted or described by the court.
Considered part-by-part, appellants opening brief does
not brief the remand issue. All of the direct references to the
issue are found in, and only in, the part of the opening brief
discussing the transactional and procedural facts.12
Thus, the table of contents of the opening brief lists
the argument sections main topic headings as follows: The trial
court erred by imputing any income to Ms. Shepherd, who is
neither unemployed nor underemployed . . . . The record does not
support the trial courts calculation of imputed income.
Appellants Brief at ii. Neither heading mentions taxes; both
headings refer to imputation of income.
Part V of the brief lists the two issues presented for
review as follows:
1. Did the trial court err by imputing
income to appellant?
2. If the trial court did not err in
imputing income to appellant, did the trial
court err in determining the amount of income
to impute to appellant?
Appellants Brief at 1. Both issues focus on the imputation of
income. The first asks whether it was error to impute income to
Shepherd; the second asks whether the court erroneously
determined the amount of imputed income. Neither issue as set
out mentions taxes or tax errors. No stand-alone computational
issue is listed; the computational issue listed by Shepherd
arises only if the superior court imputed income to Shepherd.
The court correctly notes that Part VI of the brief,
setting out the statement of the case, does discuss the superior
courts rulings on the income tax deduction and what the superior
court assumed about Shepherds annual income taxes.13 That part
is fourteen pages long. It also discusses many other
transactional and procedural facts. Appellants Brief at 1-14.
Some of those facts do not directly bear on any appellate issue,
and many relate to the property division that awarded the rental
property to Shepherd, her sale of that property, and Haralovichs
alleged noncompliance with his child support obligations.
Shepherds fact statement discusses at length the orders and
reconsideration motions that culminated in the September 2004
order. Appellants Brief at 1-14. It consequently describes a
variety of superior court issues and rulings that are not at
issue on appeal.
Part VIII is the briefs argument part. It contains
three sections. The first section discusses applicable case law.
This section discusses only the legal standard for deciding
whether to impute income. Appellants Brief at 15-17. It does
not discuss how any imputed amount should be calculated. It
focuses on demonstrating that income may be imputed only if a
parent is voluntarily and unreasonably unemployed or
underemployed. Appellants Brief at 17.
The second and third sections of appellants argument
part both address imputed rental income. Both presuppose that
the superior court imputed rental income to Shepherd. Both
therefore state the issues in even more limited fashion than the
two issues described in Part V, which lists the issues presented
for review.
Thus, the second argument section argues that it was
error to impute rental income to Shepherd for property she no
longer owns. Appellants Brief at 21. Nothing in that section
discusses income tax liability; it largely focuses on her
contention that she acted reasonably and involuntarily in 2003
when she sold the only rental property she owned, and that the
standard for imputing income was therefore not met.14 Appellants
Brief at 19-21. There is no basis in this argument section for
granting her any appellate relief if, as the entire court agrees,
the superior court did not in fact impute any rental income to
Shepherd.15
The third argument section argues that the record does
not support imputing to Shepherd net rental income of $21,288.
Appellants Brief at 21. It also contains ancillary arguments,
all relating to imputation of rental income. None of those
arguments asserts that the superior court erred in basing the
income calculation on the one-year experience of zero tax
liability. Appellants Brief at 22-23. None challenges the
correctness of the trial courts assumption in calculating child
support that there would be no federal income tax liability, as
this court describes the issue before deciding whether it was
raised and argued sufficiently so as to be properly before us on
appeal.16 Critical to her argument that there was a
calculational error is Shepherds contention that the superior
court imputed a substantial amount of rental income to her. But
all members of this court agree that there was no imputation of
rental income.17 We thus unanimously reject the root of her
argument. Her claim of calculational error, as argued, withers
away.
Part IV.B of the courts opinion concludes that Shepherd
raised and sufficiently argued the issue of income tax
liability.18 I disagree. Surely Haralovich will too, when he
learns to his surprise that the only issue on which the court
remands is one that Shepherd has not argued on appeal and which
Haralovich therefore had no reason to think he should address
either.
I do not think Shepherd has preserved the issue merely
by unfavorably characterizing in the facts section of her brief
the superior courts decision not to give her credit for any
income tax deductions.19
I also do not think that the portion of Shepherds
argument section quoted at length on page 14 of the courts
opinion refers, expressly or implicitly, to Shepherds income tax
liability. Shepherd argues in that passage only that if any
rental income is to be imputed to her, it should be only the
average of her rental income over two years, including a year in
which she earned no rental income.20 Appellants Brief at 25.
This reading of the argument is supported by Shepherds reply
brief, which states that the matter now properly before this
Court [is] [d]id the trial court erroneously impute non-existent
rental income from long-sold property to appellant? Reply Brief
at 1. Her reply brief later reiterates the dispute as she sees
it: the issue properly before this court [is] imputation of
income to Ms. Shepherd from real property previously sold. Reply
Brief at 8.
