| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ferguson v. Ferguson (10/16/2008) sp-6317
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
suggested 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
| VICTORIA FERGUSON, | ) |
| ) Supreme Court No. S- 12837 | |
| Appellant, | ) |
| ) Superior Court No. | |
| v. | ) 3AN-01-07834 CI |
| ) | |
| JAMES FERGUSON, | ) O P I N I O N |
| ) | |
| Appellee. | ) No. 6317 October 16, 2008 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sen K. Tan, Judge.
Appearances: Allison E. Mendel, Mendel &
Associates, Anchorage, for Appellant. Andrew
Josephson, Law Offices of Dan Allan &
Associates, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Carpeneti, and Winfree, Justices.
FABE, Chief Justice.
I. INTRODUCTION
Victoria Ferguson appeals the superior courts order
denying her motion
to modify the child support agreement she entered into with her
former husband, James Ferguson. She argues that the lower court
failed to make an adequate inquiry into the facts underlying her
claim and that it mistakenly concluded that no change of
circumstances could justify a modification. Victoria also
appeals the lower courts award of attorneys fees. Because the
Fergusons prior agreement contemplated Victorias current
circumstances, Victoria has already received the maximum amount
of child support available under Alaska Rule of Civil Procedure
90.3. And the trial court properly concluded that Victoria can
adequately provide for her childrens needs. Finally, the award
of attorneys fees fell within the superior courts discretion. We
therefore affirm the lower courts decision in all respects.
II. FACTS AND PROCEEDINGS
James (Jim) and Victoria Ferguson were married in 1984.
They had three children together, the oldest of whom is now
eighteen. They divorced in September 2001. Prior to the
divorce, Jim and Victoria agreed to a division of their real
estate and investment assets, and they formed a parenting plan
that addressed custody, visitation schedules, and child support,
among other issues. Superior Court Judge Sen K. Tan found that
the Fergusons agreement represented a fair and equitable
distribution of the marital assets that served the best interests
of the children. Accordingly, the lower court incorporated the
settlement terms into its divorce decree.
Jim and Victoria agreed to an unequal property division
under which Victoria was to receive $233,000 more of the marital
assets than Jim in lieu of future child support payments.
Victoria was also to receive $60,000 worth of assets as a lump
sum spousal maintenance payment. The parenting plan contemplated
shared physical custody consisting of a minimum time of 30%-50%
of the time with either parent after a one-year transitional
visitation plan. But the agreement clarified that [t]hough the
parties will have shared physical custody beginning August 1,
2002, the child support calculations are based on the mother
having primary physical custody of the minor children throughout
their minority. A table accompanying the plan indicates that the
parties calculated child support on the basis that Jim would earn
an adjusted income of $100,000, an amount that exceeded the
$84,000 cap established by Civil Rule 90.3 at the time.1
The superior court closely scrutinized the Fergusons
child support agreement, expressing concern about the lump-sum
payment of future support obligations. Judge Tan noted, I dont
know if I can set child support prospectively and essentially by
agreement, remove the right to file a modification. Victorias
counsel at the time reassured the court, insisting that the
Fergusons arrangement was appropriate in the unusual circumstance
in which people can afford to prepay child support. Victorias
counsel added that both parties understand that theyve agreed on
a certain physical [custody] arrangement today and that
arrangement may change . . . [but] that is not going to change
this child support arrangement. Finally, Jims counsel pointed
out that the parties calculated the child support according to
[Civil Rule] 90.3 and that the calculation uses an annual salary
of $100,000 rather than the minimum [$84,000], so if that even
if that amount did increase pursuant to [Civil Rule] 90.3, its
already taken that into account.
Following the divorce, the Fergusons soon resumed
litigation that led to the appointment of a custody investigator
and a guardian ad litem. For four years after the divorce,
Victoria did not work because she suffered from debilitating
depression. During this time, she liquidated many of her
investments and the real estate assets she had received in the
divorce settlement and withdrew funds from her IRA to maintain
her household. On May 6, 2004, the superior court issued a
revised custody order that mandated strict application of the
week-on week-off schedule. In February 2005 Victoria resumed her
former career as an engineer and began earning a gross income of
$102,000.
