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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Brennan v. Brennan (8/10/2018) sp-7272

Brennan v. Brennan (8/10/2018) sp-7272

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

          Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

          303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  


                      THE SUPREME COURT OF THE STATE OF ALASKA                                   

KELLY  BRENNAN,                                                   )  

                                                                  )     Supreme  Court  No.  S-15576  

                               Appellant,                         )  


                                                                  )     Superior Court No. 3HO-12-00166 CI  

          v.                                                      )  


                                                                  )     O P I N I O N  


RACHAEL BRENNAN,                                                  )  


                                                                  )    No. 7272 - August 10, 2018  

                    Appellee.                                     )  




                       ppeal  from  the  Superior  Court  of  the  State  of  Alaska,  


                     Third Judicial District, Homer, Charles T. Huguelet, Judge.  


                    Appearances:  Dan O'Phelan, Law Office of Dan O'Phelan  


                    LLC,  Homer,  for  Appellant.                      Rachael  Brennan,  pro  se,  


                    Homer, Appellee.  


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


                     and Carney, Justices.  


                     STOWERS, Chief Justice.  



                     This appeal presents a variety of issues relating to the divorce of Kelly and  


Rachael Brennan.  At the time of separation, the couple controlled substantial assets,  


including a successful fishing business, Individual Fishing Quotas (IFQs) that Kelly  


obtained prior to his marriage to Rachael, and a large home in Halibut Cove.  The court  


ordered Kelly to pay $5,000 per month as interim spousal support.   After trial, the  


superior  court  determined  that  the  IFQs  had  become  marital  property  through  

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

transmutation, and it divided most of the marital estate 50/50.                                                                                                                                                                                                       The property division                                        

included the proceeds from two post-separation sales of IFQs; the court also awarded                                                                                                                                                                                                                                             

Rachael half the gross proceeds from the post-trial sale of the couple's fishing vessel, the                                                                                                                                                                                                                                                             

F/V A 


                                                       Kelly appeals.                                                 He argues that the IFQs were his separate property not                                                                                                                                                                           

subject to division; he also challenges several other aspects of the court's property                                                                                                                                                                                                                                            

division, arguing that the court abused its discretion in failing to account for various tax                                                                                                                                                                                                                                                             

liabilities,   payments,   alleged   damage   to   marital   property,   and   other   factors   that   he  

contends unfairly favored Rachael.                                                                                                                     We conclude that the superior court applied the                                                                                                                                                  

wrong legal standard to its transmutation analysis regarding the IFQs.                                                                                                                                                                                                                                    We therefore   

reverse the determination that the IFQs were marital property, and reverse the award to                                                                                                                                                                                                                                                                      

Rachael of proceeds from post-separation IFQ sales.                                                                                                                                                                       We remand for the superior court                                                                                      

to reconsider these issues as well as the overall equitable property distribution, and to                                                                                                                                                                                                                                                                    

explain its reasoning for awarding Rachael gross rather than net proceeds from the sale                                                                                                                                                                                                                                                              

of the F/V A                                        LASKA.   We find no error or abuse of discretion regarding the other points                                                                                                                                                                                                             

raised on appeal.                       

II.                         FACTS AND PROCEEDINGS                                        

                            A.                         Facts  


                                                       Kelly Brennan is a lifelong fisherman.  He formed the fishing business  


Eclipse, Inc. with his first wife, Mary, in 1981.  Through his work as a fisherman, he  


acquired IFQs from the federal government, giving him the right to harvest specified  



amounts of halibut and sablefish. 

                            1                          As we explained in                                                                  Ferguson v. Ferguson                                                                              , 928 P.2d 597, 598 (Alaska                                                            

 1996),  "[t]he IFQ program is a federal regulatory response to various problems in the                                                                                                                                                                                                                                                                 

halibut and sablefish fisheries . . . [which] replaces the previous 'open access' regulatory                                                                                                                                                                                                                               

regime with a limited access system."                                                                                                                                Under the IFQ program, annual commercial                                                                                                      


                                                                                                                                                                             -2-                                                                                                                                                                  7272

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

                                                           Kelly and Rachael Brennan met in the summer of 1991 when Rachael was                                                                                                                                                                                                                                             

 in her early 20s and Kelly was in his early 30s.                                                                                                                                                            Rachael was working for a fish buyer at                                                                                                                                 

the time, but she left her job to be with Kelly and began helping him with his fishing                                                                                                                                                                                                                                

business.  The couple married in July 1994.  During their marriage, Kelly's settlement                                                                                                                                                                         

 agreement with his ex-wife required Kelly to make payments to her, which both he and                                                                                                                                                                                                                                                                                        

 Rachael labeled "IFQ payments."                                                                                                                          Kelly's ex-wife apparently also had a lien on the                                                                                                                                                                   

 IFQs. Kelly was responsible for all of the administrative tasks related to registering and                                                                                                                                                                                                                                                                                  

using IFQs during his marriage to Rachael.                                                                                                              

                                                           The fishing business was very successful and consistently produced high                                                                                                                                                                                                                                       

 spendable income.                                                                   With the help of proceeds from the sale of some IFQs, the couple                                                                                                                                                                                                          

built the largest home in Halibut Cove at 6,500 square feet with an apartment, barn, dock,                                                                                                                                                                                                                                                                           

 and outbuildings on 19.5 acres.                                                                                

                                                           The parties dispute the                                                                           extent oftheir respective contributions to the fishing                                                                                                                                            

business.   Kelly fished and maintained the F/V A                                                                                                                                                                     LASKA, and delegated all bookkeeping                                                                          

to Rachael. Rachael testified to running errands for the business, outfitting and cleaning                                                                                                                                                                                                                                                              

the boat, helping obtain parts for the boat, paying bills, maintaining financial records,                                                                                                                                                                                                                                                                

tracking licenses, and performing other tasks.                                                                                                                                  

                              1                            (...continued)  


 fishing quotas of halibut and sablefish are distributed among qualified "quota share  


holders." 50 C.F.R.  679.40 (2017). Halibut and sablefish fisheries are managed under  


 separate quota systems. Id.  To qualify for an IFQ, a person must have owned or leased  


 a vessel that commercially  fished  halibut or  sablefish  during  1988,  1989,  or  1990.  


Id.   679.40(a)(2)-(3).  The size of each quota share is determined in proportion to the  


 share holder's history of landings from 1984 to 1990 for halibut, and from 1985 to 1990  


 for sablefish. Id.  679.40(a)(4).  Quota shares and annual quotas are transferable (with  


 some restrictions), and so can be resold for value.  Id .  679.41.  

                                                                                                                                                                                         -3-                                                                                                                                                                            7272

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                               The couple separated in April 2011 and split a substantial amount of what                                                                                      


were apparently marital funds at the time.                                                                                                                                             

                                                                                                            Kelly continued to receive the income  


produced by the fishing business.  He bought land and built a house in Seldovia that he  


titled in his new girlfriend's name, and in October 2011 he sold a number of IFQs to one  


of his deckhands for $110,022.  


                               Rachael, who has a high school diploma, lived off what money Kelly chose  


to give her. She claimed this consisted of an initial $84,000 after separation - of which  


she later returned $24,000 -  plus an additional $15,000 in the summer of 2012.  Kelly  


did not initially contest those figures -although he later claimed the initial payment was  


$86,000 - but he asserted that Rachael received additional amounts, for a net total of  


over $150,000 in the first few months after separating, in addition to the $15,000 he gave  


her in 2012.  The bulk of the difference appears to be a $74,000 transfer which Kelly  


claimed went to Rachael, but which Rachael asserted went to their joint "tax account"  


and not to her individually.  Rachael also used her credit card and loans from friends to  


support herself.  