The court reads passages in Shepherds brief as
discussing and raising the issue, at least implicitly.21 But all
of the passages discussed by the courts opinion beginning at page
13 line 6 through page 14 line 6 are found only in the fact
portion, not the argument portion, of appellants brief. The
passage quoted in the opinion at page 14 lines 12 through 20 says
nothing of an alleged error in assuming zero tax liability. That
passage speaks of 0 rental income, not of an erroneous assumption
there was 0 tax.22
The issue perceived by the court is not implicit nor
can it be characterized as having received even minimal
treatment.23 If the issue had been raised, one would expect
Shepherds lawyers to have cited some authority to demonstrate the
error, presumably the same Civil Rule the court cites in
confirming that income tax is to be deducted from gross income.24
But the passage of the brief quoted at page 14 of the opinion
says nothing of a failure to deduct taxes, cites no rule or case
discussing a deduction for taxes, and only refers to the tax
returns to demonstrate that rental income dropped to zero in
2003. Appellants Brief at 25. This argument is made to support
Shepherds claim the rental income should be averaged, not that
tax payments should be deducted. Appellants Brief at 25.25
The topic did come up briefly at oral argument, but
only because a member of this court asked Shepherds counsel if
the September order was in error because the superior court
assumed that Shepherds normal federal income tax liability was
zero. Not surprisingly, counsel agreed, recognizing a slow pitch
when he saw one, but nothing in appellants briefs raised that
question. And if a member of the court had not asked that
question, the topic would not have been mentioned at argument.
Parties may not raise new issues at oral argument.26 That the
court sua sponte raised the topic at argument does not excuse
Shepherds failure to preserve the issue. Haralovich,
representing himself, had no adequate warning that he should be
prepared to discuss a topic not mentioned in the briefs.
Finally, even if Shepherds opening brief could be
charitably read to have mentioned the issue, it was mentioned so
indirectly and obscurely that we should hold the discussion was
too cursory to have preserved the issue.
We should therefore affirm every aspect of the superior
courts grant of summary judgment and final order denying
reconsideration. I join in the courts opinion to the extent it
affirms the superior courts grant of summary judgment and final
order denying reconsideration.
_______________________________
1 Alaska Civil Rule 90.3, Commentary III A(16) suggests
capital gains should be treated as income only to the extent they
represent a regular source of income.
2 Neal & Co., Inc. v. Assn of Vill. Council Presidents
Regl Hous. Auth., 895 P.2d 497, 506 (Alaska 1995).
3 OConnell v. Christenson, 75 P.3d 1037, 1039 (Alaska
2003) (citing Rhodes v. Rhodes, 754 P.2d 1333, 1335 (Alaska
1988)).
4 Peter Pan Seafoods, Inc. v. Stepanoff, 650 P.2d 375,
378-79 (Alaska 1982).
5 Turinsky v. Long, 910 P.2d 590, 594 n.10 (Alaska 1996)
(citing Charlesworth v. State, Child Support Enforcement Div.,
779 P.2d 792, 793 (Alaska 1989)).
6 Paxton v. Gavlak, 100 P.3d 7, 10 (Alaska 2004).
7 Quoting Alaska Civil Rule 90.3, Commentary III(C).
8 See, e.g., OConnell, 75 P.3d at 1038 (explaining that
superior court imputed income of $43,550.13 to OConnell and then
calculated his support obligation based on this amount).
9 Shepherds brief cites: Nunley v. State, Dept of
Revenue, Child Support Enforcement Div., 99 P.3d 7 (Alaska 2004);
Olmstead v. Ziegler, 42 P.3d 1102 (Alaska 2002); Robinson v.
Robinson, 961 P.2d 1000 (Alaska 1998); Vokacek v. Vokacek, 933
P.2d 544 (Alaska 1997); Kowalski v. Kowalski, 806 P.2d 1368
(Alaska 1991); and Pattee v. Pattee, 744 P.2d 658 (Alaska 1987).
Pattee is the only one of these cases to mention sale of assets,
but Pattee did not involve imputation of asset income, and it was
decided under the framework existing before Rule 90.3, which was
adopted by Supreme Court Order No. 833 (April 30, 1987), and
became effective in August 1987. See Pattee, 744 P.2d at 662.
10 Quoting Alaska Civil Rule 90.3, Commentary III(C).
11 Laybourn v. Powell, 55 P.3d 745, 746 (Alaska 2002).
12 Id. at 747.
13 Ogard v. Ogard, 808 P.2d 815, 819 n.6 (Alaska 1991).
14 American Law Institute, Principles of the Law of Family
Dissolution: Analysis and Recommendations 3.14(4) (2002).
15 Id. at 3.14 cmt. d.
16 The court may calculate child support based on a
determination of the potential income of a parent who voluntarily
and unreasonably is unemployed or underemployed. Alaska Civil
Rule 90.3(a)(4).
17 Ogard, 808 P.2d at 819 n.6.
18 Rodvik v. Rodvik, 151 P.3d 338, 351 (Alaska 2006).
1 Slip Op. at 12, 15.
2 Alaska R. Civ. P. 90.3(a)(1)(A)(i) (providing that
income taxes are deductible from gross income).
