Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Thomson v. Thomson (5/19/2017) sp-7173

Thomson v. Thomson (5/19/2017) sp-7173, 394 P3d 604

           Notice:   This opinion is subject to correction before publication in the P                     ACIFIC  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@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                       



DAVID  F.  THOMSON,                                                   )  

                                                                      )     Supreme  Court  No.  S-16155  

                                 Appellant,                           )  

                                                                                                                                      

                                                                      )     Superior Court No.  1JU-06-00608 CI  

           v.                                                         )  

                                                                                                 

                                                                      )     O P I N I O N  

                            

MARJORIE W. THOMSON,                                                  )  

                                                                                                               

                                                                      )     No. 7173 - May 19, 2017  

                                 Appellee.                            )  

                                                                      )  



                                                                                                                 

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

                                                                                               

                      Judicial District, Juneau, William B. Carey, Judge.  



                                                                                                                         

                      Appearances: Michael A. D. Stanley, Juneau, for Appellant.  

                                                                  

                      Paul H. Grant, Juneau, for Appellee.  



                                                                                                            

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

                                           

                      and Carney, Justices.  



                                         

                      CARNEY, Justice.  



I.         INTRODUCTION  



                                                                                                                            

                      In  2006 a divorcing  couple agreed to  divide the husband's retirement  



                                                                                                                             

benefit  based  on  its  present  value  and  implemented  the  division  with  a  Qualified  



                                                                                                                                 

Domestic Relations Order (QDRO).  In 2014, after the husband received an updated  



                                                                                                                                          

benefit projection that calculated the wife's share of the benefit using his salary at  



                                                                                                                                           

retirement instead of at divorce, he sought to modify the QDRO.  He asked the court to  



                                                                                                                                               

require that her benefit be based upon the same salary data used in the 2006 calculation.  


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

The superior court denied the motion.                               Because the settlement did not contain clear                        



                                                                                                                                         1  

language establishing the use of the earlier salary as required by                                        Hartley v. Hartley            ,  we  



affirm.  



                                     

II.        FACTS AND PROCEEDINGS  



                                                                                 

           A.         The 2006 Divorce And Property Settlement  



                                                                                                                                 

                      David and Marjorie Thomson married in 1982 and permanently separated  



                                                                                                                                

on December 31, 2004. Working with a mediator, they developed a property settlement  



                                                                                                                                      

agreement that was  incorporated  into  their  August 9,  2006  divorce  decree.                                                     David  



                                                                                                                                           

retained the marital home, so the property settlement assigned about 53% of the net  



                                                                                                                                                  

estate to Marjorie to help her establish adequate housing for the couple's minor children.  



                                                                                                                                             

They agreed that this division "fairly allocate[d] the economic effect of their divorce" as  



                                                        

required by AS 25.24.160(a)(4).  



                                                                                                                                        

                      Among the assets divided were retirement accounts belonging to both,  



                                                                                                                                

including their StateofAlaska Public Employees' Retirement System(PERS) retirement  



                                                                                                                                            

accounts.  David was still working for the State and had accrued a little more than 20  



                                                                                                                                        

years of PERS service credit when the parties separated.  The parties agreed on a value  



                                                                                                                                       

for David's PERS account based on its present value as calculated by a third party  



                                                                                                     

company.  The company used David's most recent average earnings for 2003-2005 to  



                                                                                                       

calculate a projected benefit if he retired at the expected date of April 1, 2015.  It then  



                                                                                                                                            

determined that the March 2006 present value of his benefits was $286,882 and that the  



                                                                                                                                   

marital portion was $271,316.  That amount was based on the proportion of David's  



                                                                                                                                           

PERS  service  that  occurred  between  their  1982  marriage  and  their  separation  on  



                                    

December 31, 2004.  