                B.             Proceedings  


                               Kelly filed a complaint for divorce in May 2012. Rachel filed a motion for  


interim support, interim possession of the marital home, and attorney's fees in August  


2012.  In his opposition, Kelly requested financial records and an accounting of what  


Rachael  had  done  with  the  money  he  had  already  given  her.                                                                                         After  a  hearing  in  


November 2012, the superior court awarded Rachael exclusive possession of the Halibut  

                2              The exact amount that Kelly and Rachael split when they separated is                                                                                                  

unclear.    Kelly's pre-                           and post-trial briefs and the trial court's findings of fact listed this                                                                      

initial  transfer   as   $86,000,   but   various   affidavits   indicate   that   it   was   $84,000,   and  

testimony on this point was unclear. Bank statements in the record from around that time                                                                                                       

do   not   show   either   amount,   but   do   show   a   transfer   of   $80,000   shortly   before   the  

separation as well as additional transfers and payments on the same day in the amounts                                                                                               

of $8,000, $6,000, $4,443, and other smaller amounts.                                                     

                                                                                                 -4-                                                                                         7272

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

Cove home, ordered the parties to prepare to sell the home, and ordered Kelly to pay                                                                                                                                                                                     

Rachael $5,000 per month in interim spousal support effective November 1.                                                                                                                                                                            The court   

found that this amount would allow Rachael to keep the property in a condition that                                                                                                                                                                                      

could be shown to potential buyers.                                                                                         The court also ordered Kelly                                                                           to  pay  Rachael  

$10,000 in attorney's fees. Kelly did not pay the attorney's fees, and did not consistently                                                                                                                                                    

pay the court-ordered spousal support.                                                            

                                           In May 2013 the court ordered Kelly to sell a batch of IFQs worth about                                                                                                                                                 

$83,905 so he could pay spousal support arrears and Rachael's attorney's fees. The IFQs                                                                                                                                                                               

were technically held by Eclipse, Inc.; the court later explained that Kelly used corporate                                                                                                                                                            

assets as if they were his personal assets, and it therefore treated themas such, effectively                                                                                                                                                       

                                                                                                                                                                                                                                                  3   The court  

disregarding the corporation for purposes of the property division at divorce.                                                                                                                                                                                       

ordered that $18,000 be used to pay off a lien Kelly's ex-wife apparently had on the  


IFQs; that money for any taxes on the sale be put in an escrow account; that the broker's  


fee be paid; and that a sum of $50,000 be put in Rachael's law firm's trust account for  


the payment of spousal support arrears, on-going spousal support for June and July 2013,  


and attorney's fees.  


                                           Kelly  thereafter  filed  motions  requesting  that  Rachael  be  required  to  


disclose financial records relating to the marital estate in order to find out whether she  


was really spending $4,000 a month on property maintenance as she claimed.  Rachael  


opposed Kelly's motions, yet the court failed to rule on them.  


                                           After a two-day trial in July 2013 the court issued findings of fact and  


conclusions of law.  First, the court found that Kelly's previously separate IFQs were  


transmuted during the marriage into marital property.  The court reasoned that because  


Kelly gave Rachael an active role in the fishing business for "nearly 20 years," made  


                     3                      Neither party                              haschallengedthesuperiorcourt'sdecision to                                                                                                      treatcorporate   

assets as personal.                                          We therefore do the same.                                           

                                                                                                                                      -5-                                                                                                                             7272

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payments using marital income from the fishing business for his ex-wife's interest in the                                                                                                                                

IFQs and also sold some of his IFQs to purchase marital property, Kelly demonstrated                                                                                                         

both the conduct and intent necessary to transmute presumptively separate property                                                                                                                        

obtained before marriage into marital property subject to division.                                                                                                          At the time of trial,                  

these remaining IFQs were worth $682,868.                                                

                                   Second, the court determined that a 50/50 division of the marital assets was                                                                                                        


equitable despite Rachael's lack of skills and Kelly's status as a successful fisherman.                                                                                                                                           

The court considered Kelly's contribution of his successful pre-marital business to the  


marriage, his age, and medical issues that would eventually limit his ability to fish  


commercially. Consequently,thecourt awarded thefishingbusiness, includingtheIFQs,  


to Kelly, but ordered that Rachael be paid her 50% share of the business value from the  


sale of the Halibut Cove home and property.  At the time the court issued its decision,  


the house had not sold but was listed at approximately $2.8 million dollars.  


                                   Third, the court stated that "[t]he parties' personal property was valued  


and/or allocated on the record at trial.  The remainder of the couple's personal property  


 [was] to be sold at auction and the proceeds divided . . . 50/50."   The court denied  


Kelly's subsequent motion for clarification on this issue.  


                                   Fourth, the court ruled that Kelly was "entitled to an offset for the $15,000  


provided to [Rachael] in 2012, and an amount equal to one half of [the] pretrial spousal  


support" because the amount "included funds needed for upkeep of the jointly owned  


home."  The court also ordered Kelly to pay Rachael $1,000 per month for one year in  


spousal support and $10,000 in attorney's fees.  


                                   Finally, the court recognized that Kelly claimed Rachael had failed to rent  


an apartment on the couple's property and allowed it to deteriorate after he left the home,  


                 4                 Rachael did not file a cross-appeal and does not challenge the court's                                                                                                    

equitable distribution.   

                                                                                                             -6-                                                                                                   7272

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but the court provided no offset for the alleged damage.                                                                                                       The court awarded Rachael                                 

$55,000 from the proceeds from Kelly's October 2011 IFQ sale to his deckhand for                                                                                                               

$110,022.   The court also ordered that Rachael be paid $35,000 as her half of the                                                                                                                                                    

proceeds of the sale of the F/V A                                                       LASKA, marital property that Kelly had sold for $70,000                                                                          

following trial.   

                                     Kelly filed an Alaska Civil Rule 60(b) motion raising the issue of the                                                                                                                          

$74,000 transfer, which he claimed was deposited into Rachael's personal account, and                                                                                                                                                

he asked for an evidentiary hearing on the issue.                                                                                              The court denied his motion and                                                      

request for an evidentiary hearing.                                                              Kelly appeals.   

III.               STANDARD OF REVIEW                                 

                                     "[T]he characterization of property as separate or marital may involve both                                                                                                                   

                                                                                 5      "Underlying factual findings as to the parties' intent,  

legal and factual questions."                                                                                                                                                                                                

                                                                                                                                                                                            6   "Findings of fact  

actions, and contributions to the marital estate are factual questions."                                                                                                                                                             


are reviewed for clear error, but whether the trial court applied the correct legal rule in  


exercising  its  discretion  is  a  question  of  law  that  we  review  de  novo  using  our  


independent judgment."7  



                                                                       We review the equitable allocation of property for an abuse of  

                             8      "Additionally, the trial court must render findings of ultimate fact that  


support any decreed property division; the findings must be explicit and sufficiently  


detailed to give this court a clear understanding of the basis of the trial court's decision."9  


                   5                 Beals  v.  Beals,  303  P.3d  453,  459  (Alaska  2013)  (quoting  Odom  v.  Odom,  

 141  P.3d  324,  330  (Alaska  2006)).  

                   6                 Id.  (citing  Odom,   141  P.3d  at  330).   

                   7                 Id.  (quoting  Hanson  v.  Hanson,   125  P.3d  299,  304  (Alaska  2005)).  

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

                   9                 Id.  (quoting  Doyle,  815  P.2d  at  368).    

                                                                                                                    -7-                                                                                                          7272

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"Whether a superior court's findings are sufficiently clear is a legal question, which we                                                 

review de novo."             10  

                      A motion for "clarification" that asks the court to reconsider substantive  


matters is treated as a motion for reconsideration, and its denial is reviewed for abuse of  


discretion.11         The award of interim spousal maintenance under AS 25.24.140(a)(2) is  


committed  to  the  sound  discretion  of  the  trial  court  and  reviewed  for  abuse  of  




discretion.          "The superior court must base its interim support order on sufficient factual  



findings concerning the parties' needs and ability to pay." 