3 Slip Op. at 15.
4 Slip. Op. at 14, 15.
5 Slip Op. at 15 ll. 5-8.
6 Petersen v. Mut. Life Ins. Co. of N.Y., 803 P.2d 406,
410 (Alaska 1990) (citations omitted).
7 Peterson v. Ek, 93 P.3d 458, 464 n.9 (Alaska 2004)
(stating that [w]e judge a pro se litigants performance by a less
demanding standard); Gates v. City of Tenakee Springs, 822 P.2d
455, 460 (Alaska 1991) (treating as abandoned claims of pro se
litigant raised below but only cursorily or not at all on
appeal).
8 Shepherds statement of points on appeal, filed when she
commenced her appeal, included this appellate contention: 2.
The trial court erred in failing to include mandatory deductions
from gross income which appellant is entitled to receive pursuant
to Alaska R. Civ. P. 90.3. Had this point been discussed in
these terms in appellants arguments, there is no question she
would have preserved it. But because the other two points listed
on her statement of points on appeal correspond exactly to the
two arguments she does raise in Part VIII of her brief, it
appears she intentionally chose not to brief this issue.
Comparing the text of the point with the text of her arguments
also strongly suggests intentional waiver. See note 25 below.
9 Cf. State v. ONeill Investigations, Inc., 609 P.2d 520,
528 (Alaska 1980) (When, in the argument portion of a brief, a
major point has been given no more than cursory statement, we
will not consider it further. Failure to argue a point
constitutes an abandonment of it.).
10 Id.
11 Slip Op. at 13-14. The court refers only to appellants
opening brief. Nothing in appellants reply brief can be read to
raise the issue, although the reply brief does confirm how
limited the appellate issues are. Thus, it asserts that Many of
appellees assertions are simply not relevant to the matter
properly before this Court: Did the trial court erroneously
impute non-existent rental income from long-sold property to
appellant? Reply Brief at 1.
12 I use the word issue advisedly, without implying that
the tax question is indeed an appellate issue. The tax question
was an issue in the superior court. It is an issue before this
court only because this court says it is, not because the
appellant says it is.
13 This is the part that, per Appellate Rule 212(c)(1)(G),
shall provide a brief description of the case and a concise
statement of the course of proceedings in, and the decision of,
the trial court. Appellant shall state the facts relevant to
each issue, with references to the record as required by
paragraph (c)(8), in this section or in the appropriate argument
sections.
14 To impute employment income, a court must first find
voluntary and unreasonable unemployment or underemployment. Slip
Op. at 8 (citing Alaska Civil Rule 90.3(a)(4)). Shepherd relies
on the standard for imputing employment income, but she is
actually contending that the superior court imputed rental, not
employment, income to her. Appellants Brief at 17, 19-21.
15 Slip Op. at 12.
16 Slip Op. at 13.
17 Slip Op. at 12.
18 Slip Op. at 13, 14.
19 The distinction between the fact and argument sections
of the brief may seem, at first glance, to be unduly harsh. It
is not, for two reasons. First, Alaska Appellate Rule
212(c)(1)(I) and our case law both explicitly require that issues
be preserved in the argument portion of the brief. Second, if we
permit parties to treat negative characterizations of the
superior courts decision as if they were legal arguments, we
allow them to unfairly surprise their adversaries. Following
this case, parties will be required to carefully parse the facts
for any lurking legal issues, even if their opponent is
represented by legal counsel. Moreover, parties often include a
thorough discussion of the procedural history of a case, partly
because our rules seem to encourage it, and perhaps also to give
some indication whether any alleged error was harmless or
prejudicial. Treating this history as argument, at least for
represented appellants, can only lead to surprise and confusion.
20 Slip Op. at 14.
21 Slip Op. at 12-15.
22 Compare Slip Op. at 14 ll. 21-23 with Shepherds quoted
passage.
23 Slip Op. at 14.
24 Slip Op. at 15 (citing Alaska Civil Rule
90.3(a)(1)(A)(i)).
25 Comparing appellants brief with the statement of points
appellant filed when she commenced her appeal, see footnote 8,
above, confirms that she has not argued the issue, even
implicitly. The relevant words in her second point on appeal are
mandatory deductions, gross income, and Civil Rule 90.3.
Mandatory, deductions, gross income, and 90.3 appear nowhere in
the table of contents (and thus the argument headings), the list
of issues, the standard of review, or the conclusion sections of
appellants brief. The words mandatory, deductions, and gross
income appear nowhere in the three parts of appellants argument
section of her brief. And the references to Rule 90.3 in the
argument section are never offered to support any contention that
income taxes must be deducted from gross income, or that the
superior court erred in calculating income tax liability or
deductions due for income tax liability. The statement of points
on appeal therefore implies that Shepherds attorneys chose to
waive the argument on appeal.
26 See Petersen v. Mut. Life Ins. Co. of N.Y., 803 P.2d
406, 411 (Alaska 1990) (holding that when appellants brief does
not raise an argument, issue is waived).
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