           1  

                                                                     

                      205 P.3d 342, 350 (Alaska 2009).  



                                                                      -2-                                                                   7173  


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

                                                                                                                            

                    The parties allocated the agreed-upon value of David's PERS benefit along  



                                                                                                                         

with the agreed values of their other assets between themselves in a chart of their marital  



                                                                                                                                 

assets.  Once they reached what they considered a fair distribution of the entire estate in  



                                                                                                                    

dollar terms, they calculated what percentageofDavid's PERSbenefit was on Marjorie's  



                              

side of the ledger.  



                                                                                                                      

                    Based on these calculations, the property settlement agreement provided  



                                                                                                                                

that Marjorie would receive 46.96% of "the marital portion of David's account" to be  



                                                                                                                         

distributed  via  a  QDRO.                   The  settlement  also  provided  that  each  party  would  



                                                                                                                   

"solely . . . retain other property acquired after their 31 December 2004 permanent  



                                                                                                                           

separation. That property is agreed to be non-marital and neither party is making a claim  



                                                                                                                               

to it."  The QDRO submitted by the parties said, in relevant part, that "Marjorie W.  



                                                                                                                       

Thomson, as the Alternate Payee, shall receive from the Plan, from the final monthly  



                                                                                                                             

retirement benefit which otherwise would be payable to the Member, 46.96% of the total  



                                                                                                                                 

monthly benefit which is based on credited service accrued from August 7, 1982 to  



                                                                                                                             

December 31, 2004." (Emphasis in original.)  The court signed this QDRO along with  



                                                                                   

the divorce decree and settlement on August 9, 2006.  



                                                                                                        

          B.        The Present Dispute Over The QDRO Distribution Amount  



                                                                                                                          

                    In the fall of 2014 David obtained an updated projection of his PERS  



                                                                                                                    

benefits from the state Division of Retirement and Benefits (DRB).   The projection  



                                                                                                                            

estimated his benefits as of a retirement date of May 1, 2015 and showed how those  



                                                                         

benefits would be affected by the QDRO.  The benefits were calculated using David's  



                                                                                                                               

average  earnings  for  his  final  three  years  of  employment,  2013-2015.                                     Due  to  his  



                                                                                                                        

significantly increased salary and about ten additional years of credited service, David's  



                                                               -3-                                                         7173
  


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

                                                                                                                                   2 

retirement benefit was projected at about 80% more than the 2006 projection.   Under  



the QDRO Marjorie would receive "nearly double" what David had expected based on  

                                                                                                                                             



the earlier projection.   When David questioned why the salary years from the 2006  

                                                                                                                                         



projection were not used to calculate Marjorie's payment, DRB reportedly responded  

                                                                                                                                



that he might need to amend the QDRO to do so.  

                                                                                    



                      David  then  moved  to  amend  the  QDRO  to  have  Marjorie's  benefit  

                                                                                                                                     



calculated using the salary years from the 2006 projection.   He argued that such an  

                                                                                                                                             



amendment would "conform [it] to the parties' property settlement and effectuate the  

                                                                                                                                            



agreed distribution of David's PERS benefit." He argued that the parties had relied upon  

                                                                                                                                         



the 2003-2005 salary data when they divided their assets.   According to David, the  

                                                                                                                                            



settlement  language  and  QDRO  demonstrated  that  Marjorie's  payment  had  to  be  

                                                                                                                                            



calculated based on the 2006 figures "so that her share would be limited to the 'marital  

                                                                                                                                    



portion' of his account."  He further argued that using the 2014 figures would allow her  

                                                                                                                                            



to benefit from non-marital property he had acquired after their divorce, contrary to their  

                                                                                                                                          



settlement agreement.  

