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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Horning v. Horning (2/17/2017) sp-7152

Horning v. Horning (2/17/2017) sp-7152

              Notice:   This opinion is subject to correction before publication in the P                                                ACIFIC  REPORTER.  

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                             THE SUPREME COURT OF THE STATE OF ALASKA                                                              



SHANDA  HORNING,                                                                          )  

                                                                                          )       Supreme  Court  No.  S-16110  

                                          Appellant,                                     )  

                                                                                                                                                                             

                                                                                          )       Superior Court No. 3AN-15-05396 CI  

              v.                                                                          )  

                                                                                                                            

                                                                                          )      O P I N I O N  

                             

DONOVAN HORNING,                                                                          )  

                                                                                                                                                       

                                                                                        )        No. 7152 - February 17, 2017  

                                          Appellee.                                      )  

                                                                                          )  



                            A                                                                                                                 

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

                                                                                                                              

                            Judicial District, Anchorage, Erin B. Marston, Judge.  



                                                                                                                                           

                            Appearances: EvaKhadjinova, Pro Bono Program -Alaska  

                                                                                                                                                    

                            Legal Services Corp., Anchorage, for Appellant.  Vikram N.  

                                                                                                                                                   

                            Chaobal, Law Office of Vikram N. Chaobal, Anchorage, for  

                            Appellee.  



                                                                                                                                          

                            Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  

                                                       

                            and Carney, Justices.  



                                                    

                            BOLGER, Justice.  



I.            INTRODUCTION  



                            Shanda Horning is eligible for healthcare from the Indian Health Service                                                                 



(IHS) because she is an Alaska Native.                                            Donovan Horning has unvested post-retirement                        



healthcare benefits through the military's TRICARE program.                                                                       When the superior court                  



divided the marital estate after the couple's divorce trial, it did not classify, value, or                                                                                      


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distribute either party's healthcare, finding instead that each had "an equal benefit that                                                                                                                                                                                                                                



 [was] in essence a wash for the purpose of dividing the marital estate."                                                                                                                                                                                                    



                                                   Shanda now appeals.                                                               She argues that her eligibility for IHS healthcare is                                                                                                                                        



separate property, that Donovan's TRICARE benefit is marital property, and that it was                                                                                                                                                                                                                                    



therefore error for the superior court to use her separate property to offset Donovan's                                                                                                                                                                                                       



marital   property.     We   agree.     We   therefore   vacate   the   superior   court's   property  



distribution order and remand for further proceedings.                                                                                                      



II.                       FACTS AND PROCEEDINGS                                  



                                                   Donovan and Shanda Horning were married in October 2000 and separated                                                                                                                                                                             



in March 2013.  Donovan enlisted in the United States Air Force in January 2001, soon                                                                                                                                                                          



after the couple married.                                                                     Donovan's monthly gross income is around $7,400; Shanda's                                                                                                                                               



monthly gross income is around $2,600.                                                                                                                    



                                                   As an active member of the military, Donovan has health insurance through                                                                                                                                                                                



TRICARE.  If Donovan retires from the military with more than 20 years of service, he                                                                                                                                                                                                 



will continue to have health insurance through the TRICARE program for the rest of his                                                                                                                                                                                                                                       



               1  

life.                                                                                                                                                                                                                                                                                                  

                      Shanda is an Alaska Native and is therefore eligible to receive healthcare provided  



                               

by IHS.  



                                                                                                                                                                                                                                                                                                                

                                                   Donovan filed for divorce in March 2015.  Before the divorce trial began,  



                                                                                                                                                                                                                                                                                                                           

 Shanda requested costs to pay for an expert valuation of Donovan's military pension and  



                                                                                                                                                                                                                                                                                                                     

his post-retirement TRICARE benefit.   Shanda argued that both of those assets were  



                                                                                                                                                                                                                                                                                                                                            

marital property and that they needed to be valued in order to divide the marital estate.  



                                                                                                                                                                                                                                                                                                    

The superior court denied Shanda's request, concluding that an expert was not necessary  



                                                                                                                                                                                                                                                                                                                   

and there was "enough information to go forward" with the distribution analysis.  