                      The trial court's failure to rule on Kelly's request for disclosure effectively  


acted as a denial of that request; we review the denial of a request for disclosure for  



abuse of discretion.                "Whether there was a violation of due process is a question of law,  



                                                   However, we will "disregard any error or defect in the  

which we review de novo." 

           10         Id.  (citing  Miller  v.  Miller,   105  P.3d   1136,   1140  (Alaska  2005)).  

           11         See   Johnson v.   Johnson,   239   P.3d   393,   404   (Alaska   2010)   (treating   a  

"motion   to   clarify"   that   did   not   address   merely   "clerical   error"   as   a   motion   for  

reconsideration);  Baseden   v.   State, 174 P.3d   233,   238   (Alaska   2008)   (reviewing   the  

denial  of  a  motion  for  reconsideration  for  abuse  of  discretion).  

           12         Johnson v. Johnson, 836 P.2d 930, 933 (Alaska  1992) (citing Burrell v.  


Burrell, 537 P.2d 1, 7 (Alaska 1975)).  


           13         Beal v. Beal, 88 P.3d 104, 112 (Alaska 2004) (citing Johnson, 836 P.2d at  



           14         See Taylor v. Johnston, 985 P.2d 460, 463, 466 (Alaska 1999); Simone H.  


v. State, Dep't of Health & Soc. Servs., Office of Children's Servs., 320 P.3d 284, 287  


(Alaska 2014).  


           15         Patrick v. Municipality of Anchorage, Anchorage  Transp. Comm'n, 305  


P.3d 292, 297 (Alaska 2013) (citing D.M. v. State, Div. of Family & Youth Servs., 995  


P.2d 205, 207 (Alaska 2000)).  


                                                                     -8-                                                              7272

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

proceeding which does not affect the substantial rights of the parties."16  The denial of  

a Civil Rule 60(b) motion is generally reviewed for an abuse of discretion,17  

                                                                                                                                  as is the     

denial of a request for an evidentiary hearing on the subject of a Rule 60(b) motion.                                                      18  


                      Under Alaska law, equitable division of marital assets involves three steps:  


(1) determining the specific property available for distribution; (2) valuing the available  


property; and (3) equitably dividing property available for distribution.19                                                  In order to  


complete the first step, the court must characterize assets as separate or marital, the latter  


being subject to division.20                    Property acquired by one spouse prior to the marriage is  


separate  property,  which  is  not  divisible  but  subject  to  "invasion"  only  "when  the  


balancing of the equities between the parties requires it."21  Marital property generally  

includes all property acquired during the marriage, except for property received by one  


spouse as a gift or inheritance, and property acquired in exchange for separate property  


which is maintained as separate.22  

                                                        However, initially separate property may "transmute"  


           16         Alaska R. Civ. P. 61.

           17         Dickerson v. Williams, 956 P.2d 458, 462 (Alaska 1998) (citing Nelson v.


Jones, 781 P.2d 964, 968 (Alaska 1989)).  


           18         See Stinson v. Holder, 996 P.2d 1238, 1242 (Alaska 2000).  


           19         Bealsv. Beals,303 P.3d 453, 458 (Alaska 2013) (citing Doyle v. Doyle,815  


P.2d 366, 368 (Alaska 1991)).  


           20         Kessler v. Kessler, 411 P.3d 616, 618 (Alaska 2018).  


           21         Id. (quoting AS 25.24.160(a)(4)).  


           22         Horning  v. Horning, 389 P.3d  61,  64  (Alaska 2017)  (citing Hansen  v.  


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


                                                                      -9-                                                              7272

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


into marital property through an implied interspousal gift.                                                       Once the trial court has              

determined what property is marital and valued that property, it must equitably divide                                                            

it between the parties.  An equal division of property is presumptively equitable,                                                                 24 but  


the trial court has broad discretion in this area.                                       


                        Kelly argues that the superior court erred by (1) finding that the IFQs were  


marital property subject to division via the doctrine of transmutation; (2) failing to offset  


the value of personal property orally awarded to Rachael at trial in its written property  


division; (3) failing to credit Kelly for overpayment of spousal support; (4) failing to  


address  alleged  payments  to  Rachael  of  $74,000  and  $20,000  or  to  provide  an  


evidentiary hearing on the subject of the $74,000 payment when raised in a Rule 60(b)  


motion; (5) failing to account for damage to the marital apartment allegedly caused by  


Rachael in its property division; (6) failing to rule on requests for records regarding the  


cost of maintaining the marital home; and (7) failing to credit Kelly for tax payments he  



made on the post-separation sale of IFQs and the F/V A 



            A.	         The  Superior  Court  Applied  An  Incorrect  Legal  Standard  When  


                        Determining That The IFQs Transmuted To Marital Property.  


                        We have established that an IFQ creates a property interest that may be  



subject to division in a divorce.                            The superior court found that the IFQs were all based  


on work Kelly performed before he married Rachael, so the IFQs were his separate  

            23          Kessler, 411 P.3d at 619 (citing                            Sparks v. Sparks               , 233 P.3d 1091, 1094,          

 1096 (Alaska 2010)).     

            24          Odom v. Odom, 141 P.3d 324, 330 (Alaska 2006) (citing Brooks v. Brooks,  


733 P.2d 1044, 1058 (Alaska 1987)).  


            25          See id.; Bellanich v. Bellanich, 936 P.2d 141, 143 (Alaska 1997) ("The trial  


court has broad discretion in fashioning a property division.").  


            26          Ferguson v. Ferguson, 928 P.2d 597, 600 (Alaska 1996).  


                                                                           -10-	                                                                    7272

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


property when he entered the marriage.                                                                                                                                However, thesuperior                                                                         court found that because  

Kelly made payments for the IFQs to his ex-wife using marital income from the fishing                                                                                                                                                                                                                                                    

business, because Kelly sold IFQs to pay for the marital home, and because Rachael had                                                                                                                                                                                                                                                                 

been working in the fishing business for nearly 20 years, the evidence established an                                                                                                                                                                                                                                                                      

"intent to treat the IFQs as marital." On that basis, the superior court determined that the                                                                                                                                                                                                                                                             

IFQs had all been transmuted to marital property and were subject to division.                                                                                                                                                                                                                 

                                                       Kelly challenges the superior court's transmutation finding by arguing that                                                                                                                                                                                                                    

(1) no evidence supports that the parties took the actions relied on by the court to find                                                                                                     

transmutation and the basis for the finding is clearly erroneous and (2) the court's finding                                                                                                                                                                                                                                            

that the parties' alleged conduct demonstrated an intent on his part to treat the IFQs as                                                                                                                                                                                             

marital was based on a misapplication of our case law.                                                                                                                                                          

                                                       As we recently explained in                                                                                       Kessler v. Kessler                                                         , our prior opinions have not                                                                        

                                                                                                                                                                                                                                                         28   For the superior court to  

always been precise in describing the transmutation doctrine.                                                                                                                                                                                                                                                                                                

find transmutation by implied interspousal gift, it is not enough to show that a married  


couple has demonstrated "an intent . . . to treat one spouse's separate property as marital  


                                           29   First, the relevant intent is not that of the "married parties" or the "couple,"  


but  only  that  of  the  owning  spouse  -  the  spouse  whose  separate  property  is  in  


                            27                         See id.                        at 600 (citing                                               Chotiner v. Chotiner                                                                      , 829 P.2d 829, 832 (Alaska                                                            

 1992));  see also Johns v. Johns                                                                                                 , 945 P.2d 1222, 1226 (Alaska 1997) (citing                                                                                                                                             Ferguson,  

928 P.2d at 600) ("[A] spouse's interest in an IFQ is his or her separate property to the                                                                                                                                                                                                                                                                

extent that the size of the quota share is attributable to labor performed prior to the                                                                                                                                                                                                                                                                

marriage, and marital property to the extent that it is attributable to labor performed                                                                                                                                                                                                                                  

during the marriage.").                     