                                       



                      Marjorie responded that Hartley v. Hartley barred David's interpretation  

                                                                                                                           



of the settlement and his proposed amendment of the QDRO:  "Absent clear language  

                                                                                     



to the contrary in a property division agreement, a court should base the division of  

                                                                                                                                              



retirement benefits on the employee spouse's high-three salary years at the time of  

                                                                                                                                             

retirement."3  

                       



                      The superior court agreed with Marjorie and found the Hartley rationale  

                                                                                                                                   



"persuasive and controlling in this instance."  It further stated that "no language in the  

                                                                                                                                            



           2          David   had   remarried,   so   this   80%   increase   in   his   projected   benefit  



accounted for a survivor benefit for his new wife. Without the survivor benefit, the 2014                                                

projected benefit was more than two and a half times the 2006 projection.                                                     



           3          Hartley, 205 P.3d at 350.  

                                                          



                                                                      -4-                                                               7173
  


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

QDRO or in the property agreement . . . requires a different conclusion" and denied the                                                                                                                          



motion   to   amend.     David   moved   for   reconsideration,  arguing   that   the   court   had  



overlooked evidence of the parties' intent and that its decision would result in Marjorie                                                                                                          



receiving more of the marital estate than the parties had agreed.                                                                                                     The superior court                   



denied the motion because the agreement did not contain the clear and unambiguous                                                                                                     



language required by                                  Hartley.   



                                 David appeals.   



III.             STANDARD OF REVIEW                             



                                 "When the parties have reached a settlement as to property division, '[w]e                                                                                                



apply basic contract interpretation principles to interpret a property division agreement                                                                                                      



                                                                                            4  

                                                                                                                                                                                                  

incorporated into a divorce decree.' "                                                           "We treat the interpretation of contract language  



                                                                                                                                               5  

                                                                                                                              

as a question of law and interpret the language de novo." 



IV.              DISCUSSION  



                                 Interpretation of the parties' property settlement agreement is the central  

                                                                                                                                                                                                       

issue before us. Interpretation of such an agreement is governed by contract principles,6  

                                                                                                                                                                                                                           

which require us "to give effect to the reasonable expectations of the parties."7                                                                                                                          If the  

                                                                                                                                                                                                                 



contract language is not ambiguous, "we decide the meaning of the contract as a matter  

                                                                                                                                                                                                        



                 4               Herringv. Herring                              ,373P.3d521,528(Alaska2016) (alteration                                                                      in original)  



(quoting  Cook v. Cook                                   , 249 P.3d 1070, 1077 (Alaska 2011)).                                         



                 5               Id. (alteration omitted) (quoting Cook, 249 P.3d at 1077).  Though David  

                                                                                                                                                                                                         

also raises a question of fact - the parties' intent - only David introduced extrinsic  

                                                                                                                                                                                                   

evidence, and the superior court made no factual findings for us to review.  

                                                                                                                                                                                            



                 6                Villars v. Villars, 277 P.3d 763, 768 (Alaska 2012) (citing Zito v. Zito, 969  

                                                                                                                                                                                                               

P.2d 1144,1147 n.4 (Alaska 1998)).  

                                                                        



                 7               Id. (quoting Knutson v. Knutson, 973 P.2d 596, 600 (Alaska 1999)).  

                                                                                                                                                                                          



                                                                                                         -5-                                                                                                7173
  


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

               8  

of law."           "An ambiguity exists only where the disputed terms are reasonably subject to                                                                   



differing interpretation after viewing the contract as a whole and the extrinsic evidence                                                            

surrounding the disputed terms."                               9  



                                                                                         

                          In Hartley we established a rule governing how courts interpret property  

                                                                                                   10    In that case a divorcing couple  

                                                                                                                                                         

agreement provisions that divide retirement assets. 



agreed to divide a retirement account without specifying the salary years to be used in  

calculating the benefit amount.11   The husband objected to the superior court's adoption  

                                                                                                                                                     



of a QDRO that explicitly based the calculation on his three highest paid salary years at  

                                                                                                                                                                   

retirement.12             We concluded that the "marital foundation theory"13  was "generally the  

                                                                                                                                                                



most equitable" approach to dividing retirement benefits and held that, "[a]bsent clear  

                                                                                                              



language to the contrary  in a property division agreement, a court should base the  

                                                                                                                                                               



             8           Krushensky v. Farinas                       , 189 P.3d 1056, 1060 (Alaska 2008) (citing                                         Keffer  



v.  Keffer, 852 P.2d 394, 397 (Alaska 1993)).                           