                          1                        See Burts v. Burts                                                  , 266 P.3d 337, 339-40 (Alaska 2011).                                                                                  



                                                                                                                                                                -2-                                                                                                                                                    7152
  


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                                                                     The superior court's final property distribution order divided the marital                                                                                                                                                                                                                                                                       



estate "[w]ith the goal of an equitable distribution of 50/50."                                                                                                                                                                                                                                                   The order required Shanda                                                                           



and Donovan to equally split the marital portion of Donovan's military pension.                                                                                                                                                                                                                                                                                                                                     But the   



 superior court did not divide the marital portion of Donovan's post-retirement TRICARE                                                                                                                                                                                                                                                                                                              



benefit.   



                                                                     Instead the superior court found that Donovan's post-retirement TRICARE                                                                                                                                                                                                                                                         



benefit and Shanda's eligibility for IHS healthcare provided "an equal benefit that is in                                                                                                                                                                                                                                                                                                                                                        



essence   a   wash   for   the   purpose   of   dividing   the   marital   estate."     The   superior   court  



therefore   concluded   that   it   was   "not   necessary   to   value   either   coverage   with   more  



 specificity and would needlessly dissipate limited marital assets without the probability                                                                                                                                                                                                                                                                                                         



of achieving meaningful values."                                                                                                                                           



                                                                     Shanda now appeals.                                                                                          She argues that the superior court implicitly treated                                                                                                                                                                                 



her separate property - her eligibility for IHS-provided healthcare - as marital property                                                                                                                                                                                                                                                                                                                        



by using it to offset Donovan's TRICARE benefit, and that this error requires us to vacate                                                                                                                                                                                                                                                                                                                                 



the   superior   court's   property   division   order.     She   also   argues   that   the   superior   court  



abused its discretion when it denied her request for costs to pay for an expert valuation                                                                                                                                                                                                                                                                                                                  



of Donovan's military retirement benefits.                                                                                                                                                                                



III.                              DISCUSSION  



                                                                     "The                                equitable                                                 division                                             of                   marital                                        assets                                   involves                                              three                                steps:   



 (1)  determining what property is available for distribution, (2) finding the value of the                                                                                                                                                                                                                                                                                                                                               

property, and (3) dividing the property equitably."                                                                                                                                                                                                                2  

                                                                                                                                                                                                                                                                                                                                                                                                                                                 

                                                                                                                                                                                                                                                                              The first step requires the court to  



                                                                                                                                                                                                                                                                              3  

                                                                                                                                                                                                                                                                                                                                                                                                                                            

characterize  property  as  either  separate  or  marital.                                                                                                                                                                                                                                   "Marital  property  includes  all  



                                  2                                 Limeres v. Limeres                                                                               , 320 P.3d 291, 296 (Alaska 2014) (citing                                                                                                                                                                    Beals v. Beals                                                          ,  



 303 P.3d 453, 458 (Alaska 2013)).                                                                                                        



                                  3                                 Hansen v. Hansen , 119 P.3d 1005, 1009 (Alaska 2005).  

                                                                                                                                                                                                                                                                                                                               



                                                                                                                                                                                                                       -3-                                                                                                                                                                                                          7152
  


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

property acquired during the marriage 'excepting only inherited property and property                                                                                   

acquired with separate property which is kept as separate property.' "                                                                              4  



                                                                                                                                                                                      

                             In making its equitable division, "the trial court must render findings of  



                                                                                                                               5  

                                                                                                          

ultimate  fact  that support  any  decreed  property  division."                                                                                                                     

                                                                                                                                    Those  "findings  must  be  



                                                                                                                                                                                      

explicit and sufficiently detailed to give this court a clear understanding of the basis of  



                                                        6  

                                   

the trial court's decision." 



                                                                                                                                                                                            

                             The  superior  court  did  not  provide  those  detailed  findings  in  this  case.  



                                                                                                                                                                       

While the superior court used Shanda's eligibility for IHS healthcare to offset the value  



                                                                                                                                                                                   

of Donovan's post-retirement TRICARE benefit, the court did not explain whether it was  



                                                                                                                                                                                      

classifying  the  parties'  healthcare  as  marital  property  or  separate  property.                                                                                     This  is  



                                                                                                                                                                                         7  

                                                                                                                                                                                            

reversible error and typically requires a remand to the trial court for additional findings. 



                                                                                                                                                                              

But additional findings are unnecessary here because we can classify both parties' health  



                                                                                                                                     8  

                                                                                                                       

benefits as a matter of law based solely on the existing record. 



               4             Id.   (quoting  Lewis v. Lewis                             , 785 P.2d 550, 558 (Alaska 1990));                                             see also   



AS 25.24.160(a)(4) (stating that "[i]n a judgment in an action for divorce . . . the court                                                                                      

may provide . . . for the division between the parties of their property . . . acquired only                                      

during marriage").   