                            28                         411 P.3d at 619.  


                            29                         Id. (citing various cases using this and similar phrases).  


                                                                                                                                                                           -11-                                                                                                                                                                   7272

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


question.            Second, the intent that must be shown is not merely intent to "treat" separate                                            


property as marital, in the sense of sharing the property during the marriage.                                                                 Rather,  


the relevant question is whether the owning spouse intended "to 'donate' or 'convey'  

                                                                                                 32   The following sections discuss  



separate property to the marital unit or marital estate." 

each of the trial court's factual findings and how they relate to this standard.  


                        1.          IFQ sales during the marriage  


                        The superior court's transmutation determination was based in part on its  


finding that IFQs "were sold to pay for marital assets."  Kelly argues that there was no  


evidence of any sale of IFQs during the marriage.  But Kelly testified that he sold two  

partial IFQs to buy property in Halibut Cove that was titled in Rachael's name.  This  


testimony is consistent with concessions in Kelly's brief.  In light of these concessions  


and evidence in the record, the superior court did not clearly err in finding that IFQ sales  


occurred during the marriage.  However, as we noted in Thomas v. Thomas, the use of  


some separate property to cover marital expenses does not necessarily render other  


                                              33   The sale of separate property IFQs to fund the construction  

separate property marital.                                                                                                             


of a marital home titled in Rachael's name is not relevant to determining whether Kelly  


had the intent to convey the remaining IFQs to the marital estate.  To the extent this sale  


            30          Id.  (citing  Sparks v. Sparks                  , 233 P.3d at 1094, 1096 (Alaska 2010);                               Thomas  

v.   Thomas,   171   P.3d   98,   107   (Alaska   2007);   1   BRETT    R.    TURNER,    EQUITABLE  

DISTRIBUTION OF PROPERTY   5:69, at 665 (3d ed. 2005)).                                     


            31          Id.  

            32          Id. ;   see   also   Sparks,   233   P.3d  at   1094   ("[S]eparate   property   may   be  

transmuted to marital property if the owner intends to convey the property to the marital                                                        

unit and the owner's conduct demonstrates that intent."), overruled on other grounds by  


Engstrom v. Engstrom, 350 P.3d 766, 771 (Alaska 2015).  


            33          See  171 P.3d at 107-08.  


                                                                           -12-                                                                    7272

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

 was evidence of Kelly's intent to convey                                                                                                                                      any  separate property to the marital estate, that                                                                                                                                     

 property is the Halibut Cove home.                                                                                           

                                                           2.                          Rachael's contribution to the fishing business                                                                                                                             

                                                           The transmutation analysis was also based in part on Rachael's work "as   

 bookkeeper and onshore liaison for the [fishing] business" for "nearly 20 years."                                                                                                                                                                                                                                                                          Kelly  

 argues that "there was little to nothing admitted at trial that showed Rachael worked at                                                                                                                                                                                                                                                                                     

 all with the fishing business" and no evidence as to when she may have performed this                                                                                                                                                                                                                                                                                

 work.   There certainly is conflicting testimony on this point, but there is ample support                                                                                                                                                                                                                                                          

 in the record for the court's factual determination that Rachael kept the books and acted                                                                                                                                                                                                                                                                     

 as an onshore liaison for the fishing business when Kelly was at sea.                                                                                                                                                                                                                                The couple's long                                            

 time friend testified to observing Rachael doing various work required to operate the                                                                                                                                                                                                                                                                                  

 fishing business.                                                          Rachael testified to running errands for the business, outfitting and                                                                                                                                                                                                                     

 cleaning the boat, helping obtain parts for the boat, paying bills, maintaining financial   

 records, tracking licenses, and performing other tasks. Kelly conceded that for the most                                                                                                                                                                                                                                                                        

 part he delegated all bookkeeping to Rachael, though he repeatedly characterized her                                                                                                                                                                                                                                                                                  

 contributions as minimal.                                                                                      Given the support in the record and the deference we give to                                                                                                                                                                                                  

                                                                                                                                                                                                           34  the court did not clearly err in finding  

 the credibility determinations of the trial court,                                                                                                                                                                                                                                                                                                   

 that Rachael contributed to the fishing business.  


                                                           But  in  order  for  the  non-owning  spouse's  contribution  to  a  separate  


 property business "to be relevant to the owning spouse's donative intent, 'the non- 


 owning spouse's "participation must be significant and evidence an intent to operate  


jointly." ' " 35                                               Although we can glean from the trial court's analysis that it considered  


                              34                          See Sheffield v. Sheffield                                                                               , 265 P.3d 332 (Alaska 2011) (citing                                                                                                                        Josephine B.   

 v. State, Dep't of Health & Soc. Servs., Office of Children's Servs.                                                                                                                                                                                                                            , 174 P.3d 217, 222     

 (Alaska 2007)).   

                              35                          Kessler, 411 P.3d at 621 (quoting Abood v. Abood , 119 P.3d 980, 988  



                                                                                                                                                                                   -13-                                                                                                                                                                          7272

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

Rachael's contribution "significant," the court did not appear to consider whether that  

contribution  specifically  evidenced  an  intent  on  Kelly's  part  to  operate  the  fishing  


business  jointly  and  therefore  to  convey  to  the  marital  unit  either  the  IFQs  or  the  


corporation that held them, Eclipse, Inc. Because the court's findings of donative intent  


are not "explicit and sufficiently detailed to give this court a clear understanding of the  


basis of the trial court's decision,"36  they are insufficient to support the transmutation  



                      We note, however, that even in the absence of donative intent sufficient to  


support  a  finding  of  transmutation  for  either  the  business  or  the  IFQs,  Rachael's  


contributions may still have given her an interest in the fishing business under  the  


doctrine of active appreciation. Under this doctrine, some portion of a separate-property  


business might be marital property if marital contributions to the business caused some  


appreciation in its value during the marriage.37  


                      3.         IFQ purchases during the marriage  


                      Finally, the trial court's transmutation analysis was basedon its finding that  


"marital funds were used to purchase the IFQs."  Kelly asserts that "[t]here was never  


any evidence at trial that any IFQs were purchased during Kelly's marriage to Rachael"  


nor any evidence that Kelly "used marital income to pay any expenses for the IFQs."  


The critical disagreement between Kelly and the court is over the evidence for and  


characterization of Kelly's payments to his ex-wife Mary, who apparently had liens  


           35         (...continued)  


(Alaska 2005)).  

           36         Beals v. Beals         , 303 P.3d 453, 459 (Alaska 2013) (quoting                               Doyle v. Doyle           ,  

815 P.2d at 368 (Alaska 1991)).                         

           37         See Kessler, 411 P.3d at 622 & n.32 (citing Odom v. Odom, 141 P.3d 324,  


330 (Alaska 2006); Schmitz v. Schmitz, 88 P.3d 1116, 1125 (Alaska 2004)).  


                                                                     -14-                                                              7272

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

against Kelly's IFQs.                                      Kelly asserts the evidence only supports that he paid down a                                                                                                   

general debt arising from his first marriage.                                                                          The court viewed the payments as the                                                          

purchase of IFQs with marital income.                                                              38  


                                  The evidence surrounding the settlement agreement between Kelly and his  


first  wife  and  payments  pursuant  to  that  agreement  is  scant,  as  the  superior  court  


acknowledged, but it is sufficient to support a finding that the payments to Mary were  


for the IFQs specifically, and not for a "general debt." When questioned about the terms  


of his prior divorce settlement, Kelly testified that he "had to reimburse [Mary] for some  


halibut shares" but that he was "done paying her" at the time of trial. At a status hearing,  


Kelly testified that Mary had a lien on the court-ordered sale of IFQs, and the IFQ sale  


document  noted  that  Mary  "has  a  lien  against  these  shares  with  a  balance  due  of  


approximately  $18,000."                                               And  as  the  court  noted  in  its  findings,  Kelly's  financial  


declaration  from  October  2012  lists  a  yearly  expense  of  $17,500  labeled  "IFQ  

                           39  Finally, given that the record is devoid of any other sources of income apart  


from the couple's fishing business, it was reasonable for the court to infer that these IFQ  


payments were made with marital income.  


                                  This evidence is sufficient to support the trial court's finding that Kelly  


"made payments on the IFQs throughout the entire marriage," but it does not follow that  


                 38               We note briefly that whether the IFQs were purchased during the marriage                                                                                             

is   not   strictly   speaking   relevant   to   a   transmutation   analysis:   if   IFQs   were   indeed  

purchased with marital funds during the marriage, they would be presumptively marital                                                                                                                       

property and the transmutation doctrine would not be in issue.                                                                                                 See Kessler                    , 411 P.3d at              

618.   This legal error aside, if the IFQs were purchased during the marriage, the trial                                                                                                                           

court's ultimate conclusion that the IFQs were marital property would not be erroneous;                                                                                                            

thus, the relevant question is whether the court clearly erred in finding that the IFQs were                                                                                                                     

purchased during the marriage.                          

                 39               The financial declaration refers to monthly income and expenses, but Kelly  


completed it based on yearly figures.  


                                                                                                          -15-                                                                                                   7272

----------------------- Page 16-----------------------

he was "purchasing" the IFQs from Mary. There is no indication that Mary had a present                                                                                                                                      

ownership interest in the IFQs during Kelly's marriage to Rachael - if she did, she                                                                                                                                                     

would not have needed a lien on them.                                                                         At most, the evidence indicates that Mary may                                                                           

have   had   the   status   of   a   secured   creditor,   similar   to   a   mortgagee,  with   the   "IFQ  

payments" going towards reducing the balance of a secured debt.                                                                                                                           As we explained in                                

Kessler, most equitable distribution jurisdictions treat the use of marital funds to pay                                                                                                                                               

down a secured debt on separate property as a contribution towards acquisition that                                                                                                                                                    

                                                                                                                       40       But this doctrine is distinct from that of  

creates a marital interest in that property.                                                                                                                                                                                                

transmutation, as such contributions create only a partial interest in property based on the  


actual amount of the contributions.41  


                                      In  short,  the  trial  court's  factual  findings  underlying  its  transmutation  


determination - the sale of IFQs to purchase the marital home, the "purchase" of IFQs  


through the payments to Mary, and Rachael's contribution to the fishing business - are  


largely irrelevant to the question of transmutation, and certainly insufficient to establish  


that Kelly intended to convey the IFQs to the marital estate.  In concluding that "intent  


to treat the IFQs as marital ha[d] been established" by the evidence on these issues, it is  


clear that the superior court's transmutation analysis was based on an incorrect legal  


 standard.                      We  therefore  reverse  the  transmutation  determination.                                                                                                          On  remand,  the  


 superior court should reconsider transmutation under the standard described here and in  


Kessler . The parties are also freeto litigate whether, alternatively, Rachael may have had  


a marital property interest in the IFQs or the corporation that held them through the  


doctrines of active appreciation or marital contribution to separate debt.  


                   40                Kessler, 411 P.3d at 622 (citing 1 T                                                                URNER,  supra  note 29,  5:26, at 399-                                                     

400;   id.    5:24, at 385-86). We have not yet decided whether to adopt this approach                                                                                                                                 

under Alaska law; because the parties have not briefed this issue, we do not do so at this                                                                                                                                              

time, but the parties are free to litigate this on remand.                                                                       

                   41                See  1 TURNER, supra note 29,  5:26, at 399-400.  


                                                                                                                    -16-                                                                                                            7272

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               B.	            The Superior Court Did Not Abuse Its Discretion By Not Offsetting                                                                        

                              The Value Of Personal Property Awarded To Rachael.                                                          

                             Kelly next argues that Rachaelreceivedagreater valuein personal                                                                               property  

than he did in the court's oral distribution of specific personal property items at trial -                                                                                              


around $24,700 more according to our calculations                                                                                                                            

                                                                                                                     - but the court failed to account  


for this disparity in its written findings and conclusions and erred in denying Kelly's  


motion for clarification on this issue.  We disagree.  


                             A superior court's allocation of marital property is reviewed for abuse of  



discretion and we reverse such an award only if it is clearly unjust.                                                                                           The denial of  


motions  for  clarification,  like  those  for  reconsideration,  are  reviewed  for  abuse  of  



discretion.                   The superior court was well aware that it had allocated specific items of  


personal property at trial; it stated it had done so in its findings of fact.  The court then  


allocated the rest of the personal property on a 50/50 basis.   In response to Kelly's  


motion for clarification the court reaffirmed its oral personal property allocation at trial  


andincorporatedtheportionofthetranscriptaddressing personal property allocation into  


its findings of fact. In crafting an equitable allocation, the court explicitly considered and  


balancednumerousstatutory factors, including theparties' relativeearning capacity, age,  


health, financial condition, conduct, and circumstances.  The court also noted that, but  


for Kelly's age and medical condition, it ordinarily would have awarded a larger portion  

               42            According to Kelly, Rachael was awarded another boat named S                                                                                       LIMER  


($11,000), two horses ($2,200), a Ford pickup ($5,000) and diamond earrings ($3,000)  


while Kelly was awarded a dump truck ($1,500). Our review of the record indicates that  

SLIMER  was actually valued at only $5,000, but Rachael also received an additional 18                                                                                                       '  

skiff valued at $11,000.         

               43             Urban  v.  Urban,  314  P.3d  513,  515  (Alaska  2013)  (citing Barnett  v.  


Barnett, 238 P.3d 594, 597 (Alaska 2010)).  


               44            See Johnson v. Johnson, 239 P.3d 393, 404 (Alaska 2010); Baseden v.  


State, 174 P.3d 233, 238 (Alaska 2008).  


                                                                                           -17-	                                                                                   7272

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


of the marital assets to Rachael.  Thus, the court's decision to reaffirm the oral personal  


property allocation at trial and to divide the remainder equally was not clearly unjust but  


reflected a careful consideration and balancing of relevant factors, given the court's view  


of the case and the relative needs of the parties.  We conclude that it was not an abuse of  



                    However,  if  the  superior  court  on  remand  determines  that  the  IFQs  


remained entirely or partially separate property, it follows that in total less property was  


marital and subject to distribution.  In that case, a 50/50 split of marital property may no  


longer be equitable, and the court may in its discretion revisit the overall division of  


marital property.  


          C.	       The Superior Court Did Not Abuse Its Discretion By Not Crediting  


                    Kelly For Alleged Overpayments Of Spousal Support.  


