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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kyoko Perry v Adam Perry (9/27/2019) sp-7409

Kyoko Perry v Adam Perry (9/27/2019) sp-7409

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

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                       THE SUPREME COURT OF THE STATE OF ALASKA                                       

KYOKO  PERRY,                                                         )  

                                                                      )     Supreme  Court  No.  S-17184  

                                 Appellant,                           )  


                                                                      )     Superior Court No. 3AN-17-05581 CI  

           v.                                                         )  


                                                                      )     O P I N I O N  


ADAM PERRY,                                                           )  


                                                                      )     No. 7409 - September 27, 2019  

                                 Appellee.                            )  



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


                      Judicial District, Anchorage, Herman G. Walker, Jr., Judge.  


                      Appearances:  Justin R. Eschbacher, Law Offices of G. R.  


                      Eschbacher,  Anchorage,  for  Appellant.                               Brian  H.  Starr,  


                      Anchorage, for Appellee.  


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


                      and Carney, Justices.  


                      CARNEY, Justice.  



                      A wife appeals two issues following her divorce.   She argues that the  


superior court erred when it classified a portion of her student loan debt as non-marital.  


She also argues that the court improperly calculated the parties' income for child support  


purposes.  Because the superior court applied the wrong legal standards to determine  


whether the student loan debt was marital and to calculate the parties' incomes for child  

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

support purposes, we vacate the superior court's final property distribution and child  


support orders and remand for the court to conduct the proper legal analysis.  


II.                   FACTS AND PROCEEDINGS  


                      A.                   Facts  

                                           Adam Perry and Kyoko Perry married in November 2005 and have two  


minor  children.                                           For  the  latter  part  of  their  marriage,  Kyoko  handled  the  couple's  




                                           Kyoko  continued  her  education  while  married,  obtaining  a  bachelor's  


degree and a master's degree and incurring approximately $84,000 in debt. The superior  


court found that she incurred $30,500 of the debt for the bachelor's degree and the  


remaining $53,500 for her master's degree. Adam was aware that Kyoko was attending  


school and taking out loans to pay for it; it is less clear whether he knew the type of  


degree or the amount of loans. Kyoko testified that she obtained a master's degree so she                                                                                                                                                                                      

could defer her loan payments while Adamwas                                                                                                            temporarily unemployed. She                                                                      stated that  

she feared they could not afford the loan payments while Adam was out of work.                                                                                                                                                                                      Adam  

decided to leave his job and was temporarily unemployed for a period of 34 days in early                                                                                                                                                                                 

2015, around the same time that Kyoko's student loan payments began.                                                                                                                                                                       

                                           Adam filed for divorce in March 2017.                                                                                             He and Kyoko continued to live                                                                  

together in the marital home until June 2017, when Adam moved to his father's home.                                                                                                                                                                                                         

He kept possessions at the marital home for another month and continued to "com[e] and                                                                                                                                                                                        

go[] as he pleased" until late August.                                                                                   The children were primarily in Kyoko's physical                                                                                      

custody between June and August.                                                                                   

                      B.                   Proceedings  

                                           In July 2017 Adam moved for interim child support.                                                                                                                           In the child support                     

affidavit accompanying his motion, he listed his gross income as $41,884 and Kyoko's                                                                                                                                                                         

as $86,543.                             He based his calculation on the parties' 2016 W-2s and Permanent Fund                                                                                                                                                           

                                                                                                                                        -2-                                                                                                                              7409

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Dividends.   Kyoko opposed the motion, but the superior court took no action before the                                                                                                                                                                                                             


                                               Trial was held in September.                                                                              At trial Adam testified that his salary was                                                                                            

 $52,000 a year.  Kyoko testified that she made roughly $4,400 per month and her trial                                                                                                                                                                                             

brief listed her salary as $76,000, not including bonuses.                                                                                                                                               

                                               The court issued its initial property division order on January 24, 2018.                                                                                                                                                                              In  

it the superior court found that Adam earned approximately $51,000 per year and Kyoko                                                                                                                                                                                                  

approximately $76,000 per year.                                                                                      The court acknowledged that Adam was aware that                                                                                                                             

Kyoko was in school and incurring debt. The court classified the entire $84,000 student                                                                                                                                                                                              

loan debt as a marital debt, but declared Adam responsible only "for half of the $30,500                                                                                                                                                                                          

debt for the first degree."                                                                     The court appears to have divided the student loan debt                                                                                                                                       

unequally because Kyoko "dissipated marital assets" by pursuing her master's degree,                                                                                                                                                                                                 

apparently not believing she needed to do so when Adam was unemployed for only 34                                                                                                                                                                                                                     

                   1   Finally, the court concluded that there was "no reason to deviate from the 50/50  


presumption" to divide the marital estate. The court noted, however, that because it had  


designated the whole student loan debt as marital, there would be "an impact on the  


marital distribution."  To counteract this impact, it would grant Adam "more of the cash  


assets" and divide the property equally.  


                                               The next day the superior court issued an interim child support order, using  


the draft order and income amounts submitted with Adam's earlier motion - $41,884  


for Adam and $86,543 for Kyoko.  Instead of using the income amounts in the property  


                        1                      See Brennan v. Brennan                                                                   ,  425 P.3d 99, 106 (Alaska 2018) ("An equal                                                                                                       

division of property is presumptively equitable, but the trial court has broad discretion                                                                                                                                                            

in   this   area.")   (internal   citation   omitted);   AS   25.24.160(a)(4)(E)   (allowing   unequal  

division   of   property   when   based   on   consideration   of   "the   conduct   of   the   parties,  

including whether there has been unreasonable depletion of marital assets").                                                                                                                                                                  

                                                                                                                                                   -3-                                                                                                                                        7409

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division order issued a day earlier, the superior court relied upon the amounts in the                                                                                                                                                                                                                    

parties' 2016 W-2s, which were roughly $10,000 less for Adam and roughly $10,000                                                                                                                                                                                                        

more for Kyoko.                                               

                                                Both  parties then filed motions to reconsider.                                                                                                                              Adam's motion sought                                           

reconsideration of                                               the property division                                                     based on thecourt'sinconsistenttreatment of the                                                                                                                 

student loan debt, stating that the court contradicted itself by declaring the whole debt                                                                                                                                                                                                            

as marital but only treating $30,500 as marital.                                                                                                                                 Kyoko also objected to the court's                                                                        

treatment of the student loan debt and argued in addition that it had used incorrect                                                                                                                                                                                                

income figures to calculate child support in the interim order.                                                                                                                                                            She argued that the court                                               

should have used the amounts in its property division order, which were based upon                                                                                                                                                                                                                

more current evidence from trial.                                                                                         She attached a proposed child support order to her                                                                                                                             

motion, using the income figures in the property division order, and estimating adjusted                                                                                                                                                                                                


incomes of $43,223.60 for Adam and $48,474.96 for Kyoko.                                                                                                                                                                        

                                                The superior court held a status hearing on the motions to reconsider in  


February 2018.  During the hearing the court advised the parties of its intent to rely on  


the child support calculations in Kyoko's motion to reconsider unless Adam objected.  


Adamconceded during the hearing that he received a promotion in 2017, confirming that  


his salary was roughly $51,000 a year.  


                                                Thesuperior courtissued anamended propertydistribution order following  


the hearing.  The amended order stated that the superior court was correcting its "error  


                        2                       See  Alaska R. Civ. P. 90.3(a)(1) (defining adjusted annual income for child                                                                                                                                                                        

support  purposes   as   "parent's   total   income   from   all   sources   minus"   certain   listed  

deductions).  Kyoko attached a child support calculation using an online child support                                                                                                                                                       

calculator provided by the Child Support Services Division to enable parents to estimate                                                                                                                                                                                                

the appropriate amount.                                                                She used annual wages of $76,000 for herself but estimated a                                                                                                                                                              

monthly deduction                                                      of $2,385.42                                       (totaling   $28,625.04  a   year), adjusting her                                                                                                                  annual  

income to $48,474.96.                                                              

                                                                                                                                                      -4-                                                                                                                                           7409

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regarding identifying the student loan debt as marital." To correct the error, the amended  


order instead stated:  "Based upon the testimony at trial[,] the court finds that it was not  


the intent of the parties to  make the whole student loan debt marital, just the loan  


acquired for the bachelor's degree."  


                    Adam did not file an objection to Kyoko's income figures after the status  


hearing.  Kyoko again moved for reconsideration, arguing that the amended property  


distribution order erroneously classified a portion of the student loan debt as non-marital  


and, because Adam had not objected, requesting that the court enter an amended child  


support order based on her calculations.   A week and a half later Adam objected to  


Kyoko's request, claiming her proposed child support order "was not prepared using the  


correct legal standard and should be rejected." Kyoko responded that her income figures  


were not contested at trial and that Adam had acknowledged at the status hearing that his  


income was $51,000.  


                    In April the superior court denied Kyoko's motion to reconsider and her  


request for an amended child support order. Again addressing the student loan debt, the  


court stated that it "considered all the testimony at trial, judged the credibility of the  


parties and came to its determination that not all the student loan [was] marital."  In  


response to the request for an amended child support order, the court stated that its  


income findings from trial of $51,000 for Adam and $76,000 for Kyoko were only for  


its property division and that it would rely on the parties' 2017 W-2s for its child support  


calculation.  The 2017 W-2s listed Adam's income as $46,230.10 and Kyoko's income  


as $79,167.01.  


                    Later that month Kyoko filed a Notice of Filing Income Information and  


Child Support Position, documenting her income and calculating child support based on  


an extrapolation of Adam's income from a January 2018 pay stub and his testimony at  

                                                               -5-                                                         7409

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trial. Adamobjected                                                          and noted the superior court's "crystal-clear directive" that it would  

base child support on the parties' 2017 W-2s instead of its findings from trial.                                                                                                                                                                                                                     

                                                  The court entered a final child support order on July 5, 2018, based only                                                                                                                                                                                     

on the income in their 2017 W-2s and Permanent Fund Dividends. On July 11 it entered                                                                                                                                                                                                              

the final decree of divorce, incorporating its custody order and most recent child support                                                                                                                                                                                                           

and property division orders                                                                               nunc pro tunc                                         to September 18, 2017.                                                                     

                                                  Kyoko appeals the superior court's treatment of the student loan debt and                                                                                                                                                                                        

the calculation of child support.                                                      

III.                     STANDARD OF REVIEW                                                   

                                                  A court must take three steps when equitably dividing marital assets upon                                                                                                                                                                                    

divorce: "(1) determin[e] what property is available for distribution, (2) find[] the value                                                                                                                                                                                                                  

                                                                                                                                                                                                               3      We generally review the first  

of the property, and (3) divid[e] the property equitably."                                                                                                                                                                                                                                                        

step for clear error because it involves questions of fact.4  


                                                                                                                                                                                                                       "Underlying factual findings  


as  to  the  parties'  intent,  actions,  and  contributions  to  the  marital  estate  are  factual  



questions."                                       However, "whether the trial court applied the correct legal rule . . . is a  



question of law that we review de novo using our independent judgment." 

                         3                                                                                                386 P.3d 1249, 1251 (Alaska 2017) (quoting                                                                                                                              Limeres  

                                                   Wagner v. Wagner,  

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

                         4                       Id.  

                         5                        Grove  v.  Grove,  400  P.3d  109,  112  (Alaska  2017)  (quoting  Beals  v.  Beals,  

303  P.3d  453,  459  (Alaska  2013)).  

                         6                       Id. (omission in original) (quoting Beals, 303 P.3d at 459).  


                                                                                                                                                            -6-                                                                                                                                                7409

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                        We will "reverse child support awards only if the superior court abused its                                                     

discretion, applied an incorrect legal standard, or clearly erred in its factual findings."                                                               7  

We "review the superior court's factual findings regarding a party's income for purposes  


of calculating child support for clear error."8                                      But we review "[w]hether the superior  


court applied the correct legal standard to its child support determination . . . de novo."9  


IV.	        DISCUSSION  


            A.	         It Was Error To Characterize A Portion Of The Student Loan Debt As  


                        Separate Debt.  


                        Kyoko argues that the superior court erred by characterizing a portion of  


her student loan debt as non-marital because there was no evidence that the parties  


intended this debt to be separate from the marital estate.   She contends that Adam's  


apparent "ignorance or . . . lack of full understanding of the debt" does not defeat the  


presumption that the debt incurred during the marriage is marital debt and that "[a] party  


in a divorce should not be able to assert ignorance of a marital obligation on one hand  


while acknowledging he agreed to give the other party the authority to make these  


decisions on the other." Adam responds by arguing that if the parties "intended the debt  


to be marital then [Kyoko] would have secured [his] agreement or at minimummade him  


aware of her decision."  


                        As       Kyoko          correctly           notes,        "[d]ebt          incurred          during          marriage           is  


presumptively marital; the party claiming otherwise must show that the parties intended  

            7           Holmes  v.  Holmes,  414  P.3d  662,  666  (Alaska  2018).  

            8           Farr  v.  Little,  411  P.3d  630,  634  (Alaska  2018)  (quoting  Limeres,  320  P.3d  

at  295).  

            9           Id.  (quoting  Limeres,  320  P.3d  at  295).  

                                                                           -7-	                                                                    7409

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it to be separate."              This presumption applies even when "one spouse is unaware of the                                         


                "Absent any showing that the parties intended a debt to be separate, the trial  


court must presume that a debt incurred during the marriage is marital and should  



consider it when dividing the marital estate." 

                      In its amended property distribution order the superior court found "that it  


was not the intent of the parties to make the whole student loan debt marital, just the loan  


acquired for the bachelor's degree."  It based its conclusion on the fact that Adam had  


only "agreed to pay for the first degree, whether that was an associate or bachelor['s]  


degree."   The court also referred to its finding that Kyoko was not credible in her  


testimony that she obtained her graduate degree only to defer her loan payments during  


Adam's unemployment; it noted that Adam was unemployed for only 34 days and  


Kyoko "did not have to continue her degree program once [he] started working."  


                      But the superior court upended the presumption regarding debts incurred  


during a marriage.   After correctly stating that debt incurred during the marriage is  


marital unless the parties intended it to be separate, the superior court began its analysis  


of the student loan debt by presuming it was Kyoko's alone unless Adam agreed to it.  


The court concluded that because Adam expressly agreed only to incur debt toward  


Kyoko's bachelor's degree, they had not intended to make the master's degree debt  


marital.  But this conclusion switches the presumption that all debt is marital:  unless  


Adam was able to prove that the parties intended to make the debt separate, the court  


was required to presume the debt was marital.  Here it did the opposite:  the superior  


           10         Richter  v.  Richter,  330  P.3d  934,  938  (Alaska  2014).  

           11         Stanhope  v.  Stanhope,  306  P.3d   1282,   1290  (Alaska  2013).  

           12         Id.  (quoting  Coffland  v.  Coffland,  4  P.3d  317,  321-22  (Alaska  2000)).  

                                                                     -8-                                                              7409

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court presumed the debt was separate because one of the parties did not expressly agree                                                     

that it was marital.            13  

                       It was error to treat a portion of the student loan debt as separate from the  


marital estate.  We therefore vacate the property distribution order and remand for the  


superior court to determine the proper distribution of the marital estate, including the  


entire student loan debt.  


            B.	        It  Was  Error  To  Rely  Upon  Only  The  Parties'  2017  W-2s  To  


                       Determine Income For Child Support Purposes.  


                       Kyoko argues that the superior court erred because it failed to use the  


incomes determined at trial and in its property distribution order when it calculated child  


support. Adam responds that using the 2017 W-2s was appropriate and that the superior  


court properly conducted a child support calculation pursuant to Alaska Civil Rule 90.3.  


                       The first step in determining child support is to calculate a "parent's total  


income from all sources."14   "The ultimate goal of a support determination is to arrive at  


an income figure reflective of economic reality."15                                       To achieve this, "[t]he court must  


examine all available evidence to make the best possible calculation,"16  and "take all  


evidence necessary to accurately reflect the parties' economic reality."17  


            13         See   Schaeffer-Mathis   v.   Mathis,   407   P.3d   485,   495   (Alaska   2017)  

("[Husband]  erroneously  argu[ed]  that  [wife]  had  to  prove  that  they  intended  the  debt  to  

be  marital.").  

            14	        Alaska R. Civ. P. 90.3(a)(1).  


            15         Farr  v.  Little,  411  P.3d  630,  635  (Alaska  2018)  (internal  quotations  


omitted) (quoting McDonald v. Trihub, 173 P.3d 416, 427 (Alaska 2007)).  


            16         Alaska R. Civ. P. 90.3 cmt. III.E.  


            17         Wilhour v. Wilhour, 308 P.3d 884, 889 (Alaska 2013) (quoting Routh v.  



                                                                        -9-	                                                                7409

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                               The superior court relied only on the parties' 2017 W-2s to determine their                                                                                  

income for child support calculations. It did not take into account any of the contrary or                                                                                                        

more recent evidence before it:  Adam's trial testimony that he makes $52,000 a year;  

his assertion from the status hearing that he had received a promotion in 2017 and his                                                                                                         

acknowledgment that he made roughly $51,000 a year; or his January 2018 pay stub; all                                                                                                            

of which indicated a higher salary than his 2017 W-2. We have previously approved the                                                                                                           

use of W-2s to determine income for child support purposes, but it has always been                                                                                                               in  

                                                                            18    But here the superior court used the parties' 2017  

conjunction with                        other evidence.                                                                                                                                   

W-2s to the exclusion of other and more recent evidence without explaining its decision  


to do so. It acknowledged Adam's trial testimony regarding his income and his assertion  


that he received a raise in 2017 at the status hearing and indicated its intent to rely upon  


this evidence to calculate child support unless Adam objected.  Yet the superior court  


then ignored that evidenceand, without explanation, instead based its child support order  


on only the parties' 2017 W-2s.  


                               While it may not have been error to rely on the parties' 2017 W-2s, it was  


 error to rely only on their 2017 W-2s when the other available evidence was to the  


                17             (...continued)  


Andreassen , 19 P.3d 593, 595 (Alaska 2001)).  

                18             See, e.g., Ward v. Urling, 167 P.3d 48, 54 (Alaska 2007) ("Relying on [the  


party's W-2s from 2001 through 2005, her pay stubs from recent pay periods, and copies  


of her unemployment checks], the court was able to reasonably assess Urling's income  


 for the purposes of computing her support obligation."); Bays v. Bays, 807 P.2d 482,  


486-87 (Alaska 1991) (affirming superior court's income calculation when it was based  


on  party's  W-2  in  conjunction  with  his  testimony);  see  also  Azzam v.  Azzam,  No.  


 S-16738, 2018 WL 5028369, at *6 (Alaska 2018) ("[T]he court did not err in deeming  


Walid's 2016 W-2 - in conjunction with his 2015 tax return and his testimony -  


 sufficient to establish his income for purposes of Alaska Civil Rule 90.3.").  


                                                                                              -10-                                                                                        7409

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

contrary   and   more recent.                                                                                                       Accordingly,  we   vacate the superior                                                                                                                                                       court's final child                                              

 support order and remand for the court to properly calculate the parties' incomes.                                                                                                                                                                                                                                                                      

                                C.	                             We Will Not Consider Adam's Argument That The Superior Court                                                                                                                                                                                                                                                                 

                                                                Erred By Making The Child Support Order Retroactive.                                                                                                                                                                              

                                                                Alaska Appellate Rule 204(a)(1) requires notice ofappeal                                                                                                                                                                                                                      to be filed within                              

 30 days of the judgment. Rule 204(a)(2) allows a party to file a cross-appeal if it is filed                                                                                                                                                                                                                                                                                                         

within 14 days of a timely filed notice of appeal by any other party or within 30 days of                                                                                                                                                                                                                                                                                                                         

the judgment, whichever is later.                                                                                                                               Adam filed neither an appeal nor a cross-appeal; he                                                                                                                                                                                             

 first raised the issue of whether the superior court erred by making the child support                                                                                                                                                                                                                                                                                                

order retroactive in his Appellee's Brief, filed eight months after the final child support                                                                                                                                                                                                                                                                                             

order was entered and seven months after Kyoko timely filed her notice of appeal. Adam                                                                                                                                                                                                                                                                                                        

therefore failed to properly raise the issue.                                                                                                                                                                     Because he failed to properly appeal the                                                                                                                                                  

issue, we will not consider it.                                                                                                             19  

V.	                             CONCLUSION  

                                                                Because it was error to treat portions of the student loan debt as separate  


property and to calculate income for child support based only on the parties' 2017 W-2s,  


we VACATE the final property distribution order and final child support order and  


REMAND for the superior court to conduct the proper legal analysis.  


                                19                              See Shumway v. Betty Black Living Trust                                                                                                                                                               , 321 P.3d 372, 375-76 (Alaska                                                                                  

2014) (declining to consider issue on appeal when it was not timely raised in notice of                                                                                                                                                                                                                                                                                                                           

appeal pursuant to Appellate Rule 204(a)(1)).                                                                                                                        

                                                                                                                                                                                                     -11-	                                                                                                                                                                                            7409

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