               5  

                                                                                                                          

                             Doyle v. Doyle , 815 P.2d 366, 368 (Alaska  1991).  



               6             Id.  



               7  

                                                                                                                                                                         

                             See, e.g., Cox v. Cox, 882 P.2d 909, 915 (Alaska 1994); Murray v. Murray ,  

                                                      

788 P.2d 41, 42 (Alaska  1990).  



               8  

                                                                                                                                                                                    

                             See Beals  v. Beals , 303 P.3d 453, 459  (Alaska 2013) (explaining that we  

                                                                                                                                                                                 

review   the   "[u]nderlying   factual   findings   as  to   the  parties'   intent,   actions,  and  

                                                                                                                                                                                    

contributions to the marital estate" for clear error, but "whether the trial court applied the  

                                                                                                                                                                                       

correct  legal rule  .  .  . is  a  question  of  law  that  we  review  de novo"  (citing Hanson  v.  

                                                                              

Hanson , 125 P.3d 299, 304 (Alaska 2005))).  



                                                                                          -4-                                                                                   7152
  


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

                       First,  we  have  previously  held  that  "[h]ealth  insurance  benefits  earned  

                                                                                                                                         

during the marriage are a marital asset of the insured spouse,"                                          9                                      

                                                                                                           and in Burts v. Burts we  



                                                                                                                                               

held that this rule applied to a post-retirement TRICARE benefit to the extent that the  



                                                                    10  

                                                     

benefit was earned during the marriage.                                                                                           

                                                                         We reaffirm Burts  and hold that Donovan's  



                                                                                                                                         

post-retirement TRICARE benefit is marital property to the extent that it was earned  



                   

during the marriage.  



                                                                                                                                         

                       Second, while we have not previously decided whether eligibility to receive  



                                                                                                                                           

IHS-provided health services is marital property, this question is easily resolved under  



                                                                                                                                    

our existing case law.   Property acquired by one spouse before marriage is generally  



                                                                                      11  

                                                                                                                                        

considered separate property, not marital property.                                       Here, Shanda is eligible to receive  



                                                                                                            12  

                                                                                                                                                

IHS-provided health services because she is an Alaska Native.                                                     Shanda has been an  



                                                                                                                                             

Alaska  Native  for her entire  life.   Shanda's  eligibility  to  receive  IHS  healthcare  was  



                                                                                                      13  

                                                                                                           

therefore acquired before marriage and is separate property. 



                                                                                                                                      

                       The superior court's order effectively invaded Shanda's separate property  



                                                                                                                                               

(i.e., her eligibility for IHS healthcare) by using that property to offset the value of the  



                                                                                                                                             

couple's marital property (i.e., Donovan's post-retirement TRICARE benefit).  We only  



                                                                                                                                       

permit such an invasion "when the balancing of the equities between the parties requires  



           9           Hansen  v.  Hansen ,   119  P.3d   1005,   1015  (Alaska  2005).  



            10         266  P.3d  337,  341-46  (Alaska  2011).   



            11         Schmitz  v.  Schmitz,  88  P.3d   1116,   1124  (Alaska  2004).  



            12         See  generally  25  U.S.C.      1601,   1602,   1603(13)(B)  (2012).  



            13  

                                                                                                                                        

                       Having  reached  this  conclusion,  we  need  not  reach  Shanda's  related  

                                                                                                                                   

arguments that the court lacked jurisdiction  to classify her eligibility for IHS healthcare  

                                                                                                                                              

as marital property and that the trial court's classification of her eligibility to receive IHS  

                                                                                                  

healthcare as marital property violated equal protection.  



                                                                        -5-                                                                 7152
  


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

         14  

it."           But the opposite balance occurs in this case - the superior court found that Shanda,                                                                                                                        



not Donovan, would bear the greater economic impact of the divorce.                                                                                                                               



                                     We therefore vacate the superior court's order and remand this case with                                                                                                                       



instructions to classify Donovan's post-retirement TRICARE benefit as marital property,                                                                                                                                 



to classify Shanda's eligibility for IHS healthcare as separate property, and to equitably                                                                                                                             



divide the marital property based on these findings.                                                                  



                                     Shanda   also   argues   that the                                               superior court abused                                          its discretion                         when   it  



denied her request for costs to pay for an expert valuation of Donovan's pension and post-                                                                                                                                         



retirement TRICARE benefit.                                                         The proposed valuation was "not to order any [present]                                                                              



                           15  

payment"                                                                                                                                                                                                                          

                                 but rather "to determine how the retirement should be split so that . . . when  



                                                                                                                                                                                                                            

 [Donovan] vests in retirement, that percentage would go . . . into effect . . . for the future."  



                                                                                                                                                                                                                           

                                     The superior court has broad discretion to award costs and fees in a divorce  



                   16  

action.                                                                                                                                                                                                                                 

                          This is meant to ensure that "both spouses have the proper means to litigate the  



                                                                                                             17  

                                                                                                                                                                                                                                

divorce action on a fairly equal plane."                                                                             In exercising that discretion, the court "must  



                                                                                                                                                                                                       18  

                                                                                                                                                                                                                          

focus on the parties' relative economic situations and earning capacities."                                                                                                                                   The superior  



                                                                                                                                                                                                                          

court also "has broad discretion to provide for the equitable division of property between  



                   14                AS 25.24.160(a)(4).                                       



                   15                We have previously rejected awarding present day, lump sum payments for  

                                                                                                                                                                                                                                         

unvested retirement benefits.  Laing v. Laing , 741 P.2d 649, 657-58 (Alaska 1987); see  

                                                                                                                                                                                                                                        

also Ethelbah v. Walker, 225 P.3d 1082, 1088 (Alaska 2009) (summarizing approaches  

                                                                                                                                 

for unvested and vested retirement benefits).  

                                                                                                 



                   16  

                                                                                                                                                                                                                                   

                                     See  Stevens  v.  Stevens,  265  P.3d  279,  290  (Alaska  2011);  see  also  

                                                                                                                                                                                                                                             

AS 25.24.140(a) (permitting award of attorney fees and costs during the pendency of a  

                       

divorce action).  



                   17  

                                                                                                                                                                                                                          

                                     Stevens, 265 P.3d at 290 (quoting Fernau v. Rowdon , 42 P.3d 1047, 1059-60  

                        

(Alaska 2002)).  



                   18                Id . (citing Fernau , 42 P.3d at 1059).  

                                                                                                                        



                                                                                                                     -6-                                                                                                           7152
  


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

the parties in a divorce," including adopting a distribution method that is most appropriate                                             



                                                                                   19  

given   the   specific   circumstances   of   the   case.                                                                                      

                                                                                         We  will  reverse  the  superior  court's  



                                                                                                                                 20  

                                                                                                               

decisions on these matters only if they amount to an abuse of discretion. 



                                                                                                                                                        

                        But  whether  the  superior  court  has  applied  the  correct  legal  rule  in  



                                                                                                                           21  

                                                                                                                 

exercising its discretion is a legal question that we review de novo.                                                                                  

                                                                                                                                In this case the  



                                                                                                                                                      

superior court denied Shanda's request for costs because it believed that it could use  



                                                                                                                                         

Shanda's  eligibility  for  IHS  healthcare  to  offset  the  value  of  Donovan's  TRICARE  



                                                                                                                                                              

benefit, and that it therefore did not need to value either parties' benefits with specificity.  



                                                                                                                                            

As we explained above, this belief was incorrect as a matter of law because Shanda's  



                                                                                                                                                      

eligibility  was  separate  property  and  Donovan's  benefit  was  marital  property.                                                                We  



                                                                                                                                                      

therefore  vacate  the  superior  court's  denial  of  Shanda's  motion  for  expert  costs  and  



                                                                                                              

instruct the superior court to reconsider Shanda's request on remand.  



        

IV.         CONCLUSION  



                                                                                                                                             

                        For the reasons stated above, we VACATE the superior court's property  



                                                                                                                                           

distribution order and REMAND for further proceedings consistent with this opinion.  



            19          Ethelbah ,  225  P.3d  at   1086-87.   



            20          Limeres  v. Limeres, 320  P.3d  291,  296  (Alaska 2014);  Ethelbah , 225 P.3d  



at   1086.   



            21  

                                                                                                                                                    

                        Beals v. Beals , 303 P.3d 453, 459 (Alaska 2013); see also Haines  v. Cox,  

                                                                                                                                                    

 182 P.3d 1140, 1143 (Alaska 2008) ("[W]e review for legal error [whether] the trial court  

                                                                            

simply failed to exercise its discretion.").  



                                                                           -7-                                                                     7152
  

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