On October 30, 2006, Victoria filed a motion to modify
child support, alleging that over the past year all three
children increasingly . . . spent more time with her. Victoria
argued that the existing child support arrangement was inadequate
in light of this de facto change in the custody schedule. Her
motion alleged that none of the property that Victoria received
as lump sum child support was actually liquid and that the
parties took no account of the costs of sale or taxes to
liquidate the property. Consequently, Victoria reasoned, [t]he
current arrangement is not meeting the needs of the children and
needs to be modified. Jim filed a cross-motion to retroactively
modify child support in case the trial court decided to reopen
the child support issue.
Superior Court Master Suzanne R. Cole conducted
hearings on February 27 and May 15, 2007. During the first
hearing, Master Cole identified Victorias assertion of changed
circumstances as a threshold issue and indicated that she would
like to rule on that before we get to income calculations. The
master then set another hearing limited to the change of
circumstances issue. After that second hearing, the master
concluded that Victoria had failed to demonstrate a change of
circumstances and therefore issued a recommendation without
considering evidence on factors that might have informed the
extent of an award modification.
In her recommendation to the superior court, Master
Cole rejected Victorias argument that the parties had overlooked
the liquidation penalties associated with the settlement assets.
The master reasoned that Victoria had knowingly entered into the
settlement, which was carefully crafted with the assistance of
counsel, and subjected to close scrutiny by the court. According
to the master, the parties were aware that most of the assets
were not liquid and would bear tax consequences.
The master also rejected Victorias argument that the
childrens increased time in her household represented a material
change in circumstances. The master pointed out that the
Fergusons agreement anticipated a fluid custody arrangement and
calculated support based upon primary custody to Ms. Ferguson to
permit such fluidity. Because the Fergusons division of property
provided Victoria with the maximum child support under the
fiction of primary custody to Ms. Ferguson, Master Cole reasoned
that it already gave her what she now argues for a primary
custody calculation. Master Cole further concluded that the
finality of the property division bestowed benefits upon both
sides, with Jim unable to pursue his colorable claims for
modification such as his reduced income, imputed income for her,
or child support when he had primary custody.
The master distinguished the case law cited by Victoria
in support of modifying the child support agreement, giving
particular attention to State, Department of Revenue, Child
Support Enforcement Division v. Green.2 That case involved a
parent who exhausted a lump-sum payment of child support and had
to rely on state benefits to adequately meet the needs of her
child.3 Master Cole pointed out that no court had approved the
agreement at issue in Green, and that [u]nlike the obligee in
Green, Ms. Ferguson is not on the edge of poverty. Her childrens
needs are more than adequately met. Finally, Master Cole
addressed extraordinary expenses, which the Fergusons had agreed
in the original parenting agreement to share provided they were
mutually agree[d] on. Master Cole recommended that the Fergusons
divide these expenses equally for any activities in which the
children are currently participating.
On June 29, 2007, before the superior court had decided
whether to adopt the masters report, Jim filed a motion for
attorneys fees. On July 10 Victoria filed objections to the
masters report, alleging factual and legal errors. Jim opposed
the objections, and on July 26 Judge Tan adopted the masters
recommendation. The superior court ordered Victoria to file any
opposition to the motion for attorneys fees within ten days.
Victoria disputed several items in the attorney billing
statements and in his reply Jim revised his fee request downward
from $7,329 to $6,834. Eventually, Judge Tan ordered Victoria to
pay $2,050.20, or thirty percent of Jims actual reasonable fees
of $6,834.
Victoria appeals.
III. STANDARD OF REVIEW
We review a trial courts decision to modify or deny
modification of a child support order for abuse of discretion.4
We will find an abuse of discretion only where the record as a
whole leaves us with a definite and firm conviction that a
mistake has been made.5 The award of attorneys fees in a divorce
action also rests within the broad discretion of the trial court
and will not be disturbed on appeal unless it is arbitrary,
capricious, or manifestly unreasonable.6
IV. DISCUSSION
A. The Trial Court Did Not Abuse Its Discretion when It
Determined that Victoria Failed To Demonstrate a Change
of Circumstances that Requires Modification of Child
Support.
Victoria argues that the lower court incorrectly based
its decision on the Fergusons intentions as they entered into
their divorce settlement rather than the childrens best interests
or the evolution of the Fergusons circumstances following the
divorce. Quoting our decision in Bunn v. House, Victoria points
out that courts have a special duty with regard to the support of
children whose parents have divorced . . . .7 Victoria suggests
that this duty should have led the lower court to modify support
because the children need additional support and their mother is
unable to support them at the expected level. Victoria contends
that her inability to provide this expected level of support
stems from changed circumstances, namely her unemployment
following the divorce, her nearly exclusive custody of the
children, and the tax consequences of liquidating the assets that
she received in the divorce settlement.
But the divorce settlement expressly contemplated all
of the circumstances that Victoria now cites. As Jim points out,
the parties calculation of child support imputed no income to
Victoria, and thus her unemployment triggered no change in
circumstances. Similarly, Victorias custody of the children
fails to support her claim for modification because the Fergusons
settlement stipulates that the child support calculations are
based on the mother having primary physical custody of the minor
children throughout their minority. Finally, Victoria fails to
sustain her claim that the settlement inadequately accounted for
the taxes and other costs associated with liquidating the assets
she received. The record indicates that Victoria fairly
bargained for the settlement agreement with the assistance of
counsel and that her attorney strongly advocated that the
agreement be accepted by the trial judge. And the property
agreement itself expressly recognizes each partys right to seek
the advice of a tax professional.
Victoria contends that even accepting these allegations
as true along with the lower courts finding that Victorias
$102,000 annual salary enables her to adequately meet the
childrens needs the law does not support the lower courts ruling
against her. In support of this claim, she cites our decisions
in Flannery v. Flannery,8 Arndt v. Arndt,9 State, Department of
Revenue, Child Support Enforcement Division v. Green,10 and
State, Department of Revenue, Child Support Enforcement Division
v. Pealatere.11 Victoria strains to draw a persuasive analogy
between these cases and her own.
Victoria emphasizes our holding in Flannery that
particular terms of a child support agreement will not totally
restrict the courts ability to modify it so long as a change of
circumstances is proven.12 In Flannery, a father sought relief
under Alaska Rule of Civil Procedure 90.3(h)(1) from a private
agreement to calculate child support payments on income exceeding
the Civil Rule 90.3(c)(2) cap. We rejected the fathers claim
that his decrease in salary should trigger the fifteen percent
rule, Civil Rule 90.3(h)(1)s presumption of a change in
circumstances.13 We also rejected the fathers argument that his
taking custody of two of the couples children supported his claim
for modification because that custody had already triggered a
decrease in his obligations and for there to be a substantial
change of circumstance, something must occur which was not
contemplated by the parties at the time they had entered into
their initial agreement.14 We nevertheless remanded for a
determination of whether any reduction in income is permanent or
temporary, instructing the trial court to use its discretion to
modify the child support award if there was a permanent change.15
But while the father in Flannery sought to reduce his
payments to a level within or closer to the cap, Victoria seeks
additional payments that would exceed the statutory cap.
Victoria maintains that the cash value of her property settlement
was actually much less than represented in the agreement. Yet
she does not allege that she received less than the maximum award
allowed under Rule 90.3, conceding that the child support
agreement provided an amount higher than the Rule required.16
Thus, the modification that Victoria seeks would award her more
than the maximum amount that the law entitled her to receive in
the first place.
Victoria argues that the lump-sum nature of the child
support award should militate in her favor. Quoting Arndt v.
Arndt, Victoria argues that there should not be a trade-off
between property divisions and child support awards.17 Like
Flannery, Arndt involved an obligor parents attempt to reduce a
child support obligation.18 The non-obligor parent argued that
the parties unequal property division implied that some of the
child support in fact represented disguised alimony.19 We
rejected that argument for the simple reason that [d]ivision of
marital property by the court is separate and distinct from
questions of child support.20
Victoria proceeds to discuss cases in which the state
sought reimbursement of public assistance from an obligor parent,
arguing that the lower courts reliance on State, Department of
Revenue, Child Support Enforcement Division v. Green was
misplaced.21 But Master Cole concluded that Green is clearly
distinguishable. We held in Green that the state possesses an
independent statutory right under AS 25.27.120(a) to recoup the
cost of public assistance payments from an obligor parent, even
when the obligor has prepaid child support pursuant to an
agreement executed at divorce.22 The master noted that, unlike
Victoria, the obligee in Green had agreed to a lump-sum
prepayment of child support without court approval and was unable
to meet the needs of her children without support from the state.
Victoria characterizes the lower courts reading as unduly narrow,
arguing that nothing in the [Green] opinion either states or
implies that the only children to whom an obligor who prepaid
support continues to owe . . . a support duty are those children
who would otherwise be destitute. We agree with Jim that the
states claim for repayment of public assistance hardly parallels
Victorias claim for child support exceeding the $233,000 in
assets that she has already received.
Victoria also relies on State, Department of Revenue,
Child Support Enforcement Division v. Pealatere.23 Like Green,
and unlike this case, Pealatere involved a motion by the State of
Alaska to recoup public assistance.24 The state sought to modify
the noncustodial parents child support obligation, which the
parties had agreed to offset in their division of property.25 We
affirmed the lower courts modification of child support to
$301.50 per month because the noncustodial parent had experienced
a substantial rise in her income.26 We also held, however, that
the superior court properly deducted $50 a month from that figure
to offset the noncustodial parents interest in marital property
against her child support obligation.27 Here, the marital assets
that Jim relinquished in the settlement would offset any modified
award that Victoria might receive. And Jims lump-sum payment
exceeded the maximum amount of child support that Victoria could
have demanded under Civil Rule 90.3.
Victoria also claims that the superior court failed to
develop an adequate factual record with respect to the childrens
needs, the current custody arrangement, and the reasons behind
Victorias exhaustion of the assets that she received in the
property division settlement. She further alleges that the lower
court made findings without sufficient factual support. We
disagree.
First, Victoria argues that [f]or purposes of analyzing
whether circumstances had changed, the court should have
concluded that at least two of the children were spending more
than 70% of the time with their mother. But as Master Cole
pointed out, the current custody arrangement served as no basis
for modification because Victorias child support calculation
already gave her what she now argues for a primary custody
calculation. Similarly, Victorias unemployment for four years
offers no grounds for relief because the property settlement
imputed no income to her. And although Victoria asserts that the
cash value of the liquidated support was actually much less than
represented in the agreement, she concedes that the parties
base[d] support on an amount higher than [Civil Rule 90.3]
required. She makes no allegation that under Civil Rule 90.3 she
was entitled to a greater amount of child support. Finally, as
the lower court observed, her settlement was carefully crafted
with assistance of counsel, and subjected to close scrutiny by
the court.
Victorias contention that the lower court made factual
findings without evidentiary support is also unconvincing. She
points out that the lower court made a note of Jims shift of
employment from engineering to teaching and then back to
engineering. But even if this factual detail lacks support in the
record, it does not appear to have influenced the lower courts
analysis of the case. The same rationale blunts the point of
Victorias attack on the lower courts findings regarding the
alleged $1 million value of her residence and the time that the
children spent in Victorias custody. And because the superior
court correctly concluded that Victoria failed to demonstrate a
substantial change of circumstances, the trial courts scope of
factual inquiry was appropriately limited.
