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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Urban v. Urban (12/13/2013) sp-6852

Urban v. Urban (12/13/2013) sp-6852

         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  



DELBERT B. URBAN,                                      )  

                                                       )        Supreme Court No. S-14784  

                           Appellant,                  )  

                                                       )        Superior Court No. 3AN-10-10291 CI  

         v.                                            )  

                                                       )        O P I N I O N  

MARTHA C. URBAN,                                       )  

                                                       )        No. 6852 - December 13, 2013  

                           Appellee.                   )  

                                                       )  



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

                              

                  Judicial District, Anchorage, Alex M. Swiderski, Judge pro  

                  tem.  



                  Appearances:  Michael Hough, Homer, for Appellant.  Robert  

                  J. Sato, Sato & Sato, LLC, Anchorage, for Appellee.  



                  Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
  

                                

                  Bolger, Justices.
  



                  BOLGER, Justice.
  



I.       INTRODUCTION  



                  In order to build a yacht, Delbert Urban borrowed against the residence he  

                                                                                                  



owned with his wife, Martha Urban.  The yacht was destroyed in a fire, and the bank  

                                                                    



foreclosed on the marital residence.  After Martha Urban filed for divorce, the parties  

                                                                                 



agreed to the division of most of their remaining marital assets, but they disputed the  


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value  of  land  they  owned  in  Arizona.    And  just  before  the  divorce  trial,  Martha  



                                                                                

discovered that Delbert owned stock that he failed to include in his pretrial disclosures.  



                                                 

                    The superior court accepted a county tax valuation of the land in Arizona,  



although Delbert presented a conflicting valuation.  The superior court classified the  



stock as marital property because Delbert failed to disclose it before trial.  The court  



                                                                                                                 

awarded Martha $1,300 per month in spousal support and also awarded her $10,000 in  



attorney's fees because of Delbert's vexatious litigation conduct.  



                    We affirm the superior court's spousal support award and valuation of the  



                                              

Arizona land.  But we reverse and remand to allow the superior court to reconsider the  



attorney's fees award and the classification of the stock.  



II.       FACTS AND PROCEEDINGS  



                                                                                                              

                    Delbert and Martha were married in 1993.  About two years later, Delbert  



              

suffered a work injury and began receiving federal disability pay.  Delbert borrowed  



             

against the marital residence to build a yacht and then stopped making the mortgage  



                                                                       

payments, which caused the residence to be lost in foreclosure.  The yacht was destroyed  



              

in a fire in Mexico, and the hull insurance carrier disputed coverage based on alleged  



misrepresentations in the insurance application.  



                    Martha filed for divorce in 2010.  At trial the parties agreed on valuation  



                                                                                                              

and distribution of the marital assets except for some land in Arizona.   During trial,  



Martha discovered that Delbert had stock in a company called Stancorp that he had  



purchased prior to the marriage.   



                                                           

                    The superior court found that Delbert's decision to mortgage the marital  



residence and build the yacht constituted an unreasonable depletion of the marital estate.  



                                 

The court valued the Arizona property at $92,424 based on a property tax assessment.  



                                                                       

The court treated the Stancorp stock as a marital asset based on Delbert's false testimony  



                                                                                                      

about the stock and his failure to list the stock in pretrial disclosures. The court awarded  



                                                              -2-                                                        6852
  


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

about 63% of the marital property to Martha and about 37% to Delbert.  The court  



                                                  

awarded Martha spousal support in the amount of $1,300 per month and attorney fees  



of $10,000.  



III.	    STANDARD OF REVIEW  



                  "Trial courts' allocations of property and awards of spousal support are  



reviewed  for  abuse  of  discretion;  we  reverse  such  awards  only  if  they  are  clearly  



           1 

                                    

unjust."   The trial court's classification of property as marital or non-marital is generally  



reviewed for abuse of discretion, but some classifications may involve questions of law  

that we review using our independent judgment.2  The court's underlying factual findings  



                                                                                                          3  

on classification and valuation of marital property are reviewed for clear error.   Clear  



error is found "only when we are left with a definite and firm conviction based on the  

entire record that a mistake has been made."4  



                                                                       

                  "A superior court has broad discretion to award attorney's fees in divorce  



                                                                                                      

cases.  We will not reverse a trial court's ruling on attorney's fees unless it is arbitrary,  



                                                      5  

capricious, or manifestly unreasonable."   