             9            Villars, 277 P.3d at 768-69 (quoting N. Pac. Processors, Inc. v. City &  

                                                                                                                                                                  

Borough of Yakutat, Alaska, 113 P.3d 575, 579 (Alaska 2005)).  

                                                                                                             



             10           205 P.3d 342, 349-50 (Alaska 2009).  

                                                                                                   



             11          Id. at 345-46.  

                                     



             12          Id. at 346.  

                                     



             13           "This theory reasons 'that a post-divorce merit increase is based upon the  

                                                                                                                                                                

employee's entire history of service to the employer.  In other words, the post[-]divorce  

                                                                                                                                           

increases are built upon a foundation of prior marital efforts' and therefore the increases  

                                                                                                                                                    

are not  separate property.  . . . [T]his approach [is]  'better policy' because  it  'avoids  

                                                                                                                                                       

undervaluation of contributions made early in a marriage' and 'gives more dollars to the  

                                                                                                                                                                

spouse who assisted in the development of the employee's career, and less dollars to the  

                                                                                                                                                                

spouse who was the passive beneficiary of that career after it was established.' "  Id. at  

                                                                                                                                                                  

349-50 (quoting 2 BRETT  R.  TURNER, EQUITABLE  DISTRIBUTION  OF  PROPERTY  6:26,  

at   171,   183  (3d  ed.  2005)).  



                                                                                -6-                                                                         7173
  


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

division of retirement benefits on the employee spouse's high-three salary years at the                                                     

time of retirement."             14  



                      David's PERS is a defined benefit plan.  Under a defined benefit plan, a  

                                                                                                                                               

                                                                                                    15   The payment's amount  

retired employee "is entitled to a fixed periodic payment."                                                                          

                                                                                   

generally dependsontheemployee's prior salary and length of service.16  David's benefit  

                                                                                                                                                   



is based on his years of service and his highest average monthly salary at the time of  

                                                                                                                                              



retirement.  

                     



                      The Thomsons decided to distribute the marital portion of David's benefit  

                                                                                                                                      



using  the  "deferred  distribution"  method,  which  distributes  "the  benefits  actually  

                                                                                                                                   

received in the future."17  A deferred distribution of benefits is implemented via a QDRO,  

                                                                                                                                    



which does not add to or modify an agreement to distribute benefits but "simply enforces  

                                                                                                                                    

                                                                                              18   Here the parties agreed that  

a court order calling for division of retirement benefits."                                                                                

                                                                               



Marjorie was entitled to 46.96% of the marital portion of David's PERS benefit and  

                                                                                                                                           



implemented the agreement via a QDRO.  David now disputes what average monthly  

                                                                                                                                   



salary should be used to calculate Marjorie's share of the benefit.  

                                                                                                 



                      The Hartley rule governs the interpretation of the Thomsons' settlement  

                                                                                                                                



agreement, as the superior court rightly concluded.  David briefly objects that Hartley  

                                                                                                                                     



should not apply because it had not been decided at the time of settlement. But Hartley 's  

                                                                                                                                  



           14         Id.  at 349-50.   



           15         Id.  at 347 (quoting            Comm'r, Internal Revenue v. Keystone Consol. Indus.,                            



                                         

Inc., 508 U.S. 152, 154 (1993)).  



           16         Id.  



           17         Id. at 348.  

                                 



           18         Zito  v.  Zito,  969  P.2d  1144,  1146  (Alaska  1998)  (citing  Wahl  v.  Wahl,  945  



P.2d   1229,   1232  (Alaska   1997)).  



                                                                      -7-                                                               7173
  


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

interpretive rule does not depend on the parties' awareness of it, as demonstrated by                                                     



                       19  

Hartley  itself.                                                                                                                     

                           Without clear language requiring the use of David's 2003-2005 salary  



                                                                                                                                         

data, Marjorie's share must be calculated based on David's actual benefit, using his  



                                                                                                                                  

highest salary data at retirement. David also argues that several specific phrases provide  



                                                                                                                          

the "clear language" requiring the use of the 2003-2005 salary data.  We disagree and  



                                                       

address each of his arguments in turn.  



