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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Cox v. Floreske (11/30/2012) sp-6727

Cox v. Floreske (11/30/2012) sp-6727

        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 



VICTORIA E. COX,                                ) 

                                                )       Supreme Court No. S-14234 

                Appellant,                      ) 

                                                )       Superior Court No.      1JU-08-00409 CI 

        v.                                      ) 

                                                )       O P I N I O N 

JOHN M. FLORESKE, JR.,                          ) 

                                                )      No. 6727 - November 30, 2012 

                Appellee.                       ) 

                                                ) 



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

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



                Appearances:      Loren Domke, P.C., Juneau, for Appellant. 

                Blaine H. Hollis, Juneau, for Appellee. 



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

                Stowers, Justices. 



                STOWERS, Justice. 



I.      INTRODUCTION 



                Victoria   ("Vicky")   Cox   and   John   Floreske   were   married   in   July   1981. 



They separated in September 2007 and divorced in June 2009.   During their 28 years of 



marriage,   Vicky   and   John   amassed   a   highly   illiquid   marital   estate   including   three 



businesses and two subdivisions, all located in Haines. After a bench trial each party was 



awarded a mutual right of first refusal on all properties awarded to the other party.  This 


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

right was personal to the parties and would not survive them.  Vicky appeals the superior 



court's denial of her motion for relief from judgment under Civil Rule 60(b)(4) and (5) 



arguing that (1) the mutual right of first refusal is void under Civil Rule 60(b)(4), and (2) 



the superior court abused its discretion when it denied her motion to vacate the mutual 



right of first refusal under Civil Rule 60(b)(5).         We conclude that it was an abuse of 



discretion to deny the motion to vacate the mutual right of first refusal under Civil Rule 

60(b)(5).1 



II.     FACTS & PROCEEDINGS 



                During the 28 years Vicky and John were married, they amassed a highly 

illiquid marital estate worth approximately $3 million, including three businesses2 and 



two    subdivisions,    all  located   in  Haines.     The    three   businesses    were    Northern 



Construction, a general contracting business, Southern Energy, a small hydroelectric 



station, and Crystal Cathedral Water and Sewer Systems (CCWS or Crystal Cathedral), 



a water and sewer service.  The estate was illiquid and included significant debt on most 



of the property.     Vicky and John did not own a house and did not have any retirement 



        1       Civil Rule 60(b)(5) states: 



                On motion and upon such terms as are just, the court may 

                relieve a party or a party's legal representative from a final 

               judgment, order, or proceeding for the following reasons: . . . 

                the judgment has been satisfied, released, or discharged, or a 

                prior judgment upon which it is based has been reversed or 

                otherwise     vacated,   or  it  is  no  longer  equitable   that  the 

               judgment should have prospective application[.] 



        2       In its order on Vicky's Civil Rule 60(b) motion for relief from judgment, 



the superior court stated there were four closely held businesses included in the marital 

estate, but this appears to be erroneous. There were only three businesses which were the 

subject of the parties' dispute and the court's property decision order (and the court's 

order on the Rule 60(b) motion):   Northern Construction, Southern Energy, and Crystal 

Cathedral Water and Sewer Systems. 



                                                 -2-                                           6727
 


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

accounts or significant funds in banks.          All profits from the businesses were invested 



back into the businesses or in real estate.         Only John had the expertise and regulatory 



permits to run the couple's businesses.   Throughout their marriage Vicky worked in the 



family businesses and managed the household. 



                Vicky     and   John   separated    on   September     1,   2007,   and  Vicky    filed  a 



complaint for divorce on January 30, 2008.              Vicky's trial memorandum proposed to 



divide the marital estate equally by remaining in a non-marital partnership with John for 



several years while the properties were sold.  John also expressed an intent to divide the 



property equally, but proposed Vicky take and operate one of the businesses, Crystal 



Cathedral,   to    ensure   she   had   an  income.    John's     trial   memorandum      also   had   the 



following provision: 



                Defendant requests a 60-day first right of refusal to meet any 

                offer on any and all of the property to be sold.  In addition, if 

                plaintiff [Vicky] is awarded CCWS and later chooses to sell 

                it, defendant requests a 60-day first right of refusal to meet 

                any offer on CCWS. 



                In April 2009 Superior Court Judge Patricia A. Collins held a bench trial 



to determine how to equitably divide the marital estate.              During the trial, John testified 



as to his desire to have a first right of refusal: 



                Q:	     I'd    like  you    to  take   a   look   at,  now,    our   trial 

                        memorandum and property table. And is it correct that 

                        you would like a 60-day first right of refusal? 



                A:       	That's correct. 



                Q:	     Okay.   And what would you want that on, with regard 

                        to? 



                A: 	    I'd like it on all the pieces of property. 



                Q:	     So any of the pieces of property that the court orders 

                        sold, you'd like to have a first right of refusal to meet 

                        an offer? 



                                                   -3-	                                            6727
 


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

                A:       That's correct. 



                Q:      Okay.  And that would include CCWS, if it's awarded 

                        to Ms. Floreske and she later decides to sell it? 



                A:       That's correct. 



Vicky also expressed the desire for a right of first refusal, but only on one property. 



                Q:	     Ms.   Floreske,   you   heard   your   husband   say   that   he 

                        wanted . . . a first right of refusal on any property that 

                        was     ordered    sold.   Is  there   a  particular   piece   of 

                        property that you would like a first right of refusal on? 



                A:	     The garden property. 



                Q:	     Any other properties? 



                A:       No. 



In his closing argument John's counsel once again reiterated John's desire to have a right 



of first refusal: 



                MR.   HOLLIS:        [J]ust   a   reminder   about   the   first   right   of 

                refusal.   That is very important to Mr. Floreske.          We would 

                just   ask   that   it  be  crafted   in  a   way    that's  absolutely 

                transparent to Ms. Floreske.         In other words, she would not 

                be in any way prejudiced by it. 



                        And it could be   both ways.         If she wants the same, 

                that's fine. 



                On    June    8,  2009,   the  superior   court   entered   its  findings   of   fact   and 



conclusions of law.  The court ordered an equal division of the marital estate.  The court 



awarded John all of the businesses   except Crystal Cathedral, which was awarded to 



Vicky.    John was also awarded a few high-value real estate properties, and Vicky was 



awarded most of the lots in two subdivisions, totaling thirty pieces of property.  The 



court provided a right of first refusal to both parties in Finding 11: 



                Of the significant real estate holdings by the parties, sales of 

                the   parcels   appear   to   be   generally   consistent   with   asking 



                                                   -4-	                                            6727
 


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

                price.    The   distribution   of   assets/debts   is   intended   to   give 

                Vicky,   who   has   vacillated   about   whether   she   will   stay   in 

                 Haines,     income    from    the   sale  of  these   properties,    with 

                 comparatively little debt, until she decides what she chooses 

                to do next.     John is given the option of matching any sales 

                 offer   for   property   awarded   to   Vicky   for   15   days   after   the 

                 offer is tendered, after which it may be sold to the successful 

                bidder.     Vicky   is   given   the   same   option   with   respect   to 

                property awarded to John. 



Final judgment was entered on September 26, 2009. 



                Vicky was awarded the Meadowlands residential subdivision as well as a 



$102,615 bank loan secured by the subdivision.                She was unable to make some of the 



monthly loan payments, so John paid them to preserve his credit because they had co- 



signed for the loan during marriage.   Once she sold Crystal Cathedral, Vicky paid John 



the money she owed him and retired the bank loan in December 2010. 



                Vicky and John complied with the right-of-first-refusal provision until fall 



2010.    Once Southern Energy, the utility, and Crystal Cathedral had been successfully 



sold, Vicky's lawyer e-mailed John's lawyer asking John to stipulate to having Finding 



11 set aside.    John, through his lawyer, refused. 



                 On January 24, 2011, Vicky moved for clarification as to what the right of 



first refusal meant.   Vicky reminded the court that John's trial memorandum stated that 



he wanted "a 60-day first right of refusal to meet any offer on any and all of the property 



to be sold" and on Crystal Cathedral "if plaintiff is awarded CCWS and later chooses to 



sell it." Vicky interpreted John's position to be that John wanted a right of first refusal 



on all properties the court ordered sold. Because the court ordered Southern Energy sold 



and awarded Vicky Crystal Cathedral, which she subsequently sold, Vicky's position 



was that all the properties the right of first refusal applied to were now sold.  In its order 



on Vicky's motion for clarification, the superior court stated that the "order gave John 



                                                    -5-                                              6727
 


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

Floreske the option of matching any sales offer for property awarded to Ms. Cox for 15 



days after the offer is tendered." 



                 Vicky then moved for relief from the judgment on March 9, 2011.  Vicky 



argued   that   the   right   of   first   refusal   was   void   under   Civil   Rule   60(b)(4)   because   it 



"suspend[ed] alienation" in violation of AS 34.27.100(a)(1) and was inconsistent with 



due process because Vicky did not have the opportunity to argue against such a broad 



right of first refusal at trial.   In the alternative, Vicky argued that the right of first refusal 



should be vacated under Civil Rule 60(b)(5) due to the indefiniteness of the right.  John 



opposed the motion for relief from judgment. 



                 The superior court denied Vicky's motion for relief from judgment but 



clarified that the right of first refusal "is personal to the parties and shall not survive 



them."    Although the court noted that it did not want to make Vicky and John "post- 



divorce business partners," "the reality of the parties' property holdings and related debt 



was such that some continuing involvement between the parties was anticipated, at least 



until planned property sales occurred" and that "it was not possible to totally disengage 



the parties at divorce because of the complexity of their business holdings." 



                 The court also outlined the four reasons it created the right of first refusal: 



(1) "both Vicky and John asked for a right of first refusal on some or all of the marital 



property";   (2)   since   the   parties   anticipated   that   all   their   properties   would   be   sold, 



"fairness suggested that each party should have the chance to match fair market offers 



for businesses and sub-divisions they built or developed from scratch"; (3) "John's credit 



standing and contractual obligation[s] . . . were such that . . . John had (and to this court's 



knowledge, still has) a very strong financial interest in maintaining the properties and 



businesses and avoiding 'fire sale' prices that could leave him personally liable for debt 



associated with property awarded to   Vicky"; and (4) the court intentionally did not 



require the properties sold within a set period of time because it assumed Vicky and John 



                                                    -6-                                              6727
 


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

would "promptly but not recklessly disentangle their significant joint financial interests 



by sales that were reasonable in financial terms and served their personal interests." 



                Vicky   moved   for   reconsideration   on   May   10,   2011,   asserting   that   the 



court's reason for providing the right of first refusal - that John still had "personal, 



financial or contractual obligations" on the properties award to Vicky - was no longer 



true because "Vicky has paid John every dime that she owes him."  (Emphasis omitted.) 



The court denied her motion for reconsideration. 

                This appeal followed.3 



III.    STANDARD OF REVIEW 



                We   review   a   superior   court's   decision   to   deny   relief   under   Civil   Rule 



60(b)(5) for abuse of discretion, reversing only if we are "left with the definite and firm 

conviction on the whole record that the trial court has made a mistake."4 



IV.     DISCUSSION 



                Vicky argues in the alternative that the right of first refusal is void under 



Civil Rule 60(b)(4) or that it should be vacated under Civil Rule 60(b)(5) because all of 



Vicky's financial obligations created by the property division have been met and it is no 



longer equitable for the right of first refusal to continue to have prospective application. 



Because we conclude that it was an abuse of discretion not to vacate the right of first 



        3       John filed a "Notice of Intent Not to File a Brief."            Vicky consented to 



John's attorney participating at oral argument. 



        4       Princiotta v. Municipality of Anchorage , 785 P.2d 559, 562 (Alaska 1990); 



see also Kennecorp Mortg. & Equities, Inc. v. First Nat'l Bank of Fairbanks, 685 P.2d 

1232, 1236 (Alaska 1984) ("In reviewing the denial of a Rule 60(b)(4) motion, this court 

does not defer to the discretion of the trial court: '[N]o question of the lower court's 

discretion is presented by a Rule 60(b)(4) motion because the validity of a judgment is 

strictly a question of law.' " (quoting Aguchak v. Montgomery Ward Co. , 520 P.2d 1352, 

1354 (Alaska 1974))). 



                                                  -7-                                            6727
 


----------------------- Page 8-----------------------

refusal under Civil Rule 60(b)(5), we do not address Vicky's argument under Civil Rule 



60(b)(4). 



        A.	     It Was An Abuse Of Discretion Not To Vacate The Mutual Right Of 

                First Refusal Under Civil Rule 60(b)(5). 



                Civil Rule 60(b)(5) states: "On motion and upon such terms as are just, the 



court   may   relieve   a   party   .   .   .   from   a   final   judgment,   order,   or   proceeding   for   the 



following reasons:  . . . the judgment has been satisfied, released, or discharged . . . or it 



is no longer equitable that the judgment should have prospective application."  The rule 

"requires 'some change in conditions that makes continued enforcement inequitable.' "5 



Further, "[t]his motion shall be made within a reasonable time."6 



                1.	     Vicky's Rule 60(b)(5) motion was timely. 



                Vicky waited 17 months after entry of judgment to file her Civil Rule 60(b) 



motion.     It   appears   it   took   her   that   length   of   time   to   pay   off   $200,000   in   financial 

obligations on the properties.7      Her paying off the debt is relevant to the timeliness of her 



Civil Rule 60(b)(5) motion because only after this 17-month period was John's credit no 



longer tied to the property awarded   to her.          Therefore, Vicky argues, her Civil Rule 



60(b)(5) motion is timely because only after fulfilling her financial obligations was there 



a changed circumstance that warranted relief under Civil Rule 60(b)(5).                 We agree. 



        5       Dewey v. Dewey , 886 P.2d 623, 627 (Alaska 1994) (quoting 11 CHARLES 



A. WRIGHT & ARTHUR R. MILLER , FEDERAL PRACTICE AND PROCEDURE  2863 (1973)). 



        6	      Alaska R. Civ. P. 60(b). 



        7       Because the parties went back to court several times between the date when 



the right of first refusal was initially granted on June 8, 2009, and the entry of final 

judgment on September 28, 2009, John argued that there was a 21-month delay between 

when the court created the right of first refusal and when Vicky filed her Civil Rule 60(b) 

motion on March 9, 2011.         But under Rule 60(b) timeliness is measured from the final 

judgment. 



                                                   -8-	                                           6727
 


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

                We have upheld challenges under Civil Rule 60(b)(5) more than two years 



after the final judgment when there has been a change of circumstance after the final 

judgment. 8     Thus, while the superior court commented that "[t]here is a reasonable 



argument that her request is an untimely assault on   an old judgment," we conclude 



Vicky's Civil Rule 60(b)(5) motion was timely. 



                2.	     It was an abuse of discretion to deny relief under Civil Rule 

                        60(b)(5). 



                "[A] motion pursuant to Rule 60(b)(5) seeking relief from the prospective 



application of a judgment requires the court to balance the equities and decide whether 

relief is warranted."9    "We will reverse a trial court's denial of Rule 60(b)(5) relief only 



where the trial court has abused its discretion."10       We have stated that in order to prevail 



on a 60(b)(5) motion, Civil Rule 60(b)(5) "requires 'some change in conditions that 

makes continued enforcement inequitable.' "11 



                Vicky argues that the fact that she has fully paid all her financial obligations 



is a changed circumstance. We agree that this constitutes a changed circumstance in this 



case.   Because Vicky has paid all of the debt associated with her properties, John's 



        8       See   Dixon   v.   Pouncy,   979   P.2d   520,   526   (Alaska   1999)   (holding   that 



challenging paternity two and a half years after the divorce was not unreasonable as a 

matter of law); Propst v. Propst , 776 P.2d 780, 783-84 (Alaska 1989) (holding that 

waiting 29 1/2 months after a change in the law relating to post-majority educational 

child   support   awards   before   filing   a   Rule   60(b)(5)   motion   was   within   a   reasonable 

amount of time); see also Lowe v. Lowe, 817 P.2d 453, 459 (Alaska 1991) (remanding 

the case because we could not "say that a motion for relief made four and a half years 

after entry of judgment is per se unreasonable"). 



        9       Dixon , 979 P.2d at 526. 



        10      Cook v. Cook, 249 P.3d 1070, 1083 (Alaska 2011). 



        11      Dewey v. Dewey , 886 P.2d 623, 627 (Alaska 1994) (quoting11 CHARLES 



A. WRIGHT & ARTHUR R. MILLER , FEDERAL PRACTICE AND PROCEDURE  2863 (1973)). 



                                                  -9-	                                           6727
 


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

financial standing which is no longer at risk, was a major consideration in the superior 



court's reasoning in ordering the mutual right of first refusal. 



                The equities in this case also require that Vicky's motion for relief from 



judgment be granted.       While Vicky and John requested a right of first refusal at trial, 



each of their requests was narrower than what the superior court ordered. John requested 



a "60-day first right of refusal to meet any offer on any and all of the property to be sold" 

and on CCWS if the company was awarded to Vicky.12                 Vicky requested a right of first 



refusal only on a single property,"the garden property."  In contrast, the superior court's 

order gave each party a lifetime right of first refusal on all properties.13 



                In his treatise Equitable Distribution of Property , Turner states, "[t]he [right 



of first refusal] option should end within a reasonable time after the property division 

order.   A[n] option with no time limit at all is therefore error."14          The lifetime right of 



        12      John later argued that he had intended to request a right of first refusal on 



all properties, not just the ones the court ordered sold.           However, this interpretation is 

inconsistent with his initial request in his trial memorandum:  "Defendant requests a 60- 

day first right of refusal to meet any offer on any and all of the property to be sold.  In 

addition, if plaintiff is awarded CCWS and later chooses to sell it, defendant requests a 

60-day first right of refusal to meet any offer on CCWS." If John had intended to request 

a right of first refusal on all properties, the second sentence about CCWS would have 

been superfluous. 



        13      In Propst v. Propst , we noted that it appeared the court acted sua sponte 



when awarding post-majority education support to the children when it had not been 

specifically   requested     by   the   mother.  776   P.2d   at   784.  This   was   one   factor   we 

considered when weighing the equities in that case and concluding that the superior court 

abused its discretion when it denied the father's motion for relief from judgment under 

Civil Rule 60(b)(5). 



        14      3 BRETT R. TURNER , EQUITABLE DISTRIBUTION OF PROPERTY ,  9.15 (3d 



ed.   2005)   (citing  In   re   Marriage   of   Webb,   426   N.W.2d   402   (Iowa   1988); Moses   v. 

Moses , 879 So. 2d 1043 (Miss. App. 2004); Rado v. Rado , 747 N.Y.S.2d 870 (N.Y. App. 

                                                                                       (continued...) 



                                                 -10-                                            6727
 


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

first refusal on all properties awarded to each party in this case is inconsistent with this 



principle of marital property division.           Additionally, the superior court's order has the 



effect of giving John some degree of continuing control over Vicky for so long as she 



owns her properties; not only is this a potential source of friction, it is inconsistent with 



the superior court's goal to disentangle the parties.              Accordingly, it was error for the 

superior court to award such an option to the parties.15 



                 Further,   the   superior   court   considered   it   fair   that   each   party   have   the 



opportunity to match fair market offers on the properties they had "developed from 



scratch."      We   acknowledge   that   the   opportunity   to   reclaim   potentially   sentimental 



property is a valid consideration, but circumstances have changed.                     John's financial 



standing is no longer tied to properties Vicky received in the divorce.  The opportunity 



to buy property should the ex-spouse desire to sell it must be weighed against the strong 

policy we have expressed "to disentangle fully interspousal affairs upon dissolution."16 



We are unconvinced that equity requires a mutual lifetime right of first refusal in light 



of these changed circumstances. 



        14(...continued) 



2002)). 



        15       We note that in Odom v. Odom, 141 P.3d 324 (Alaska 2006), the trial court 



recognized a father's strong attachment to the family home by awarding him a right of 

first refusal to purchase it should the mother predecease him, or should she choose to sell 

it during her lifetime.  Id. at 329.   This lifetime right of first refusal was not contested in 

that case, and we found no abuse of discretion when the superior court awarded the home 

to the mother.  Id. at 332.  Odom is distinguishable from this case, where the right of first 

refusal is contested. 



        16      Musgrove v. Musgrove , 821 P.2d 1366, 1370 n.7 (Alaska 1991) (quoting 



Voyles v. Voyles, 644 P.2d 847, 849 (Alaska 1982)). 



                                                   -11-                                              6727
 


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

V.     CONCLUSION 



              The decision of the superior court denying Vicky's Rule 60(b)(5) motion 



to vacate the order requiring mutual rights of first refusal is REVERSED and the case 



REMANDED          with  instruction  to  the  superior  court  to  vacate  Finding  11  of  its 



June 8, 2009 order. 



                                            -12-                                       6727
 

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