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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Day v. Williams (9/7/2012) sp-6704

Day v. Williams (9/7/2012) sp-6704

        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, email 

        corrections@appellate.courts.state.ak.us. 



                THE SUPREME COURT OF THE STATE OF ALASKA 



CAROLYN VIEVE DAY,                            ) 

                                              )       Supreme Court No. S-13423/13433 

               Appellant and                  ) 

               Cross-Appellee,                ) 

                                              )       Superior Court No. 1JU-07-00916 CI 

        v.                                    ) 

                                              )       O P I N I O N 

CHARLIE T. WILLIAMS,                          ) 

                                              )       No. 6704 - September 7, 2012 

               Appellee and                   ) 

               Cross-Appellant.               ) 

                                              ) 



               Appeal from the Superior Court of the State of Alaska, First 

               Judicial District, Juneau, Patricia A. Collins, Judge. 



               Appearances:      Michael Gershel, Anchorage, for Appellant. 

               James W. McGowan, Sitka, for Appellee. 



               Before:      Carpeneti,     Chief   Justice,  Fabe,   Winfree,    and 

                Stowers, Justices.   [Christen, Justice, not participating.] 



                STOWERS, Justice. 



I.      INTRODUCTION 



               In this appeal we review the superior court's valuation and distribution of 



marital property in the divorce of Carolyn Vieve Day and Charlie T. Williams.                  Day 



appeals on three grounds: first, she contends that the superior court erred when it found 


----------------------- Page 2-----------------------

her to be employable; second, she argues that the facts and equities of this case do not 



support a 50-50 property division; and third, she argues that the superior court should not 



have included in the marital estate funds that had already been spent by the date of trial. 



We   remand   for   additional   findings   on   the   superior   court's   50-50   property   division 



because the court did not make sufficient findings to explain why an equal distribution 



was justified in the presence of facts that appear to favor a greater distribution to Day. 



Because we are remanding for further findings as discussed below, the court will have 



the opportunity to reexamine its findings on Day's employability.   Finally, we conclude 



that it was error for the superior court to include in the marital estate funds that had 



already been spent by the time of trial. 



                Williams cross-appeals on three grounds: first, that the superior court erred 



when it revalued the parties' duplex after divorce; second, that the court should not have 



applied the active appreciation theory when valuing the land on which the parties' paint 



business was situated; and third, that the court should not have awarded attorney's fees 



to Day.   We agree with Williams that revaluing the duplex would have been improper, 



but because it is not clear whether the superior court actually revalued the duplex, we 



vacate the order to sell the duplex and remand for reconsideration and clarification.  We 



also   hold   that   it   was   error   for   the   superior   court   to   award   Day   the   duplex   without 



considering whether she would be able to afford to keep or sell the property.                     As to 



Williams's remaining two claims, we affirm the superior court's decisions. 



II.     FACTS AND PROCEEDINGS 



        A.      Facts 



                Day and Williams were married in May 1993 and permanently separated 



in April 2007.     They have no children. 



                Prior to marriage the couple signed a prenuptial agreement. The prenuptial 



agreement stated that in the event of divorce, Williams would receive $250,000, Day 



                                                  -2-                                             6704
 


----------------------- Page 3-----------------------

would receive $15,000, and all other property would be divided equally.  The agreement 



also   provided   that   it   would   last   for   only   ten   years,   but   if   "either   party   has   filed   for 



divorce   or   dissolution   on   or   before   ten   years   from   the   date   of   the   execution   of   this 



agreement, it shall continue in effect."  Day filed for divorce in 2002, less than ten years 



after the agreement was made, but quickly dismissed the action. 



                 During the marriage, Williams's primary source of income was Valley Paint 



Center, a business in which he was a majority partner at the time of the marriage and of 



which he became the sole owner during the marriage.  In the years immediately prior to 



the couple's separation, the business consistently had annual sales receipts between $1.6 



and   $1.7   million,   and   was   largely   responsible   for   the   couple   having   adjusted   gross 



incomes ranging between $183,520 and $287,963 from 2004-2006. 



                 Although she has an associate's degree in health information management, 



Day's primary source of income during the marriage was from working in retail: she 



worked at General Nutrition Center (GNC) for five years and worked for short periods 



of time at other retail establishments.           In 2007, the year the couple separated, Day's 



adjusted gross income was $22,929 and Williams's was $203,802. 



                 Day    began    to  suffer   from    medical    problems     towards     the  end   of  the 



marriage.  In 2007 she underwent successful back surgery to correct herniated discs and 



osteophytes (bone spurs).   She also suffered from serious eye problems and underwent 



a   corneal   transplant   in   her   right   eye   prior   to   trial   in   2008.  Dr.   Harry   Geggel,   who 



performed the transplant, testified at trial that  "normally it takes up to a year and a half 



after [a corneal transplant] . . . for patients to get some visual usefulness out of the eye." 



He testified that Day will likely need a corneal transplant in her left eye once the right 



fully heals. 