                    Kelly  argues  that  he  paid  too  much  spousal  support  because  Rachael  


inflated the amount needed to maintain the marital home and failed to disclose the extent  


of her assets to the court.  Kelly asks that we remand and require the trial court to give  


him credit for the resulting overpayment.  


                     Rachael asserted in her motion for interim spousal support that at the time  


Kelly moved out of the marital home in April 2011 the couple split marital money, each  


taking around $84,000 - of which Rachael later returned $24,000 - and that she  


received an additional $15,000 from Kelly in the summer of 2012.   In addition, she  


declared in her affidavit and reported in her financial declaration that she had about  


$4,000 in monthly expenses maintaining the Halibut Cove property and paying taxes,  


utilities, and other costs, and that  she "ha[d] no money to pay the bills."  


                    In response, Kelly relied on a bank statement to argue that he had actually  


transferred more income to Rachael - about $152,342 - in the few months after  


separating in addition to $15,000 he gave her in the summer of 2012.  Kelly asserts on  


appeal that Rachael did not include the receipt of these additional funds in her financial  

                                                               -18-	                                                        7272

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

 declaration, that he paid for taxes, heating fuel, and property maintenance performed by                                                                                                                                                                                           

 third parties, and that Rachael therefore misrepresented her expenses.                                                                                                                              

                                            At trial Rachaeladmittedthattheexpenses                                                                                                onher financial                                    declaration were   

just   estimates   and   did   not   reflect   actual   payments.    She   also   admitted   that   since  

 separation Kelly had paid all the property taxes on the Halibut Cove property, which was                                                                                                                                                                                       

 inconsistent with her estimates in her financial declaration.                                                                                                                                   Kelly testified, as he argues                                         

 now, that there was no explanation or evidence as to how all of the money he gave                                                                                                                                                                                         

 Rachael was spent.                                              

                                            Kelly is correct that there is little documentation showing how Rachael                                                                                                                                              

 spent the funds she received from Kelly after separation and before the interim support                                                                                                                                                                           

 award.   But the question here is not how the funds Rachael received were ultimately                                                                                                                                                                     

 spent, but whether the court's interim spousal support award was properly based on                                                                                                                                                                                                

                                                                                                                                                                                                                                                          45  or to put  

 "sufficient factual findings concerning the parties' needs and ability to pay,"                                                                                                                                                                                                  

 it another way, whether the court abused its discretion in awarding Rachael $5,000 per  


 month.46                        We conclude that there was support for the court's award and that the award  


 was not an abuse of discretion.  


                                            First, while a detailed accounting of past expenses would have been a  


 stronger basis for the prospective award, the court's determination was not without  


 support. Rachael asserted in her motion for interim support and supporting affidavit that  


 her $4,000 maintenance number included work needed to make the house marketable,  


 utility costs, significant transportation costs between Homer and Halibut Cove, and  


 support for her while working to maintain the property. While Kelly asserted at trial that  


 it did not cost $4,000 to maintain the home, he acknowledged that making improvements  


                       45                   Beal v. Beal                            , 88 P.3d 104, 112 (Alaska 2004) (citing                                                                                            Johnson v. Johnson                                                ,  

 836 P.2d 930, 934 (Alaska 1992)).                                                                                    

                       46                   See Johnson, 836 P.2d at 933.  


                                                                                                                                        -19-                                                                                                                                7272

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

to the house would cost more than merely maintaining the condition of the property, and                                                                                                                                                                                                                   

he did not address the other costs Rachael included in her maintenance figure, such as                                                                                                                                                                            

costs of transportation.      

                                                Moreover, at the hearing preceding its order, the court noted that Rachael                                                                                                                                                               

was essentially fired from her job with the family fishing business and that $5,000 per                                                                                                                        

month to maintain a large property did not seem excessive.                                                                                                                                                           Later in its findings of fact                                                       

the court made specific findings as to the amounts of money Rachael received after                                                                                                                                                                                                                   

separation and her comparatively                                                                                      limited jobskills vis-à-vis                                                                 Kelly'sstatus                                    as asuccessful   

commercial fisherman; the court also explained its desire to keep the property in good   

condition so it could be sold.                                                                                This demonstrates that the court took into account the                                                                                                                                       

parties' needs and ability to pay, crafted its award to preserve - and ultimately sell -                                                                                                                                                                                                                     

the marital home, and provided for the reasonable and necessary living expenses of the                                                                                                                                                                                                                      

                                                                                                                                                       47   We conclude the court's decision to award  

parties during the pendency of the divorce.                                                                                                                                                                                                                                                      

 $5,000  a  month  in  interim  spousal  support  and  not  to  credit  Kelly  for  alleged  


overpayments of spousal support was not an abuse of discretion.  


                        D.	                     The Superior Court Did Not Abuse Its Discretion Or Deny Kelly Due  


                                                Process   By   Not   Explicitly   Addressing   Two   Alleged   Transfers  


                                                Occurring Shortly After Separation.  


                                                Kelly contends that shortly after the couple's separation a $74,000 transfer  


was made to Rachael's account, not to the couple's tax account as Rachael claimed; he  


argues that the superior court failed to address this issue, failed to allow an evidentiary  


hearing, and failed to grant relief under Civil Rule 60(b), thereby abusing its discretion  


and denying Kelly due process.  Kelly also asserts on appeal that he gave Rachael an  


additional $20,000 in 2012, on top of the $15,000 he gave her in the summer of that year.  


                        47                      See Beal                        , 88 P.3d at 112 (citing                                                          Johnson, 836 P.2d at 934).                                                     

                                                                                                                                                    -20-	                                                                                                                                            7272

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


                     Kelly'ssuggestion that therewas an additional payment of$20,000 was not  


raised before the trial court, and Kelly has not identified any evidence in the record  


showing that he paid $20,000 in addition to the earlier $15,000.  The only evidence in  


the record that Kelly paid Rachael $20,000 in 2012 is a statement of Rachael's total  


"cash flow" for 2012 and testimony about that document.   That document shows a  


transfer of $20,000 from Kelly to Rachael, but does not mention the transfer of $15,000  


that same year, suggesting that the larger amount includes the smaller.   And Kelly  


testified at trial that the $20,000 he paid her in 2012 consisted of the $15,000 transfer,  


plus $5,000 of court-ordered spousal support. Because the trial court credited Kelly both  


for the $15,000 payment and for the payment of interim spousal support, it appears that  


the trial court effectively addressed the entirety of the $20,000 Kelly now claims he paid  


to Rachael in 2012.  


                    A  review  of  the  trial  transcript  reveals  limited  testimony  about  a  tax  


account, and none in relation to a $74,000 payment.  What it does show is that Rachael  


testified the "tax account" and the money in it was used to pay for business expenses and  


taxes.  Additional declarations submitted in relation to Kelly's Rule 60(b) motion add  


little.     Rachael  declared  in  an  affidavit  that  $74,000  in  "additional  funds"  were  


transferred to the couples' joint "tax account" in April 2011 shortly after the couple  


separated. Kelly declared that his accountant never informed him that Rachael paid a tax  


matching the one described in her affidavit.  