                                                                                                                                            

                      David argues that the settlement's express statement that Marjorie has a  



                                                                                                                               

46.96% interest in the "marital portion" of David's PERS account and the QDRO's  

                                         20  that her interest is "based on credited service accrued from  

                                                                                                                                      

corresponding statement 



August 7, 1982 to December 31, 2004" prohibit using his post-separation salary to  

                                                                                                                                           



calculate her benefit.  He argues that these statements not only limit Marjorie's share to  

                                                                                                                                           



the years of service credit accrued during the marriage but also to a benefit calculated  

                                                                                                                 



based on his salary level during the marriage.   But neither the meaning of the term  

                                                                                                                                       



"marital portion," nor the dates used in the QDRO to calculate Marjorie's share, support  

                                                                                                                                  



David's claim.  

               



                      The standard meaning of "marital portion" or "marital share" in Alaska  

                                                                                                                                   



involves application of the coverture fraction,  which "is calculated by dividing the  

                                                                                                                                         

number of years worked during the [marriage] by the total number of years worked."21  

                                                                                                                                                



           19         Hartley, 205 P.3d at 347-50.         



           20  

                                                                                                                                

                      Although both parties discussthetermsoftheQDRO, therelevantlanguage  

                                                                                                                                        

under Hartley is that of the settlement agreement. See Hartley, 205 P.3d at 350. See also  

                             

Zito, 969 P.2d at 1146.  



           21         Engstrom v. Engstrom, 350 P.3d 766, 770 (Alaska 2015) (quoting Hansen  

                                                                                                                                  

v. Hansen, 119 P.3d 1005, 1015 (Alaska 2005)) ("Determining the [retirement health]  

                                                                                                                

benefits' marital portion requires calculation of the 'coverture fraction.' ").   Accord  

                                                                                                                                  

Faulkner v. Goldfuss, 46 P.3d 993, 1003 (Alaska 2002) ("The marital share of a pension  

                                                                                                                                 

                                                                                                                        (continued...)  



                                                                     -8-                                                              7173
  


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

David's   proposed   definition   of   "marital   portion"   would   limit  a   former   spouse's  



retirement benefits to the salary level earned during the marriage, but he has cited no                                                     

cases supporting this additional meaning.                            22  



                                                                                                                                            

                      The QDRO's listing of the marriage and separation dates provides no  



                                                                                                                                           

reason to reevaluate the meaning of "marital portion" in the agreement.  It indicates the  



                                                                                                                                       

time period used to calculate the marital portion of the benefit.   The QDRO's dates  



                                                                                                                                            

establish  the  numerator  of  the  coverture  fraction,  while  David's  total  period  of  

                                                                                                      23   This understanding of  

                                                                                                                                             

employment would establish the denominator once he retired. 



the QDRO's use of the dates is bolstered by other language in the QDRO explicitly  

                                                                                                                                



indicating that David's final benefit - calculated according to his three highest paid  

                                                                                                                                         



salary years at retirement -will be used in calculating Marjorie's share: Marjorie "shall  

                                                                                                                                       



receive . . . 46.96%  of the total monthly benefit which is based on credited service  

                                                                                                                                    

accrued" during the marriage.24  (Emphasis added.)  

                                                                                      



           21         (...continued)  



                                                                                                                                          

is typically determined by the coverture fraction . . . ."); Wainwright v. Wainwright, 888  

                                                                                                                                            

P.2d 762, 763 (Alaska 1995) ("The marital portion of the pension will be determined by  

                                                                                                                                             

a so-called coverture fraction of 75/240.   Seventy-five is the number of months of  

                                                                                                                                            

Robert's qualified employment during the marriage.  Two hundred and forty will be the  

                                                                                                          

total number of months of qualified employment at the time of vesting.").  