                 After the parties separated in 2007, Day remained in the couple's duplex 



for several months, moving out in September 2007.                   She then lived with her mother 



                                                    -3-                                               6704
 


----------------------- Page 4-----------------------

before   moving   into   her   own   apartment,   from   which   public   transportation   was   not 



accessible.   Day withdrew over $30,000 from a joint account after separation to pay for 



living expenses, and also withdrew money from the couple's health savings account to 



pay for medical expenses. 



        B.       Proceedings 



                 In October 2007 Day filed for divorce, asking the superior court to divide 



the parties' property "in a just and equitable manner."               The superior court conducted a 



bench trial in September 2008, and issued its findings and conclusions and a divorce 



decree in October 2008. 



                 The court found that because Day initially "filed for divorce prior to the 10- 



year marriage mark, the prenuptial agreement continued according to [its] terms. . . ." 



But the court concluded: 



                 [T]he equities of this case do not warrant strict application of 

                 the prenuptial agreement . . . .  The agreement was . . . made 

                 at a time when both parties agreed that they were each of 

                 sound health, approximately the same age and had sufficient 

                job skills to support themselves.  While [this was] likely true 

                 at the time of marriage, [Day's] current vision issues, which 

                 will continue for approximately 18 months to two years, were 

                 not foreseen when the agreement was made.                  Under these 

                 circumstances,   the   agreement   is   accorded   some   probative 

                 value   as   to   intent   but   will   not   be   strictly   enforced   in   this 

                        [1] 

                 case. 



                 The superior court found that when the couple first married, the Valley 



Paint Center business was worth $32,400, the real property on which the business was 



located was worth $118,000, and the total value of the asset was $151,000.                      The court 



found that at the time of trial the business was worth $170,087, the real property was 



        1        Neither party appeals this ruling. 



                                                    -4-                                                 6704 


----------------------- Page 5-----------------------

worth   $180,245,   and   the   total   value   of   the   asset   was   $350,332.   Applying   "active 



appreciation" analysis, the superior court concluded that $151,000 of the total value of 



the asset was Williams's separate property and that $199,332, the amount by which the 



value of the asset increased during the marriage, was marital property. 



                The court found that most of the parties' other assets were marital property 



and it divided them equally between Day and Williams.  Among the assets Day received 



were   the   parties'   duplex   and   the   money   she   withdrew   from   the   joint   account   after 



separation.  The court stated "that a 50-50 distribution of the marital estate . . . [was] fair 



given all of the circumstances of this case." 



                The court also determined that Day was not entitled to spousal support, 



noting   that   Day   had   "been   living   well   beyond   her   reasonable   financial   needs   and 



resources" and had "not meaningfully pursue[d] reasonable employment."                        The court 



found that "[w]hile [Day's] eye condition will limit her job opportunities, this court is 



not satisfied that she is unemployable," citing the fact that "she is well-educated and 



articulate." The court found that Day suffered from medical problems, but noted that she 



was able to go on a recent scuba diving trip and stated that it was "likely that the stress 



of the divorce [had] exacerbated [her] health problems." 



                Day filed a motion for reconsideration alleging several errors in the superior 



court's     findings    and    conclusions.       Williams      then    filed  his   own     motion     for 



reconsideration.       On November 24 the superior court granted both motions in part.  It 



also awarded Day one-half of her attorney's fees, which amounted to $10,406, noting 



that "Day's current income-producing capabilities are significantly less than [those] of 



. . . Williams."   In January 2009, the superior court issued its order upon reconsideration 



of the case.  In it the court ordered, among other things, that Day attempt to refinance the 



duplex so that she was the sole owner, but noted that "the realities of current economic 



                                                   -5-                                              6704
 


----------------------- Page 6-----------------------

conditions suggest that refinancing of the home into . . . Day's sole ownership may be 



problematic."  The court ordered Day to sell the duplex if refinancing was not possible. 



                Day appeals the finding that she was employable, the equal division of the 



marital estate, and the inclusion of the funds she spent after separation in her share of the 



marital   estate.   Williams   cross-appeals,   challenging         the  terms   of   the  order  of   the 



conditional sale of the duplex, the use of active appreciation analysis on the real estate 



portion of the Valley Paint Center asset, and the award of attorney's fees. 



III.    STANDARD OF REVIEW 



                We review the superior court's finding that Day was employable for clear 

error.   Factual   findings   are   upheld   unless   they   are   clearly   erroneous,2  and   we   grant 



"particular deference to the trial court's factual findings when they are based primarily 



on oral testimony, because the trial court, not this court, performs the function of judging 

the credibility of witnesses and weighing conflicting evidence."3 



                We review the superior court's property division for abuse of discretion 



because "[t]rial courts have broad discretion in fashioning property divisions . . . . [and] 

we reverse such awards only if they are clearly unjust."4            While trial courts have broad 



discretion in matters of property division, "[a]n order of recapture is . . . not justified 



without findings of fact that the assets in question were actually wasted, dissipated, or 



converted to non-marital form.          These findings cannot be merely conclusory, but must 



        2       In re Protective Proceedings of W.A. , 193 P.3d 743, 748 (Alaska 2008). 



        3       Millette v. Millette , 177 P.3d 258, 261 (Alaska 2008) (quoting Ebertz v. 



Ebertz , 113 P.3d 643, 646 (Alaska 2005)) (internal quotation marks omitted). 



        4       Barnett v. Barnett , 238 P.3d 594, 597 (Alaska 2010) (internal citations and 



quotation marks omitted). 



                                                  -6-                                             6704
 


----------------------- Page 7-----------------------

be   based   on   evidence."5    A   superior   court   errs   when   it   recaptures   property   without 



making specific findings of fact as to waste or dissipation.6 



                 We   review   the   superior   court's   decision   to   reconsider   and   revalue   the 

duplex for abuse of discretion.7          Whether active appreciation is the appropriate legal 



theory to use is reviewed de novo.8             The valuation of the property itself is a factual 



determination and is reviewed for clear error.9            A finding is clearly erroneous if we are 



"left with a definite and firm conviction based on the entire record that a mistake has 

been made."10 



                 Finally, we review the superior court's award of attorney's fees for abuse 

of discretion.11 



IV.	    DISCUSSION 



        A.	      We Vacate And Remand The Property Division Because We Cannot 

                 Determine The Basis For The Superior Court's Decision. 



                 Alaska Statute 25.24.160(a)(4) provides that "division of property must 



fairly allocate the economic effect of divorce . . . based on consideration of the following 



factors": 



        5        Ethelbah   v.   Walker ,   225   P.3d   1082,   1090-91   (Alaska   2009)   (internal 



citations omitted). 



        6	       Id . 



        7	       See Barnett, 238 P.3d at 597 (internal citations omitted). 



        8	       See Schmitz v. Schmitz, 88 P.3d 1116, 1122 (Alaska 2004). 



        9	       Id . 



        10       Farmer v. Farmer , 230 P.3d 689, 693 (Alaska 2010) (quoting Casey v. 



Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004)). 



        11       Wagner v. Wagner, 183 P.3d 1265, 1266 (Alaska 2008). 



                                                    -7-	                                              6704
 


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                 (A) the length of the marriage and station in life of the parties 

                 during the marriage; 



                 (B) the age and health of the parties; 



                 (C)  the    earning    capacity    of  the   parties,  including     their 

                 educational backgrounds, training, employment skills, work 

                 experiences,   length   of   absence   from   the   job   market,   and 

                 custodial responsibilities for children during the marriage; 



                 (D)  the    financial   condition    of   the  parties,  including     the 

                 availability and cost of health insurance; 



                 (E) the conduct of the parties, including whether there has 

                 been unreasonable depletion of marital assets; 



                 (F) the desirability of awarding the family home, or the right 

                 to live in it for a reasonable period of time, to the party who 

                 has primary physical custody of children; 



                 (G) the circumstances and necessities of each party; 



                 (H) the   time and manner of acquisition of the property in 

                 question; and 



                 (I) the income-producing capacity of the property and   the 

                 value of the property at the time of division.[12] 



                 We   have   explained   that,   in   general,   "[t]he   law   presumes   that   an   equal 

division of property is equitable"13         and "the party seeking deviation from the norm[] 



        12       See also Merrill v. Merrill , 368 P.2d 546, 547-48 n.4 (Alaska 1962) (listing 



similar factors the court must consider in dividing marital property). 



        13      Miller v. Miller , 105 P.3d 1136, 1140 (Alaska 2005) (citing Lundquist v. 



Lundquist , 923 P.2d 42, 53 (Alaska 1996)); see also Heustess v. Kelley-Heustess, 158 

P.3d 827, 833 (Alaska 2007) ("When dividing a marital estate, 'the trial court generally 

should begin with the presumption that an equal division of marital property is most 

equitable.' " (quoting Fortson v. Fortson , 131 P.3d 451, 456 (Alaska 2006))). 



                                                    -8-                                              6704
 


----------------------- Page 9-----------------------

bears the burden of showing that the property division is clearly unjust."14               But we have 



also stated that "[w]hen a couple has sufficient assets, the spouse with the smaller earning 



capacity can and should receive a larger share in the property distribution to aid him or 

her in this transition."15    We have explained that one consideration in reviewing marital 



property divisions is "whether the property division was adequate to meet the parties' 

needs while they made the transition into post-marital life."16 



                The superior court determined "that a 50-50 distribution of the marital 



estate . . . is fair given all of the circumstances of this case."  The court explained that the 



equal division would meet Day's needs in her transition into post-marital life, noting that 



she "will receive a net estate value of over $400,000."              But the court made no findings 



under   AS   25.24.160(a)(4)   or  Merrill ,   nor   did   it   otherwise   explain   its   reasoning   in 



dividing the marital estate equally. 



                Day argues that the superior court's decision to divide the marital estate 



equally was an abuse of discretion, contending that "[e]ach of the factors applicable to 



this case supports an unequal division of the marital estate." Day's arguments are largely 



based on her health problems and lesser earning capacity: she argues that (1) the age and 

health of the parties17 supports an unequal division, citing her eye and back problems; 



        14      Brandal v. Shangin , 36 P.3d 1188, 1194 (Alaska 2001) (citing Julsen v. 



Julsen , 741 P.2d 642, 645 (Alaska 1987)). 



        15       Tollefsen   v.   Tollefsen,   981   P.2d   568,   570   (Alaska   1999)   (alteration   in 



original) (quoting Dixon v. Dixon , 747 P.2d 1169, 1173 (Alaska 1987)). 



        16      Fortson , 131 P.3d at 457 (citing Dixon , 747 P.2d at 1173). 



        17      AS 25.24.160(a)(4)(B). 



                                                   -9-                                              6704
 


----------------------- Page 10-----------------------

(2) the relative earning capacities and financial conditions of the parties,18 including the 



availability   of   health   care,   supports   an   unequal   division,   citing   Williams's   superior 



                                                                                            19 

earning capacity; (3) the time and manner of acquisition of the property                      supports an 



unequal division, citing Williams's greater pre-marital assets; (4) the income-producing 



                                                                                                20 

capacity of the property and the value of the property at the time of division                    supports 



an unequal division, because "Williams received all of the income producing property"; 



and (5) the need for spousal support supports an unequal division, again citing her health 



problems and inferior earning capacity. Williams counters that the superior court's equal 



division of the marital estate should be affirmed because it was a decision within the 



court's broad discretion. 



                 We are unable to determine how the superior court reached its conclusion 



that an equal division was just and equitable given the facts and circumstances of the 



case and the court's rather cursory explanation.              Looking at the statutory factors listed 



above,   we   observe   that   the   duration   of   the   marriage   was   approximately   14   years,   a 



substantial length of time.   Williams, who was 48 years of age at the time of separation, 



had no evident health issues while Day, who was 44 at separation, had comparatively 



worse health due especially to her recent and continuing eye problems.  Williams had a 



much higher earning capacity than Day, even when Day was employed in retail and 



before   she   experienced   her   eye   problems.        In   finding   that   spousal   support   was   not 



warranted, the superior court acknowledged that Day's "income has been and will be 



         18      AS 25.24.160(a)(4)(C). 



         19      AS 25.24.160(a)(4)(H). 



        20       AS 25.24.160(a)(4)(I). 



                                                    -10-                                                 6704 


----------------------- Page 11-----------------------

dramatically      reduced    from    that  enjoyed     during   marriage,"     demonstrating      that   it 

understood that Day's income would be less than Williams's going forward.21 



                The superior court did not make a specific finding regarding the parties' 



health insurance, although the issue was addressed at trial.  The presence or absence of 



health    insurance    is  particularly   relevant   here,   given   Day's    substantial   health   care 



concerns and the superior court's acknowledgment that it was concerned Day may not 



be able to afford to keep the duplex.   Day testified that she pays nearly $500 a month for 



private health insurance.  At trial, Day was recovering from corneal surgery on one eye 



and she expected to have a similar surgery on the other.              Thus, it was apparent that she 



had incurred and would likely continue to incur significant health care expenses.  The 



superior court did not make any specific findings as to either party's health care expenses 



and health insurance costs, or the impact of their health care costs on their financial 



conditions.  Alaska Statute 25.24.160(a)(4)(D) specifies that cost of health insurance is 



an element of the parties' financial condition, and the superior court therefore should 



have made such findings under the circumstances of this case. 



        21      We note that we are troubled by the superior court's findings with respect 



to Day's employability.        In addition to the court's observation that Day's income had 

been and will be dramatically reduced, when considering Day's employability, the court 

found   that   Day's   corneal   transplant   "has   limited   and   will   limit   [Day's]   vision   for 

approximately one year [to] 18 months, after which a second corneal transplant on her 

other eye will occur, with another year [to] 18 months with limited vision."                 The court 

also acknowledged that Day "does not currently drive due to her eye condition."  The 

court nevertheless determined that Day was not "making meaningful efforts to secure 

employment."       Because the superior court did not explore the degree to which Day's 

employment opportunities would be affected by her serious vision impairment after 

corneal surgery, we invite the court to reevaluate this issue on remand.  Because we are 

remanding   this   case   on   other   issues   and   because   facts   may   have   changed   since   the 

superior court last considered this case, the superior court in its discretion may wish to 

take   additional   evidence   as   it   reexamines   Day's   employability   and   other   factors   on 

remand. 



                                                  -11-                                             6704
 


----------------------- Page 12-----------------------

                 As noted, the superior court acknowledged that Day's "income has been 



and will be dramatically reduced from that enjoyed during marriage," but this comment 



was made in the context of determining spousal support, which the court declined to 



award, and not in the context of property division. With respect to the income-producing 



capacity   of   the   properties   and   their   values   at   the   time   of   division,   it   was   clear   that 



Williams's paint shop business had a history of substantial income production. The court 



observed in its order on the motions for reconsideration that Day's duplex was not then 



making money, "and that 'the unprecedented economic downturn that has occurred since 



trial . . . has likely impacted the value of virtually all of the parties' assets.' "              But the 



court   did   not   make   any   finding   regarding   how   these   and   other   factors   affected   the 



equitable distribution of the marital property. 



                 It may be that the court simply relied on that general presumption that an 



equal distribution of property is fair and equitable; but the presumption must be balanced 



against countervailing considerations, such as fairly allocating the economic effect of 



divorce and ensuring the property division is adequate to meet both parties' needs while 

transitioning into post-marital life.22       Unfortunately, we cannot determine how the court 



reached its decision. When even a superficial examination and balancing of the statutory 



factors appear to weigh in favor of the spouse who earns substantially less than the other 



spouse, a conclusory statement that "a 50-50 distribution of the marital estate is fair 



given     all   of   the  circumstances"    does   not   provide    sufficient   information     to  permit 

meaningful review.23 



        22       See Fortson v. Fortson, 131 P.3d 451, 457 (Alaska 2006). 



        23       Cf.   Dragseth   v.   Dragseth,   210   P.3d   1206,   1208,   1210   (Alaska   2009) 



(noting, with respect to child custody determinations, that "[t]he court's findings should 

give us a clear indication of the factors which the superior court considered important in 

                                                                                           (continued...) 



                                                    -12-                                              6704
 


----------------------- Page 13-----------------------

                We therefore vacate the superior court's property distribution and remand 



for additional findings.       If the court in its discretion determines that it is necessary, 



additional evidence may be taken. 



        B.      It Was Error To Distribute Money That Had Been Spent Before Trial. 



                Between the date of separation and the date of trial, Day withdrew $33,548 



from a joint checking account and used the money for her living expenses.   Also in this 



time    period,   Williams     paid  $7,893    for   some   of  Day's    expenses.     In   its  property 



distribution, the superior court distributed $33,548 to Day as part of her share of the 



marital estate and credited Williams with $7,893. 



                Day argues that the superior court erred by including money spent before 



trial in the final property division.  She argues the money "should have been treated . . . 



as interim spousal support" and not offset against the final property division.                  She also 



argues that even if the superior court was permitted to offset the money against the final 



division, it was required to value the funds "as close as possible to the time of trial."  In 



other words, Day argues that the "value" of those funds at the time of the trial, and 



consequently   the   amount   that   should   have   been   offset   against   the   final   division,   if 



anything, was zero, because the funds had already been spent. 



                Williams argues that it was appropriate for the superior court to offset the 



money   against   the   final   property   division   because   it   was   not   court-ordered   interim 



support, noting that Day never requested an interim support order.                  He also argues that 



"a rule that interim expenditures . . . should not count against the ultimate distribution 



of the marital estate" would encourage parties to "go[] on spending sprees" and "engage 



in irresponsible interim spending." 



        23(...continued) 



exercising its discretion or allow us to glean from the record what considerations were 

involved") (internal quotation marks and citations omitted). 



                                                  -13-                                                6704 


----------------------- Page 14-----------------------

                 Day cites cases that support the proposition that interim support should not 

be offset against a final property division.24        But she cites no authority for the notion that 



unilateral expenditures of marital funds, where the party does not request an interim 



support order, should be treated as interim support.  The superior court did not abuse its 



discretion by not treating the funds as interim support. 



                 It was error, however, for the superior court to value the funds as of the date 



of separation and recapture them for purposes of including them in its final property 



distribution absent specific findings that Day wasted or otherwise improperly used the 



funds.     We   have   "consistently   held   .   .   . that property   should   be   valued   as   close   as 

possible to the date of trial."25     We have noted that "[a] valuation date should be chosen 



which will provide the most current and accurate information possible and which avoids 

inequitable results,"26 but "[d]issipation of marital assets justifies a valuation at the time 



of separation."27    We have also held, however, that the "recapture" of an asset, by valuing 



        24       See Korn v. Korn, 46 P.3d 1021, 1022-23 (Alaska 2002); Jones v. Jones , 



835 P.2d 1173, 1177 (Alaska 1992). 



        25      Miller v. Miller , 105 P.3d 1136, 1143 (Alaska 2005) (citing Leis v. Hustad , 



22 P.3d 885, 888 (Alaska 2001)); see also Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 

1991)   (establishing   that   the   date   of   trial   is   a   proper   time   for   valuation   of   marital 

property). 



        26       Ogard, 808 P.2d at 819 (quoting L. GOLDEN , EQUITABLE DISTRIBUTION OF 



PROPERTY  7.01, at 207 (1983)). 



        27      Miller ,   105   P.3d   at   1144; see also   Cox   v.   Cox,   882   P.2d   909,   918   n.5 



(Alaska 1994) ("If assets no longer exist or are not owned by the parties, they are not 

available for distribution. However, where there is evidence that a marital asset was 

dissipated, wasted, or converted to a non-marital form, the court can 'recapture' the asset 

by giving it an earlier valuation date and crediting all or part of it to the account of the 

party who controlled the asset.") (citing  Gallant v. Gallant, 882 P.2d 1252, 1255 n.5 

(Alaska 1994)). 



                                                   -14-                                              6704
 


----------------------- Page 15-----------------------

it at the time of separation rather than trial, is "not justified without findings of fact that 



the asset[] in question [was] actually wasted, dissipated, or converted to non-marital 

form."28    "Marital assets that are spent after separation for marital purposes or normal 



living expenses are not typically taken into account in the final property division."29 



                Here the superior court made no finding that Day wasted or dissipated the 



funds and did not use them for normal living expenses.                It did find that Day had "been 



living well beyond her reasonable financial needs and resources," and it remarked that 



it was "not reasonable [for Day] to assume that without working [she would] continue 



to have an income of $5,370.00 a month, which is the average that's been going on for 



this last 18 months."      While these findings may justify not awarding spousal support, 



they are insufficient to justify recapture of the money that was expended by or on behalf 



of Day to meet her post-separation living expenses.  The distribution of $33,548 to Day 



and the credit of $7,893 to Williams are reversed.  On remand, the court shall make these 



adjustments, which will also affect its equitable distribution of the marital estate. 



        C.	     We     Remand       The   Court's     Order    On    Reconsideration        To   Clarify 

                Whether   It   Revalued   The   Duplex   And   To   Consider   Whether   Day 

                Can Afford To Maintain That Property. 



                In   its   initial   property   division,   the   superior   court   awarded   the   parties' 

duplex and the attendant mortgage to Day.30              Day filed a motion for reconsideration, 



arguing that she did not receive sufficient liquid assets to keep the duplex.  The superior 



        28      Ethelbah v. Walker , 225 P.3d 1082, 1090 (Alaska 2009) (citing Korn , 46 



P.3d at 1023). 



        29      Partridge v. Partridge , 239 P.3d 680, 692 (Alaska 2010) (citing Jones v. 



Jones , 942 P.2d 1133, 1139 (Alaska 1997)). 



        30      The   court   valued   the   home   at   $565,000,   and   the   debt   on   the   home   at 



$247,092, producing a net value of the asset of $317,908. 



                                                  -15-	                                            6704
 


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court initially granted her motion to reconsider, stating that it would "reconsider whether 



to award the marital home to . . . Williams and/or to direct that the home be sold, with 



half the net proceeds going to each party."  But in its order on reconsideration, the court 



declined to amend its award of the duplex to Day. 



                 Instead, the court ordered Day to "make her best efforts to refinance the 



home such that she is the sole owner," but noted "the realities of [the] current economic 



conditions" suggested that refinancing of the home into Day's sole ownership might be 



problematic.      Therefore, the court ordered a contingent sale of the home:                   if Day was 

unable to refinance the home, the home was to be sold "at a mutually agreeable sum."31 



In the case of a sale, the court ordered the net value of the home to be adjusted to account 



for realtor and closing costs and any payments by Williams towards the maintenance of 



the home to be credited to him.           Finally, the court stated that "[s]ale proceeds shall be 



allocated   by   the   parties   in   such   a   way   as   to   achieve   the   50-50   distribution   initially 



ordered by this court." 



                 Williams   argues   the   court's   order   on   reconsideration   was   an   abuse   of 



discretion   because   it   improperly   revalued   the   duplex   after   the   court's   valuation   of 



property at the end of trial.         Day argues that the superior court "did  not revalue the 



duplex on reconsideration," contending instead that the superior court "reapportioned the 



risk of loss related to the duplex" and "contingently directed that the market value of the 



duplex [for the purposes of the division] would be determined by the market itself [at the 



time of a sale]." 



                 On the record before us, it is unclear whether the superior court revalued 



the duplex on reconsideration.          The order that "[s]ale proceeds . . . be allocated by the 



parties in such a way as to achieve the 50-50 distribution initially ordered by the court" 



        31       Day claims in her appeal brief that she was unable to refinance the duplex. 



                                                    -16-                                                 6704 


----------------------- Page 17-----------------------

is ambiguous. It could mean that proceeds from a sale would go entirely to Day, because 



she received the duplex in the "distribution initially ordered by the court."                 But it may 



also mean that sale proceeds were to be split and the estate reallocated (or Williams's 



equalization payment adjusted) to achieve the equal nature of the "distribution initially 



ordered by the court." 



                Additionally, there is a more fundamental problem with the superior court's 



award   of   the   duplex   to   Day   -   the   court   initially   awarded   her   the   home   without 



considering whether she would have sufficient funds to maintain the property and, on 



reconsideration, ordered a contingent sale of the property without explaining how the 



parties should divide the costs and proceeds from the sale to maintain the court's initial 



goal of a 50-50 property division. 



                Day moved for reconsideration arguing that the net result of the court's 



division was that she had "no funds to protect the assets awarded to her from foreclosure 



or   repossession."     She   argued   the   order   guaranteed   that   she   would   have   to   sell   the 



duplex, and that she would incur approximately $35,000 to $40,000 in realtor fees and 



closing costs.   She asserted that the court's award made it financially impossible for her 



to keep the house because the record showed that the mortgage exceeded the rental 



income,   and she had no additional funds or source of income to pay for the excess 



mortgage.      She concluded that if she were forced to sell the duplex, it would be sold at 



below market value, and she would bear the costs of the sale, thus ensuring she would 



end up with less than 50% of the value of the marital estate.  Day requested that the court 

restructure its property division, relying on Tollefsen v. Tollefsen.32 



        32      981 P.2d 568 (Alaska 1999). 



                                                   -17-                                               6704 


----------------------- Page 18-----------------------

                 In Tollefsen, the superior court awarded the former wife assets with a net 

equity of 52.6 percent of the marital estate.33         The former wife moved for reconsideration 



arguing that the court had awarded a collection of property and support which ensured 

that she would be completely unable to support herself.34               She argued that such an award 



was clearly unjust because the court failed to consider how its findings related to her 

short-term needs and expenses.35             The trial court had found that she was clearly the 



economically disadvantaged party and that the economic effects of the divorce had fallen 

more heavily on her than the former husband.36                The former wife argued that the court 



did not account for how she was to make the monthly mortgage payments or prepare the 

house for sale.37    On appeal we concluded that the trial court, in deciding to award over 



50 percent of the marital property to the former wife, sought to achieve an equitable 



distribution and account for her needs.           But we held that: 



                 While the trial court had considerable discretion over how to 

                 carry out its findings in the property distribution, its failure to 

                 make any provision for the costs of repair and sale prevented 

                 the property division from meeting the court's stated goal of 

                 an unequal property split in [the former wife's] favor.[38] 



        33       Id. at 569.
 



        34       Id. 
 



        35
      Id. at 570. 



        36       Id. 



        37       Id. at 571. 



        38       Id . 



                                                    -18-                                               6704
 


----------------------- Page 19-----------------------

We explained that the court's property distribution actually left the former wife with less 



than half of the marital estate, despite the fact that its stated intent was that she should 

receive a larger share of the estate.39        We concluded: 



                 Ordinarily, the trial court need not consider the factors of sale 

                 costs and commissions for real property awarded to one party 

                 because   both   parties   will   encounter   such   expenses   in   any 

                 sales of real property awarded to them, thus balancing out 

                 their net awards.     Here, however, the trial court premised its 

                 division of marital property on [the former wife's] sale of the 

                 real property awarded to her, while no finding contemplated 

                 that [the former husband] would have to sell the real property 

                 awarded [to] him. . . . 



                 In summary, although the superior court expressly found that 

                 [the former wife] was the economically disadvantaged party, 

                 the court's failure to make provision for the costs of repairs 

                 and sale of the real property awarded   to   [her] defeated its 

                 stated goal of awarding her the greater share of the marital 

                 estate.[40] 



                 Our   holding   in  Tollefsen  is   applicable   to   the   superior   court's   property 



division in this case, and to the court's order on reconsideration.  Although the superior 



court made no findings on the statutory equitable division factors, we infer that the court 



concluded a 50-50 division would be sufficient to meet Day's needs, including her need 

to pay the mortgage and expenses to keep the duplex.41                 On reconsideration, the court 



declined   to   restructure   the   property   division,   but   was   troubled   by   Day's   uncertain 



financial means, stating that "the realities of the current economic conditions suggest that 



        39       Id. at 571-72. 



        40       Id. at 572. 



        41       In its order on reconsideration, the court stated that "[w]hile the duplex is 



not currently making money for [Day], it could be the best long-term investment she 

could make with her share of the marital estate." 



                                                    -19-                                              6704
 


----------------------- Page 20-----------------------

refinancing of the home into [Day's] sole ownership may be problematic, thus effectively 



forcing a sale and related realtor/closing costs."           So the court put in place a contingent 



order:    if Day could not refinance the mortgage within 60 days, she was to sell the 



duplex.   But the court's order is unclear as to how Day and Williams were to divide the 



costs   and   proceeds   of   the   sale,   or   to   actually   achieve   the   50-50   division   of   assets 



originally contemplated by the court. 



                 It is possible to read the court's order as requiring the parties to share the 



realtor's fees and closing costs, but it is unclear if that adjustment alone would effectuate 



a 50-50 division of the property.  Given the possibility that the duplex will sell (if at all) 



for less than its value at the time of trial, did the court intend that Williams's equalizing 



payment be increased to effectuate an equal division of the marital estate? This, too, is 



unclear. And under a Tollefsen analysis, it is questionable whether the proceeds Day will 



receive - whether the duplex is sold or not - and the other property awarded to her 



will accomplish the court's goal of arriving at a fair and just distribution sufficient to 



meet Day's needs. 



                 Because the court is required on remand to make additional findings and 



to correct its award as described above in this opinion, the court will necessarily have to 



reconsider   its   reconsideration      order   and   specifically    explain   its   intentions   and  the 



procedure the parties must follow in selling the duplex if a sale is to be ordered.  We thus 



vacate the order on reconsideration and remand for further proceedings. 



        D.       The Superior Court Did Not Err In Valuing The Business. 



                 Applying "active appreciation" analysis, the superior court concluded that 



$151,000 of the total value of the Value Paint Center   asset was Williams's separate 



property and that $199,332, the amount by which the value of the asset increased during 



the marriage, was marital property.           Williams argues that applying active appreciation 



analysis   to   the   portion   of   the   asset   attributable   to   the   real   estate   component   of   the 



                                                   -20-                                              6704
 


----------------------- Page 21-----------------------

business was erroneous, asserting that the superior   court did not make the requisite 

findings.42 



                 "Active appreciation occurs when marital funds or marital efforts cause a 

spouse's separate property to increase in value during the marriage."43                In order to apply 



active appreciation analysis to an asset, a court must make three findings: 



                 First,   it   must   find  that   the  separate  property   in  question 

                 appreciated during the marriage. Second, it must find that the 

                parties made marital contributions to the property.              Finally, 

                 the court must find a causal connection between the marital 

                 contributions and at least part of the appreciation.[44] 



                 The superior court found that the Valley Paint Center asset, including the 



real estate, appreciated during the marriage.           The superior court also found that "[t]he 



increased   value   of   the   business   [was]   almost   certainly   due   to   marital   efforts   .   .   .   ." 



Specifically,   Day   allowed   Williams   to   "work[]   at   the   business   all   the   time   and   the 



business prospered because of his commitment to it and his customers." Williams argues 



that these findings support the application of active appreciation analysis only to the 



business, not the real estate. 



                 But the superior court also determined that it was "not clearly possible to 



separate the business . . . from the land and building associated with the business."                    It 



found that "the land [had] been refinanced over the years to accommodate the business." 



        42       Williams does not contest the superior court's active appreciation valuation 



of the business component, however. 



        43       Schmitz v. Schmitz, 88 P.3d 1116, 1125 (Alaska 2004) (quoting Harrower 



v. Harrower , 71 P.3d 854, 857-58 (Alaska 2003)). 



        44      Harrower ,       71  P.3d    at  858   (quoting   BRETT     R.  TURNER ,     EQUITABLE 



DISTRIBUTION OF PROPERTY  5.22, at 236 (2d ed. 1994)). 



                                                   -21-                                              6704
 


----------------------- Page 22-----------------------

These   two   findings,   neither   of   which   Williams   directly   challenges,45    and   which   we 



review   for   clear   error,46  support   the   superior   court's   consideration   of   the   "land   and 



business as a single entity."       A finding is clearly erroneous if this court is "left with a 

definite and firm conviction based on the entire record that a mistake has been made."47 



Given that the record supports the court's findings, we cannot say that the superior court 



clearly erred in finding that both the business and the real property   on   which it sits 



actively appreciated in value during the marriage.              We therefore affirm the superior 



court's valuation. 



        E.	     The     Superior     Court    Did    Not   Abuse    Its  Discretion     By   Awarding 

                Attorney's Fees To Day. 



                Finally, the superior court awarded Day one-half of her attorney's fees, or 



$10,406, noting that "Ms. Day's current income-producing capabilities are significantly 



less than [those] of Mr. Williams." Williams argues that the award of attorney's fees was 



an abuse of discretion because the size of Day's share of the marital assets negated any 



possible need for attorney's fees.         He also draws our attention to the superior court's 



remark that "both parties litigated [the case] . . . on a fairly equal plane. . . . likely due to 



the significant interim payments made by Mr. Williams for and to Ms. Day."                      He then 



argues that the attorney's fee award was, in essence, a requirement that he "pay [Day's] 



attorney's fees a second time." 



        45      He argues that most of the significant structural improvement occurred 



before the marriage.      But that observation is not inconsistent with the superior court's 

findings. 



        46      Schmitz, 88 P.3d at 1122. 



        47      Farmer v. Farmer , 230 P.3d 689, 693 (Alaska 2010) (quoting Casey v. 



Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004)). 



                                                  -22-	                                            6704
 


----------------------- Page 23-----------------------

                The award of attorney's fees in   a divorce action rests within the broad 



discretion of the trial court, and we will not   disturb   an award on appeal unless it is 

"clearly unjust."48     "In Alaska, 'cost and fee awards in a divorce are not to be based on 



the   prevailing   party   concept,   but   primarily   on   the   relative   economic   situations   and 

earning   powers   of   the   parties.'   "49 The   rationale   is   that   "in   divorce   actions[,]   'the 



purpose of awarding attorney's fees is to assure that both spouses have the proper means 

to   litigate   the   divorce   action   on   a   fairly   equal   plane.'   "50  Here,   the   superior   court 



appropriately based the attorney's fee award on the relative earning powers of the parties. 



It   is   undisputed   that   Day   earned   substantially   less   than   Williams,   and   the   fact   that 



Williams made payments for Day's living expenses does not undermine the rationale 



behind the superior court's decision to award Day one-half of her attorney's fees.  We 

find no abuse of discretion in the superior court's award of attorney's fees to Day.51 



V.      CONCLUSION 



                We AFFIRM in part, REVERSE in part, VACATE in part, and REMAND 



for further proceedings consistent with this opinion.            We do not retain jurisdiction. 



        48      Ethelbah v. Walker , 225 P.3d 1082, 1086 (Alaska 2009) (citing Brotherton 



v. Brotherton , 941 P.2d 1241, 1244 (Alaska 1997)). 



        49      Rodvik v. Rodvik , 151 P.3d 338, 351 (Alaska 2006) (quoting Lone Wolf v. 



Lone Wolf , 741 P.2d 1187, 1192 (Alaska 1987)). 



        50      Id. (quoting Lone Wolf , 741 P.2d at 1192). 



        51      However,       the  court   may    reconsider    its  attorney's    fee  award    if  after 



reconsidering its property distribution it determines that its fee award should be adjusted. 



                                                   -23-                                               6704 

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