IV.	     DISCUSSION  



         A.	      The Superior Court's Valuation Of The Arizona Property Was Not  

                  Clearly Erroneous.  



         1        Barnett v. Barnett , 238 P.3d 594, 597 (Alaska 2010) (citations omitted).
  



         2        Beals v. Beals, 303 P.3d 453, 458-59 (Alaska 2013).
  



         3
       Ethelbah v. Walker , 225 P.3d 1082, 1086 (Alaska 2009) (citations omitted).  



         4        Barnett , 238 P.3d at 597 (internal quotation marks and citation omitted).  



         5        Heustess v. Kelley-Heustess , 259 P.3d 462, 478 (Alaska 2011) (internal  



quotation marks and citation omitted).  



                                                        -3-	                                                  6852
  


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

                            Delbert first argues that the court's valuation of the Arizona real estate was   



clearly  erroneous.    At  trial,  Delbert  relied   on   a  real  estate  agent's  valuation,  which  



suggested that the four-parcel property was worth only $35,800.                                                                        The agent valued one  



parcel and then extrapolated the value of all four parcels.   The agent testified that local   



real estate values had dropped dramatically after Delbert purchased the property for   



$98,000.  Martha submitted a county tax assessment showing a total value of $92,424.     



The tax valuation had been discounted by about 50% from the previous year.  Delbert's                          



witness testified that the tax valuation did not adequately account for the recent decline                                                      



in the real estate market.  



                                                                                                               

                            The trial court relied on the county tax valuation when it determined the  



                                                                                                       

value of this property.  We have previously held that, in the absence of an appraisal, a  



trial court may reasonably choose to rely on a tax valuation over a real estate broker's  

                   6   In this case the court made a reasonable decision that the tax valuation was  

estimate.    



more  reliable  than  the  real  estate  agent's  opinion.    The  resulting  valuation  of  this  

                                                                                           



property was not clear error.   



              B.	           It Was An Abuse Of Discretion To Award Enhanced Fees Without  

                                                                                                                                                      

                            Proper Documentation And Without A Clear Basis For the Award.  



                            Delbert  also  argues  that  the  trial  court  erred  by  awarding  $10,000  in  

                                             



attorney fees against him.  The court reasoned that an attorney fee award was merited by  

                                                                                                                                        



Delbert's vexatious litigation behavior, including his lack of cooperation in his pretrial  

                                                                                                        



disclosures and his evasive testimony on the stand.  On appeal, Delbert argues that  



Martha never documented her assertion that she had spent over $35,000 in fees.  



              6            Haines v. Cox , 182 P.3d 1140, 1144 (Alaska 2008) (citation omitted).  



                                                                                       -4-                                                                                      6852  


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

                                                                                                                

                    Ordinarily, a fee award should be based on documentation of the actual fees  



                7  

expended.   Here, it appears that the court based its award on the unsupported assertion  



of fees in Martha's post-trial brief.  We remand so that the court can review Martha's  



documentation of her actual fees.   



                                                                                                     

                    In  addition,  this  court  has  held  that  fee  awards  in  divorce  cases  under  



AS 25.24.140 "are to be based primarily on the relative economic situations and earning  



                                  8 

                                                                                                                   

powers of the parties,"  and that such  fee awards may be enhanced because of bad faith  

or vexatious behavior.9  But if the trial court chooses to enhance a fee award, it must first  



                                                                                       

identify the fees that would be awarded in the absence of bad faith, and then identify the  



                                                                                                             10  

                                                                                                                  On remand,  

nature and amount of the increase assessed due to the bad faith behavior. 



                                                                              

the court should require documentation of Martha's fees and make findings regarding the  



basis for its award.  



                                                                                                                     

          C.	       The Superior Court's Spousal Support Award Was Not An Abuse Of  

                    Discretion.  



          7         See AS 25.24.140 (stating that "in appropriate circumstances" in divorce  



actions, courts may award "attorney fees and costs that reasonably approximate the  

actual fees and costs required to prosecute or defend the action").  



          8	        S.L. v. J.H., 883 P.2d 984, 985 (Alaska 1994) (citation omitted).  



          9	        Berry v. Berry , 277 P.3d 771, 779-80 (Alaska 2012) (citation omitted).  



          10        Kowalski v. Kowalski , 806 P.2d 1368, 1373 (Alaska 1991) ("We hold that,                          



in making an increased fee award, the court must first determine what fee award would              

be appropriate under the general rule, and only then increase the award to account for a  

party's  misconduct.  Failure  to  follow  this  two-step  process  constitutes  an  abuse  of  

discretion.") (citations omitted).  



                                                               -5-	                                                        6852
  


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

                   Delbert also argues that the  superior court's decision to award spousal  



                                                                                   

support was an abuse of discretion.  In a divorce case, the court may make an award of  



                                                                                                          11  

spousal support in order to "fairly allocate the economic effect of divorce."                                  



                   In this case, the superior court found that Delbert had surplus income of  



                                                                                           

about $2,172 per month, and Martha was accruing a deficit of about $700 per month.  



These findings are not clearly erroneous.  The court's award of $1,300 per month should  



         11        AS 25.24.160(a)(2) allows the court in a divorce action to provide:  



                                                                                      

                   for the recovery by one party from the other of an amount of  

                   money for maintenance, for a limited or indefinite period of  

                   time, in gross or in installments, as may be just and necessary  

                                                                                     

                   without regard to which of the parties is in fault; an award of  

                   maintenance  must  fairly  allocate  the  economic  effect  of  

                   divorce by being based on a consideration of the following  

                   factors:  



                            (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 division of property under (4) of this subsection;  and  

                                                                                      



                            (G) other factors the court determines to be relevant in each  

                                                                                                        

                            individual case.  



                                                           -6-                                                     6852
  


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

provide both parties with a monthly income that will allow them to meet their anticipated   



monthly expenses.  



                    A  superior  court  should  generally  provide  for  the  needs  of  a  divorced  



                               

spouse  through  the  division  of  marital  assets;  awards  of  spousal  support  are  "only  



                                                                                       

appropriate when the marital estate is insufficient to meet the needs of a disadvantaged  



          12  

              We have required the superior court to make adequate findings showing that  

party."                                                               



the property division is insufficient to meet the parties' needs in order to justify an award  

                                                                

of spousal support.13  



                    In this case, the court did not state an express conclusion that the marital  



estate was inadequate for Martha's needs.  But this conclusion is inescapable when we  

                                                                 



consider the court's findings about the parties' income and expenses and the property  

                                                                                                        



available  for  distribution.    In  addition,  the  court  found  that  Delbert  unreasonably  



                                                                                               

dissipated between $400,000 and $700,000 in marital assets by mortgaging the marital  



                                                                      

residence to build the yacht.  We conclude that the award of spousal support was not an  



abuse of discretion.  



                                                                                                            

          D.	       The Court's Decision To Treat The Stancorp Stock As A Marital Asset  

                    Was Error.  



                                                                      

                    Delbert also argues that the court improperly treated the Stancorp stock as  



a marital asset.  The court's decision was based on Delbert's failure to list the stock in  



pretrial  disclosures.    Alaska  Civil  Rule  26.1(b)(1)(K)  requires  a  divorce  litigant  to  



                                                                                                   

provide "an itemized list . . . of all assets and debts . . . which the party considers non- 



marital and the basis for the non-marital designation[.]"  Delbert's pretrial disclosures  



                                                                                                                   

did  not  indicate  that  he  was  claiming  the  Stancorp  stock  as  a  non-marital  asset;  he  



          12        Barnett v. Barnett , 238 P.3d 594, 599 (Alaska 2010) (citations omitted).  



          13        See  id.  at  601-602  (remanding  spousal  support  award  for  findings  



concerning spouse's needs).  



                                                              -7-                                                           6852  


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

                                                                               

claimed that he had no investments at all.  The court also made an express finding that  



Delbert gave false testimony about this asset.  



                                                                   

                    Under Rule 37(c), a party who fails to make required pretrial disclosures  



                                                                                                         

"without  substantial  justification"  may  not  be  permitted  to  use  that  information  as  



                                                                          14  

                                                                              In this case, however, Martha did  

evidence at trial, "unless such failure is harmless." 



                                   

not object to Delbert's testimony that he had purchased the Stancorp stock before their  



                                                

marriage.  So the trial court did not exclude this evidence based on this portion of Rule  



37.  



                    In  addition  to  exclusion  of  evidence,  the  court  may  impose  "other  



                                                        

appropriate  sanctions"  for  a  failure  to  make  pretrial  disclosures  under  Rule  37(c),  



                                                                                 15 

                                                                                     These sanctions include "[a]n  

including the sanctions authorized under Rule 37(b)(2). 



order refusing to allow the disobedient party to support or oppose designated claims or  



          14        Alaska R. Civ. P. 37(c)(1) provides:  



                                                                                      

                    A party that without substantial justification fails to disclose  

                    information  required  by  Rules  26(a),  26(e)(1),  or  26.1(b)  

                    shall not, unless such failure is harmless, be permitted to use  

                                                                                 

                    as evidence at a trial, at a hearing, or on a motion any witness  

                                                                              

                    or information not so disclosed.  In addition to or in lieu of  

                    this  sanction,  the  court,  on  motion  and  after  affording  an  

                                                                          

                    opportunity  to  be  heard,  may  impose  other  appropriate  

                                                                    

                    sanctions.   In addition to requiring payment of reasonable  

                                     

                    expenses,  including  attorney's  fees,  caused  by  the  failure,  

                    these sanctions may include any of the  actions authorized  

                    under sections (A), (B), and (C) of subparagraph (b)(2) of  

                    this rule and may include informing the jury of the failure to  

                                                                                               

                    make the disclosure.                     



          15        Alaska R. Civ. P. 37(c)(1).  



                                                             -8-                                                        6852
  


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

                       16  

defenses  .  .  .  ."        The  trial  court  apparently  concluded  that  Delbert's  misbehavior  



                                                                               

warranted an order precluding him from supporting his claim that this stock was a non- 

marital asset.17  



                   But we have held that preclusion sanctions under Rule 37(b) should be  



                                                                                                         18 

                                                                                                             The same  

imposed only as a last resort if a continuance or other sanction is inadequate. 



rule should apply when the Rule 37(b) sanctions are imposed under Rule 37(c) for failure  



to make pretrial disclosures.  In this case, it appears that a continuance would have been  



                                                                                                          

an adequate remedy because the parties agreed to leave the record open after the first day  



                                                                                                      

of trial so that Martha could conduct a further investigation of this asset. On remand, the  



court should determine whether the stock is marital property based on the evidence; the  



parties may be allowed to submit additional evidence in the court's discretion.  



V.        CONCLUSION  



                                                                                                   

                   We REVERSE and REMAND the attorney's fee award and the question  



of whether the Stancorp stock is marital property.  We AFFIRM the superior court's  



judgment on all remaining issues.  



          16       Alaska R. Civ. P. 37(b)(2)(B).  



          17       The court stated:  "In view of Mr. Urban's failure to disclose even the  



existence of the stock and his false and misleading testimony with respect to it, the stock  

                                                                                                              

will be considered as part of the marital estate."  



          18       See Maines v. Kenworth Alaska, Inc., 155 P.3d 318, 325 (Alaska 2007)  



("Before imposing such a sanction, Rule 37(b)(3) requires a finding of 'willfulness,' as  

                                                                                                

well as the consideration of several factors, including whether lesser sanctions would  

                                                                

adequately protect the opposing party.") (citations omitted).  



                                                           -9-                                                    6852
  

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