           22         Cf. Faulkner, 46 P.3d at 1003 n.36 (using "marital share" to refer to a  

                                                                                                                                              

portion of the actual benefit at retirement).  

                                                    



           23         See Engstrom, 350 P.3d at 770.  

                                                                    



           24         In addition, the dates of marriage do not correspond to the salary years  

                                                                                                                                       

David claims are required.   The QDRO correctly states that the parties permanently  

                                                                                                                           

separated at the end of 2004, but David argues Marjorie's benefit must be calculated  

                                                                                                                               

based  on  his  average  salary  in  2003-2005  - fully  one-third  of  which  is  after  the  

                                                                                                                                           

marriage.  The parties used the permanent separation date, December 31, 2004, as the  

                                                                                                                                           

end of the marriage for property division purposes. See Hanlon v. Hanlon, 871 P.2d 229,  

                                                                                                                                         

                                                                                                                         (continued...)  



                                                                      -9-                                                              7173
  


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

                              David also argues that a settlement clause excluding from division any                                                                                       



property acquired after separation establishes that Marjorie is not entitled to receive a                                                                                                       



benefit calculated using his post-separation salary.                                                               That paragraph states:                             "The parties   



agree solely to retain other property acquired after their 31 December 2004 permanent                                                                                      



separation. That property is agreed to be non-marital and neither party is making a claim                                                                                             



to it."        David argues that calculating Marjorie's monthly payment using his salary at                                                                                                    

                                                                                                                                           25     But by its terms, this  

retirement is inconsistent with this portion of the agreement.                                                                                                                             



paragraph applies to "other property" acquired after separation.  (Emphasis added.)  It  

                                                                                                                                                                                               



therefore does not apply to the marital portion of David's PERS account, which was by  

                                                                                                                                                                                              

definition  acquired  before  separation  and  was  discussed  earlier  in  the  agreement.26  

                                                                                                                                                                                                     



               24             (...continued)  



                                                                                                                                                                                           

231 (Alaska 1994). David explains in his brief that this use of post-separation salary was  

                                                                                                                                                                                         

acceptable because the coverture fraction was applied to ensure Marjorie received only  

                                                                                                                                                                                    

a share of the marital portion.  This is precisely the reason that Marjorie's actual benefit  

                                                                                                                                                                                     

can becalculatedusingpost-separation salary withouther receivingmorethan theparties  

                                                               

agreed on in the settlement agreement.  



               25             David also argues that "PERS service credit that [he] accrued since the  

                                                                                                                                                                                            

parties' divorce undeniably constitutes non-marital property under this Paragraph 6."  

                                                                                                                                                                                                     

However, Marjorie has never argued that she should be entitled to the years of service  

                                                                                                                                                                                   

credit David accrued after their separation, nor did the court's order allow her to receive  

                                                                                                                                                                                   

any  benefits  from those  years of  service  credit.                                                                The  use of  the  coverture  fraction  

                                                                                                                                                                                 

prevents that.  Service credit and salary are separate elements of the benefit calculation.  

                                                                                                                                                                                                     



               26             As we have explained, the marital foundation theory establishes that the  

                                                                                                                                                                                            

increased value of the marital portion of a retirement benefit remains marital property,  

                                                                                                                                                             

so the clause does not establish that the increased value based on David's higher post- 

                                                                                                                               

separation salary is separate property.  See Hartley v. Hartley, 205 P.3d 349-50 (Alaska  

                                                                                                                                                                                  

2009).  



                                                                                             -10-                                                                                       7173
  


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

Therefore this provision does not contain "clear language" requiring the use                                                              of the earlier     

salary years.          27  



                         Because the settlement does not contain the clear language required by  

                                                                                                                                                            



Hartley, we conclude that the superior court did not err when it denied David's motion.  

                                                                                                                                                                   



We therefore do not reach David's other claims regarding the parties' intent.  

                                                                                                                                                



V.           CONCLUSION  



                         The order of the superior court is AFFIRMED.  

                                                                                        



             27          See id. at 350.  

                                            



                                                                             -11-                                                                            7173  

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC