You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Berg v. Berg (7/30/99) sp-5146
<![CDATA[
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.
THE SUPREME COURT OF THE STATE OF ALASKA
JEFFREY J. BERG, )
) Supreme Court No. S-8284
Appellant, )
) Superior Court No.
v. ) 1PE-95-8 CI
)
SHANNON L. BERG, ) O P I N I O N
)
Appellee. ) [No. 5146 - July 30, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Petersburg,
Thomas M. Jahnke, Judge.
Appearances: Chrystal Sommers Brand, Baxter,
Bruce, Brand & Douglas, Juneau, for Appellant. Mary E. Guss,
Ketchikan, for Appellee.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
Jeffrey Berg appeals the superior court's valuation of
several remaining items of real and personal property after
Jeffrey's divorce from Shannon (Berg) Vandervest. We affirm the
trial court's valuation and distribution of all of the parties'
assets.
II. FACTS AND PROCEEDINGS
Jeffrey (Jeff) and Shannon Berg petitioned for
dissolution of their ten-year marriage in March 1995. The
dissolution was granted effective April 26, 1995. At the time of
dissolution, Jeff and Shannon decided to retain joint ownership and
shared use of several pieces of real and personal property and to
continue to manage their commercial assets in a fishing
partnership.
In particular, the parties chose to reserve a portion of
their real property -- two adjacent parcels of waterfront land in
Papkes Landing in Petersburg -- to use jointly. This land consists
of two parcels: Lot 13 contains 2.97 acres, and Lot 14 contains
5.47 acres. The parties agreed that Jeff would take Lot 13, the
northernmost part of the property, and that Shannon would take an
equivalently sized portion on the south end of the property. But
the parties explained that "[t]he middle 2.5 acres which include
storage, mill, garden, & house [are] to be mutual property." Lot
14 was not actually subdivided and the parties presented
conflicting evidence as to whether they intended that it be
formally divided.
Soon after the dissolution was granted, Jeff and Shannon
began having problems maintaining cooperative and amicable
ownership and use of the jointly held items. They again came
before the superior court for valuation and distribution of the
assets they held jointly. Judge Thomas M. Jahnke held trial in
Petersburg on April 16, 1997. Jeff and Shannon stipulated to the
value and distribution of many of the disputed items before trial;
the trial court focused largely on the valuation of the Papkes
Landing property. Jeff and Shannon each presented widely divergent
appraisal values of the property. Additionally, the court heard
testimony about the value of Jeff and Shannon's jointly owned
salvage business, Katrina Ann, Inc., and a variety of items of
personal property, including the fishing vessel JANE B (F/V JANE
B), a 1983 Chevrolet Suburban, and a set of black cod pots.
The superior court issued its Memorandum of Decision and
Order on July 17, 1997. After a lengthy discussion of the merits
of the differing appraisals that had been conducted on the
property, the court valued Lot 14 at $85,000 and awarded it in its
entirety to Shannon. Jeff moved for reconsideration of the court's
decision regarding several items; his motion was denied. Jeff
appeals.
III. STANDARD OF REVIEW
Trial courts exercise broad discretion in the division of
marital assets. [Fn. 1] Division of property upon divorce is a
three-step process. First, the court must determine what property
is marital and thus available for division. [Fn. 2] We review the
court's characterization of property as marital or separate for an
abuse of discretion. [Fn. 3] Second, the court places a monetary
value on the marital property. [Fn. 4] We review valuation issues
under the clearly erroneous standard, reversing only if we are left
with a "definite and firm conviction that a mistake has been made."
[Fn. 5] Third, the court equitably distributes the marital
property. [Fn. 6] We review this step for abuse of discretion and
will affirm unless the trial court's decision is clearly unjust.
[Fn. 7]
IV. DISCUSSION
Jeff maintains that the trial court "undervalued items of
property that were awarded to Shannon[] and overvalued items of
property that were awarded to Jeff,"with a resulting inequitable
division of the property between the parties. Jeff specifically
challenges the valuations of several items: the Papkes Landing
property, the F/V JANE B, the couple's business venture Katrina
Ann, Inc., Shannon's Suburban, and the black cod pots. He also
appeals the court's award of Katrina Ann, Inc. to him.
A. Valuation of the Papkes Landing Property
Jeff first argues that the court's valuation of Lot 14 at
$85,000 was clearly erroneous and that the court committed legal
error when it relied on a 1996 appraisal that Jeff believes was a
"low-ball appraisal"rather than accepting a 1997 appraisal that
yielded a significantly higher value. We disagree.
The first appraisal report on the Papkes Landing
property, prepared by Gaylord Orsborn of the firm of Thomas P. King
and Associates, was released February 1996. Orsborn inspected the
property, took photographs, and conducted comparative analysis
between the Berg property and similar sales of waterfront real
estate in the Petersburg market. He estimated the value of the
land using a price-per-acre measure of $10,000 per acre, adjusting
for the condition of the Bergs' property and sales prices of
comparable lots. Orsborn valued Lot 14 at $85,000. He noted that
the property's value would increase if Lot 14 were divided into two
separate lots.
At Jeff's request, the King firm performed another
appraisal of Lot 14 in December 1996; this time Thomas King
prepared the appraisal. Jeff asked King to appraise the land's
value if it were subdivided into three separate parcels -- Lots
14A, 14B, and 14C. The subdivision corresponded to the agreement
for sharing the land contemplated in Jeff and Shannon's dissolution
agreement: Lot 14C comprised the southern tip of the property and
measured 2.97 acres, while Lots 14A and 14B were split equally into
two 1.25 acre parcels. [Fn. 8] Unlike Orsborn, King did not take
into account actual improvements on the land. And King valued the
lots based on the amount of waterfront acreage -- a "per-front-foot
of beachfront"measure instead of a price-per-acre measure. Thus,
the King appraisal employed methodology significantly different
from that of Orsborn's appraisal.
King's appraisal of the hypothetically divided Lot 14
produced dramatically different land values than the Orsborn
appraisal had. King concluded that the entire parcel, undivided,
was worth $107,100. He also appraised the values of the divided
parcel, valuing Lots 14A and 14B at $50,000 each and Lot 14C at
$110,000, for a total of $210,000. King stated that the only
reason for the significant difference in the two appraisals was the
differing valuation methods used.
After considering these widely divergent appraisal values
for Lot 14, the superior court concluded that the Orsborn
assessment was more sound. To support its conclusion, the court
noted several flaws in King's appraisal. First, the court observed
that Orsborn thoroughly compared the Berg property to similar
nearby parcels, while King's analysis in this area was much weaker.
Second, the court criticized King's "per frontage foot"measure as
lacking a reliable foundation in the Petersburg land market because
King did not explain how he arrived at the value per frontage foot.
Third, the court did not find it reasonable that King's assessment
valued Lot 14C alone as being worth more than all of Lot 14
together. Fourth, the court was skeptical that the selling price
of the Berg land could have increased so dramatically in less than
a year and found King's assessment inconsistent with real estate
sale prices of comparable parcels in the Petersburg area. Finally,
the court pointed out that King admitted that his estimates did not
include the costs that subdividing Lot 14 would create, including
the need to build a road to ensure access to each parcel. These
criticisms of the King appraisal are all reasonable and supported
by the record. Accordingly, we conclude that the court's decision
to rely on the Orsborn assessment rather than the King assessment
was not clearly erroneous.
Jeff also argues that the court committed legal error
because it discounted the findings in the most recent appraisal.
In support of his position, Jeff cites a line of Alaska cases in
which this court has held that marital property should be valued as
close to the time of trial as possible. For example, in Ogard v.
Ogard, [Fn. 9] we explained that the valuation date for marital
property should normally be "as close as practicable to the date of
trial"in order to "provide the most current and accurate
information possible and [to] avoid[] inequitable results."[Fn.
10] Jeff relies on this language in arguing that the court erred
when it based its valuation of the Papkes Landing property on the
Orsborn appraisal rather than the King appraisal since the King
appraisal was performed most recently and closer to the trial date.
Jeff's reliance on these cases is misplaced.
The cases Jeff cites dealt with the question of whether
the court should determine marital property values as of the date
of separation or the date of trial. We have held that the proper
inquiry is normally the value of the property as of the time of
trial rather than the date of separation. [Fn. 11] But here, Judge
Jahnke did conduct the valuation inquiry on the basis of the
property's worth at the time of trial. [Fn. 12] It is true that,
in doing so, he accepted an appraisal value other than the most
recent one. But nothing in the cited cases supports the idea that
the court must automatically accept the most recent estimate of an
item's value. Indeed, the last-in-time rule urged by Jeff would be
unwise from a policy perspective: Rather than asking, as the
superior court did here, which appraiser used the better methods
and depended upon the most reliable information, the superior court
would be required to accept the most recent appraisal no matter how
it was obtained. The Ogard line of cases does not support this
interpretation.
B. Valuation of the F/V JANE B
Jeff also disputes the court's valuation of the F/V JANE
B. First, he challenges the court's rejection of the figure
contained in the dissolution petition. In the alternative, he
argues that the trial court should have accepted his testimony that
the vessel was worth $15,000 rather than Shannon's testimony that
its value was $10,000. These arguments are meritless.
The court had three conflicting pieces of evidence before
it regarding the value of the vessel. In their dissolution
agreement, Jeff and Shannon stipulated that it was worth $20,000.
At trial, both parties revised their estimates: Jeff testified
that the vessel was worth $15,000 and Shannon that it was worth
$10,000. The court ultimately valued this asset at $10,000 and
awarded it to Shannon.
Jeff maintains that the court should have accepted the
previously stipulated value of the F/V JANE B as $20,000. But both
Jeff and Shannon approached the court for valuation and
distribution of all the assets jointly held in the dissolution
decree. And since neither party believed $20,000 was a fair value
at the time of trial, it would make little sense to require the
court to accept that value.
Jeff alternatively claims that the court should have
accepted his testimony over Shannon's. The only evidence presented
at trial of F/V JANE B's value was the testimony of the parties.
Jeff testified that the boat was purchased for $20,000, that the
couple had added improvements, and that he believed the vessel was
now worth $15,000. Shannon testified that the boat was purchased
for $14,000, had not been used in a decade, was in poor condition,
and was worth only $10,000. Because it is within the province of
the trial court to make factual determinations based on witness
credibility, [Fn. 13] Jeff has failed to show that the trial
court's valuation of the F/V JANE B was clearly erroneous.
C. Valuation and Distribution of Katrina Ann, Inc.
Jeff also appeals the valuation and distribution of a
partnership that he and Shannon jointly owned during their
marriage. Katrina Ann, Inc. was a salvage venture initiated by
Jeff and Shannon to purchase a sunken boat and some salvage
equipment. By the time of trial, the business was "essentially
defunct." Jeff testified that the corporation was valueless and
might even be "more of a liability than an asset"because of the
possibility that the boat could injure someone or begin to leak
oil. But he also testified that the business owned a gear locker,
float bags, and other miscellaneous gear with a value he estimated
to be $5,000. Jeff stated that he could see no reason why he could
not sell the float bags and miscellaneous gear. Thus, the only
testimony before the court established that the business had assets
of $5,000 that could be liquidated. The superior court committed
no error in valuing Katrina Ann, Inc. at $5,000.
Jeff also appeals the court's distribution of Katrina
Ann, Inc. to him. But Jeff testified at trial that he did not care
which party received Katrina Ann, Inc. His distribution argument
is actually a restatement of his contention that Katrina Ann, Inc.
was improperly valued: He argues that "[t]he court should have
awarded the Katrina Ann, Inc. to either Shannon or Jeff, but at a
zero value. Instead, the Court valued [Katrina Ann, Inc.] at
$5,000.00 [and] made Jeff take it at that inflated value."
Accordingly, this argument must fail for the same reasons the
valuation claim does.
D. Valuation of the Chevrolet Suburban
The trial court valued Shannon's 1983 Chevrolet Suburban,
along with an attached snow plow, at $2,500. Jeff claims that this
valuation is clearly erroneous. In support of his argument, Jeff
points out that the court heard testimony from Jeff's appraiser,
Jane Mulready, who valued the van and plow at $3,750. We find no
error in the superior court's valuation of these assets.
Mulready testified as to the Blue Book values for the
car, which ranged from a high of $4,550 to a low of $2,275. She
also stated that the snow plow had independent value, but she did
not separately appraise the plow. Mulready testified that the car
needed repairs, but she was unsure what kind of work was required.
She based her appraisal in part on her recollection that she had
ridden in the car.
But Shannon also testified about the car's value. She
stated that she thought the Suburban was worth $1,500 because it
needed extensive repairs, but she did not specify what repairs were
needed or how much they would cost. She also stated that the snow
plow was worth $600. Shannon's testimony thus supported a combined
value of $2,100 for the van and the plow.
The court did not explain precisely how it arrived at the
$2,500 figure. But the value it chose is within the range of
figures offered by Mulready and Shannon. Both witnesses agreed
that the car needed substantial repair work, and Mulready's
concessions on cross-examination that she was unsure that she had
ridden in the car support the court's choice to give Shannon's
testimony more weight. The valuation of the Suburban was not
clearly erroneous.
E. Valuation of the Black Cod Pots
Finally, Jeff appeals the valuation of the black cod pots
awarded to Shannon. The court assigned a value of zero to the 120
pots. The court had two conflicting estimates of the value of the
pots. Mulready valued the pots at an average of $10 each for a
total of $1,200. But she admitted that she did not examine each
one and that some looked useless. Jeff agreed with the Mulready
appraisal. But Shannon, who is a professional fisher, testified
that the pots were "garbage"because they were eight or nine years
old, purchased in poor shape, stored outdoors, and rotting. The
court did not clearly err when it accepted Shannon's testimony as
to the value of the cod pots.
V. CONCLUSION
Because the trial court did not clearly err when it
valued Lot 14 of the Papkes Landing property, the F/V JANE B,
Katrina Ann, Inc., the Chevrolet Suburban, and the black cod pots,
we AFFIRM.
FOOTNOTES
Footnote 1:
See Johns v. Johns, 945 P.2d 1222, 1224 (Alaska 1997).
Footnote 2:
See Brotherton v. Brotherton, 941 P.2d 1241, 1243 (Alaska
1997).
Footnote 3:
See id.
Footnote 4:
See id. at 1244.
Footnote 5:
Davila v. Davila, 876 P.2d 1089, 1092 (Alaska 1994); see alsoBrotherton, 941 P.2d at 1244; Musser v. Johnson, 914 P.2d 1241,
1242 (Alaska 1996).
Footnote 6:
See Brotherton, 941 P.2d at 1243.
Footnote 7:
See Cox v. Cox, 882 P.2d 909, 914 (Alaska 1994).
Footnote 8:
Jeff testified that he believed dividing the property in this
way would be most fair, because it would enable both Jeff and
Shannon to keep a precisely equal portion of the Papkes Landing
property. He also stated that he believed this understanding was
shared by Shannon and reflected in the dissolution agreement's
statements regarding "the middle 2.5 acres." Shannon, however,
testified that she never intended to subdivide Lot 14 and that she
did not wish to do so. Her view of the dissolution agreement was
that it merely reflected the informal boundaries at the time when
the couple believed they could jointly use the middle section of
the property. In any case, Jeff conceded at trial that it would be
"easier"simply to award Lot 14 in its entirety to Shannon and that
such an approach would be a reasonable way to "try and attain a
fair resolution in the case."
Footnote 9:
808 P.2d 815 (Alaska 1991).
Footnote 10:
Id. at 819 (citations and internal quotation marks omitted);
see also Cox, 882 P.2d at 917.
Footnote 11:
See Ogard, 808 P.2d at 819; Cox, 882 P.2d at 917-18.
Footnote 12:
There is no express finding as to the date of valuation. But
the court heard extensive testimony about the value of all the
disputed property items at the trial. And in its judgment, the
court noted that the King appraisal was more recent but chose to
discount its conclusions because of perceived flaws in King's
methodology.
Footnote 13:
See Moffitt v. Moffitt, 749 P.2d 343, 348 (Alaska 1988) ("To
the extent that this issue [of valuation] depends on the
credibility of the parties, [the judge] had ample opportunity to
evaluate the parties' demeanor on this particular question.
Accordingly, we affirm [the judge's] recommendation.").
]]>