                     On  this  record,  the  court's  decision  not  to  address  the  payment  in  its  


decision implies that it credited Rachael's testimony and determined the money had gone  


to pay marital taxes or bills. Accordingly, there was no need to credit any party with the  


payment because it was marital income used to satisfy a marital expense.  We conclude  


that  the  court's  decision  not  to  address  the  $74,000  transfer  was  not  an  abuse  of  



                                                               -21-                                                          7272

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

                            Moreover, refusing to provide relief from the judgment or an evidentiary                   

hearing on this issue under Rule 60(b) was not an abuse of discretion.                                                                                Kelly based his             

request for relief on Rule 60(b)(1) mistake, surprise, or excusable neglect, (3) fraud, and                                                                                      

                                                                                     48    Relief was not justified under any of these  

(6)  "any other reason justifying relief."                                                                                                                                   

categories.                First,  to  gain relief  under  Rule 60(b)(1), "a party  must show not only  



'neglect,' but a valid 'excuse' therefor."                                                   But Kelly's request was not based on any  


neglect, excusable or otherwise, in raising the issue of the $74,000, nor on any mistake  


or surprise. On the contrary, he included the money transfer in the summary of payments  


attached to his opposition to Rachael's motion for interim support and he raised the issue  


in both his pre- and post-trial briefs.  Because Kelly himself raised the issue with the  


court before trial, he cannot claim entitlement to relief based on mistake, surprise, or  


excusable neglect.  Nor can he complain that the trial court did not provide for a post- 


trial evidentiary hearing, because the issue was raised at trial.  


                             Second,  Rule  60(b)(3)  "is  aimed  at  judgments  which  were  unfairly  


obtained, not at those that are factually incorrect."50  It provides relief where a judgment  


was entered based on misconduct that materially "prevented the losing party from fully  


and fairly presenting his case or defense."51  Again, Kelly was able to raise the issue of  


the $74,000 before the trial court.  Mere uncertainty or disagreement as to the nature of  


a payment does not show that the judgment was unfair or fraudulently obtained.  


              48            Alaska R. Civ. P. 60(b). While the language of clause (6) indicates a broad                                                                    

catch-all provision, we have held that it is limited to "extraordinary circumstances."                                                                

O'Link v. O'Link                     , 632 P.2d 225, 229-30 (Alaska 1981).                               

              49            Dickerson v. Williams, 956 P.2d 459, 465 (Alaska 1998) (citing Rill v.  


State, Dep't of Highways, 669 P.2d 573, 576 (Alaska 1983)).  


              50            Babinec v. Yabuki, 799 P.2d 1325, 1333 (Alaska 1990) (quoting McCall  


v. Coats, 777 P.2d 655, 658 (Alaska 1989)).  


              51            Id. (citing McCall, 777 P.2d at 658).  


                                                                                        -22-                                                                                 7272

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

                         Third,    the    factual    dispute    discussed    above    does    not    indicate    any  

"extraordinary circumstance" that would justify relief under Rule 60(b)(6).                                                                 This catch-  

all clause of Rule 60(b) "is reserved for extraordinary circumstances not covered by the                                                                   

                                    52  We have held that there are four factors to be considered before  

preceding clauses."                                                                                                  

setting aside a property division under Rule 60(b)(6): whether (1) the fundamental,  


underlying assumption of the division has been destroyed; (2) the parties' property  


division was poorly thought out; (3) the property division was reached without the  


benefit of counsel; or (4) the property in dispute was the parties' principal asset.53  On  

this record, none of these factors are present in relation to the $74,000 money transfer,  


and there are no other indications of any extraordinary circumstance.  


                         A motion under Civil Rule 60(b) does not "allow relitigation of issues that  


                                                                          54     The court heard  and considered  evidence  

have been  resolved  by  the  judgment."                                                                                                        


pertaining to the tax account and the $74,000 money transfer and apparently did not  


credit Kelly's argument. Because none of these categories support relief under Rule  


60(b), we conclude the court's denial of Kelly's motion for relief and request for an  


evidentiary hearing was not an abuse of discretion.  Furthermore, because Kelly could  


and did present arguments and evidence relating to the money transfer both before and  


after trial, we conclude the court did not deny Kelly due process.  


             52          Johnsonv. Johnson                  , 394 P.3d 598, 602(Alaska2017) (quoting                                       O'Link, 632   

P.2d at 229).     

             53          Id. at 602-03 (citing Hopper v. Hopper, 171 P.3d 124, 130 (Alaska 2007)).  


             54          Morris v. Morris, 908 P.2d 425, 429 (Alaska 1995) (quoting Burrell v.  


Burrell, 696 P.2d 157, 163 (Alaska 1984)).  


                                                                             -23-                                                                      7272

----------------------- Page 24-----------------------

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


                    For Alleged Damage To The Marital Apartment Caused By Rachael.  


                    Kelly alleges that Rachael removed cabinets from an apartment on their  


property and made other changes to the apartment.  He argues she violated court orders,  


completely destroyed the apartment, and deprived him of its use and rental income.  He  


asserts that the superior court erred by not including "distribution for the unilateral  


damage to the apartment by Rachael" in its decision.  We disagree.  


                    While the record supports that Rachael removed carpeting and vintage  


1980s cabinets fromthe apartment, Kelly's claims that the apartment was destroyed, that  


the cabinets were damaged, and that he lost rental income were contradicted by the  


testimony of multiple witnesses.   For example, the couple's friend testified that the  


apartment had been painted, described the changes as renovations, said that the cabinets  


were covered and being stored in the boathouse, and did not believe any fixtures had  


been removed from the apartment.   Rachael testified that she wanted to update the  


apartment to make the property more marketable.  Rachael and another friend testified  


that the apartment had not typically been rented out.  Furthermore, the court explicitly  


addressed Kelly's claim of damage in its findings when discussing whether there had  


been an unreasonable depletion of marital assets, and chose not to account for this claim  


in its distribution of marital assets.  Given the conflicting evidence in the record and the  


court's explicit treatment of Kelly's claim, its decision not to account for alleged damage  


to the apartment in its property division was not an abuse of discretion.  


          F.	       The Failure To Rule On Kelly's Pre-Trial Motions ForDisclosure And  


                    Request For A Hearing Was Harmless.  


                    Kelly argues the superior court abused its discretion and denied him due  


process when it failed to rule on his motions for disclosure of financial records and for  


disclosure of records of maintenance on the marital home, and his request for a hearing.  


We conclude the court's failure to rule on these motions was harmless.  In  Taylor v.  


                                                              -24-	                                                        7272

----------------------- Page 25-----------------------

Johnston, a medical malpractice case, we addressed a court's failure to rule on the                                                              


plaintiff's discovery motion to obtain information to impeach the defendant at trial.                                                                    

Because the court permitted the complaining party to introduce substantial amounts of  


impeachment evidence at trial, accuse the defendant of misrepresentation and falsifying  


his medical credentials, and offer testimony supporting those allegations, we concluded  


that the court's failure to rule on the motion to reopen discovery was harmless.56  Like  


in Taylor, though the court failed to rule on Kelly's motions, it allowed Kelly to question  


Rachael about her statements on her financial declaration, permitted Kelly to accuse her  


of  misrepresenting  information  to  the  court,  and  allowed  Kelly  to  offer  his  own  


testimony and that of another witness to contradict Rachael's maintenance claims. Thus,  


as in Taylor, the court's failure to rule was harmless.  


                       We analyze Kelly's due process claim under the familiar three-part test set  


out in Mathews v. Eldridge.57   We consider and balance the private interest affected, the  


risk of erroneous deprivation of such interests through the procedures used and value of  


additional procedural safeguards, and the government's interest, including the function  


                                                                                                                58    Here, the potential  

involved and the burden of additional procedural requirements.                                                                          


overpayment in spousal support, a purely economic interest, is "not [a] particularly  


                                                      59   the  state  has  an  interest  in  efficiently  adjudicating  

compelling  private  interest[]";                                                                                                


divorce cases; and considering that Kelly was able to present evidence and testimony to  


            55         985  P.2d  460,  466  (Alaska   1999).    

            56         Id.   

            57         424  U.S.  319  (1976).  