This case illustrates why prepaid child support
agreements require court approval and why that approval should
only be granted after a careful review of the parties
circumstances. Circumstances can change, and it can be difficult
to alter a prepayment agreement without injustice. In this case
there was court approval of the prepayment agreement preceded by
appropriate judicial scrutiny. Although Victoria believes that a
substantial change of circumstances occurred in the five years
following the agreement, the superior court master properly
concluded that any altered circumstances were contemplated by the
parties at the time they entered into their initial agreement28
and that there was no substantial change of circumstances that
justified modifying the agreement. In reaching this conclusion,
the superior court master conducted appropriate proceedings, made
adequate findings of fact and conclusions of law, and did not
abuse her discretion.
B. The Trial Court Did Not Abuse Its Discretion in
Awarding Attorneys Fees.
Alaska Rule of Civil Procedure 82 applies to
proceedings governing the modification of child support.29 The
superior court ordered Victoria to pay $2,050.20, or thirty
percent of Jims $6,834 in actual reasonable fees, as prescribed
under Civil Rule 82. Victoria contends that this decision was in
error.
In support of her claim, Victoria repeats much of her
argument that the children spend most of their time with her and
that their care already strains her income. Victoria also points
out that the lower court ordered Jim to share an equal part of
the childrens extraordinary expenses in response to her claim
that Jim did not act reasonably with respect to these
activities.30 Without further specification, Victoria reasons
that [u]nder these circumstances, it was unreasonable further to
burden Victoria by an award of attorneys fees. Finally, she
submits that [r]equiring Jim to bear his own costs and fees . . .
should not impact the childrens welfare since they do not depend
on him for support. Because none of Victorias arguments suggest
that the superior court abused its discretion, we affirm the
superior courts award of attorneys fees.
V. CONCLUSION
For the reasons discussed above, we AFFIRM the judgment
of the superior court.
_______________________________
1 Alaska R. Civ. P. 90.3(c)(2) (2001). The limit on
income that will be considered for a child support calculation
under Rule 90.3 has since risen to $100,000. See Alaska R. Civ.
P. 90.3(c)(2) (2007).
2 983 P.2d 1249 (Alaska 1999).
3 Id. at 1251-52.
4 Sawicki v. Haxby, 186 P.3d 546, 550 (Alaska 2008).
5 Id.
6 Hopper v. Hopper, 171 P.3d 124, 129 (Alaska 2007).
a 1989). 10983 P.2d 1249. 11996 P.2d 84 (Alaska 2000).
12950 P.2d at 130-31 (citing AS 25.24.170 and Alaska R. Civ.
P. 90.3(h)(1)). 13Id. at 132. Alaska Rule of Civil Procedur
e 90.3(h)(1) states: A final child support award may be mod
ified upon a showing of a material change of circumstances as
provided by state law. A material change of circumstances will
be presumed if supp
8 950 P.2d 126 (Alaska 1997).
9 777 P.2d 668 (Alaska 1989).
10 983 P.2d 1249.
11 996 P.2d 84 (Alaska 2000).
12 950 P.2d at 130-31 (citing AS 25.24.170 and Alaska R.
Civ. P. 90.3(h)(1)).
13 Id. at 132. Alaska Rule of Civil Procedure 90.3(h)(1)
states:
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.
14 Flannery, 950 P.2d at 133 (internal quotation marks
omitted).
15 Id.
16 As a table in the parties agreement outlines, Victorias
award reflected a calculation of the net present value of future
child support payments under Civil Rule 90.3, based on Jim
earning $100,000 in after-tax income. The current cap applies to
adjusted annual income of over $100,000. Alaska R. Civ. P.
90.3(c)(2). At the time of the Fergusons divorce, however, the
attribution of a $100,000 salary to Jim exceeded the then
statutory cap of $84,000. Alaska R. Civ. P. 90.3(c)(2) (2001).
17 777 P.2d at 670.
18 Id. at 668-69.
19 Id. at 670.
20 Id.
21 983 P.2d 1249.
22 Id. at 1256-57.
23 996 P.2d 84.
24 Id. at 85.
25 Id.
26 Id. at 86-88.
27 Id. at 88.
28 See Flannery, 950 P.2d at 133.
29 See also Patch v. Patch, 760 P.2d 526, 531 (Alaska
1988).
30 In their settlement agreement Jim and Victoria agreed
to