            58         Blaufuss  v.  Ball,   305  P.3d  281,  286   (Alaska   2013)   (citing  Borkowski  v.  

Snowden,  665  P.2d  22,  27-28  (Alaska   1983);  Mathews,  424  U.S.  at  335).  

            59         See  Hertz  v.  State,  Dep't  of  Corr.,  230  P.3d  663,  672  (Alaska  2010)  (citing  

Midgett  v.  Cook  Inlet  Pre-Trial  Facility,  53  P.3d   1105,   1112  (Alaska  2002)).   

                                                                        -25-                                                                  7272

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counter Rachael's, both the risk of erroneous overpayment of spousal support and the                                                                                


added benefit of additional disclosures or an additional hearing were relatively small.                                                                                    

Even if the superior court erred in failing to rule on Kelly's motions for disclosure and  


request for a hearing, we conclude that any error, including any due process error, was  



             G.	          The  Superior  Court  Must  Explain  Its  Reasoning  For  Awarding  


                          Rachael Pre-Tax Proceeds For The Sale Of The F/V A 


                          Kelly  argues  that  the  superior  court  abused  its  discretion  because  its  


division of marital property did not credit him for taxes he paid on the sale of the F/V  


ALASKA.  Kelly sold the vessel for $70,000 after trial, and the superior court awarded  


Rachael exactly half of this amount, $35,000.  Thus, the superior court appears to have  


awarded Rachael pre-tax gross proceeds rather than net proceeds from this sale.  


                          The superior court has broad discretion in valuing and allocating property  


in a divorce.61  But the findings and reasoning underlying any property division "must  


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


of the trial court's decision."62  In light of Rachael's relative lack of ability to generate  


income in comparison to Kelly, and the prospect that Rachael would receive very little  


income until the Halibut Cove property sold, it may well have been reasonable for the  


court to favor Rachael when distributing the sale proceeds, as these were liquid assets  


capable of immediate distribution. But without some indication of the trial court's actual  


reasoning, this is mere speculation on our part.  On remand, the superior court must  


             60           See id.        

             61           Odom v. Odom                  , 141 P.3d 324, 332 (Alaska 2006) (citing                                         Cox v. Cox            , 882   

P.2d 909, 913 (Alaska 1994)).                 

             62           See Beals v. Beals, 303 P.3d 453, 459 (Alaska 2013) (quoting Doyle v.  


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


                                                                                 -26-	                                                                          7272

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address this issue.                            

                          H.	                      Because We Reverse The Superior Court's Transmutation Finding                                                                                                                                                                                           

                                                   Regarding The IFQs, We Also Reverse The Superior Court's Orders                                                                                                                                                                                             

                                                   Awarding Rachael Part Of The Proceeds From IFQ Sales.                                                                                                                                                                  

                                                   Kelly raises the issue of the superior court's treatment of post-separation                                                                                                                                                   

IFQ sales.                                 In May 2013 the superior court ordered Kelly to sell some IFQs to pay                                                                                                                                                                                                             

 spousal support arrears and Rachael's attorney's fees.                                                                                                                                                        The court revisited this IFQ sale                                                                             

in a July 2014 order responding to Rachael's motion for clarification and ordered that                                                                                                                                                                                                                                       

Rachael receive half of the remaining proceeds after taxes and brokers fees were taken                                                                                                                                                                                                                                 

out.   The court also awarded Rachael "50 percent of the proceeds" of the October 2011                                                                                                                                                                                                                                   

IFQ sale for $110,022.                          

                                                   Because we reverse the superior's transmutation finding, the                                                                                                                                                                        court's orders   

granting   Rachael   half   the   proceeds   of   these   sales   cannot   stand.     Without   a   valid  

transmutation finding or other basis for concluding that the IFQs were marital property,                                                                                                                                                                                                                 

the IFQs were Kelly's separate property.                                                                                                                     As such, the IFQs and the proceeds from their                                                                                                                 

 sale were not subject to division.                                                                                             The superior court does have the authority to invade                                                                                                                              

a party's separate property "when the balancing of the equities between the parties                                                                                                                                                                                                                              



requires it,"                                           but in the absence of a finding to that effect, we cannot uphold an order  



dividing proceeds from the sale of separate property. 


                                                   Kelly  also  argues  that  the  superior  court  abused  its  discretion  by  not  


crediting him for paying taxes on both of these sales.  With respect to the 2013 sale, the  


court order specifically provided that money for taxes on the sale be paid from the  

                          63                       AS 25.24.160(a)(4);                                                            Green v. Green                                                , 29 P.3d 854, 860 (Alaska 2001).                                                                       



                                                   This holding does not affect the superior court's  order  for part of the  


proceeds to go towards spousal support arrears and attorney's fees, as those payments  


do not constitute a division of marital property.  

                                                                                                                                                               -27-	                                                                                                                                                     7272

----------------------- Page 28-----------------------

proceeds.    This means that regardless of whether the IFQs were separate or marital                                                                                                     

property, the court order made Kelly responsible for the tax payment in direct proportion                                                                                         


to his ownership interest, and he was therefore not entitled to a credit.                                                                                                


                               With respect to the 2011 sale, it appears the superior court intended for  


Rachael to receive 50% of pre-tax proceeds: in the July 2014 order, the court ordered  


Kelly's attorney to pay Rachael $55,000 from the proceeds of the sale, almost exactly  


half of the $110,022 gross proceeds.  Because we cannot uphold awarding Rachael any  


of the proceeds without a valid basis for treating them as marital property or for invading  


separate property, we do not need to address whether this particular award was an abuse  


of discretion.   But we again note that the superior court has discretion to divide the  


proceeds from the sale of marital property unevenly if doing so is necessary to achieve  


an equitable distribution of property, so long as the court's reasoning is "explicit and  


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



court's decision." 

V.              CONCLUSION  


                               We  AFFIRM  the  superior  court's  decision  not  to  offset  the  value  of  


personal  property  awarded  to  Rachael,  its  decision  not  to  credit  Kelly  for  alleged  


overpayments of spousal support, its denial of Kelly's Civil Rule 60(b) motion, and its  


decision not to account for alleged damage to the marital apartment.  We conclude that  


any error in the superior court's failure to rule on Kelly's motions for disclosure was  


harmless.  However, we REVERSE the superior court's determination that all of the  


                65             In other words, if the IFQs were Kelly's separate property then Kelly was                                                                                         

solely responsible for paying the taxes on the sale.                                                                  If, on the other hand, the IFQs were                                     

marital property then Kelly alone did not pay the taxes; the marital estate did.                                                                                                          Either  

way, Kelly was not entitled to a credit for his share of the tax payment.                                                                       

                66             See Beals, 303 P.3d at 459 (quoting Doyle, 815 P.2d at 368).  


                                                                                                -28-                                                                                          7272

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IFQs were marital property, and REVERSE the awards to Rachael of proceeds from the                                                                                                                                                                                                                                                                                                                    

post-separation saleofIFQs. WeREMANDfor                                                                                                                                                                                     proceedings consistent with thisopinion                                                                                                                                                    

 for reconsideration of whether there existed a marital interest in the IFQs or in Eclipse,                                                                                                                                                                                                                                                                                      

Inc.   In light of its characterization of the IFQs and the fishing business, the superior                                                                                                                                                                                                                                                                                     

court on remand should reconsider the award of IFQ sale proceeds to Rachael, and                                                                                                                                                                                                                                                                                                                    

 should explain or amend its award of gross pre-tax proceeds from the sale of the F/V                                                                                                                                                                                                                                                                                                               

         LASKA.   The superior court may in its discretion reevaluate on remand the overall  


property division to ensure an equitable distribution.  We do not retain jurisdiction.  


                                                                                                                                                                                                 -29-                                                                                                                                                                                         7272

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