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Hartland v. Hartland
Citations: 777 P.2d 636; 1989 Alas. LEXIS 77; 1989 WL 74519Docket: 3459
Court: Alaska Supreme Court; July 7, 1989; Alaska; State Supreme Court
In the Supreme Court of Alaska case 777 P.2d 636 (1989), Jay W. Hartland and Patricia A. Hartland, who were married in 1969, engaged in a divorce proceeding resulting in cross appeals regarding the division of marital property. At the time of the trial, Patricia was employed as an elementary school teacher, earning $48,588 in 1985, while Jay, a stockbroker, had a fluctuating income ranging from $46,812 to $116,840 over the previous years. Following Jay's divorce filing on May 6, 1986, the couple reached an agreement on child custody and support prior to trial. During the bench trial from October 29-31, 1986, the court evaluated the marital assets and liabilities, determining a total value of $324,186. The court awarded Patricia 60% of the assets, citing Jay's prior personal use of marital assets as a reason for the unequal division. Disputes arose over the transfer of stocks awarded to Patricia, leading to both parties filing appeals. Jay's appeal contended that the court lacked sufficient evidence to value their retirement benefits, improperly considered fault in property division, erred by not granting a new trial due to his attorney's malpractice, wrongfully held him in contempt for stock transfer delays, and incorrectly awarded attorney's fees to Patricia. Conversely, Patricia cross-appealed, arguing that the court failed to account for marital assets dissipated by Jay post-separation, neglected to include certain compensation Jay earned prior to the evaluation date, and did not award her sufficient attorney's fees. In discussions regarding retirement benefits, Jay claimed insufficient evidence was presented for valuation, while Patricia maintained that Jay's lack of evidence was self-inflicted, asserting she had provided all necessary documentation regarding her pension and that her retirement benefits figure was unchallenged at trial. Patricia issued a subpoena to the office manager of Shearson Lehman Brothers to obtain documents related to Jay's retirement benefits, but was informed that no information could be provided until an audit was completed at the end of 1986. Shortly before trial, she served a second subpoena for the same documents. During trial, the court expressed skepticism about the unavailability of the retirement data and indicated it would resolve doubts against the party withholding the information. Jay did not provide further evidence regarding the value of his retirement benefits, nor did either party present evidence on the present value of future payments from the pension plans. Patricia introduced a 1985 statement and evidence of Jay's life expectancy, calculating the expected benefits over his lifespan post-65, which Jay did not contest. The trial court accepted this valuation in its Findings of Fact and Conclusions of Law. Alaska Statute 25.24.160(a)(4) grants trial courts broad discretion in property division during divorce proceedings. The process involves three steps: determining available property (reviewed under abuse of discretion), valuing the property (a factual determination subject to clear error), and equitably allocating the property (also under abuse of discretion). Jay argued the court's valuation of retirement benefits was unjust due to insufficient evidence; however, the court found Patricia had presented adequate evidence, and Jay's failure to supply information when subpoenaed hindered further evidence collection. The court denied Jay's motion for a new trial, stating that any valuation errors stemmed from his lack of cooperation. Under Alaska law, a trial court can resolve findings against a party whose obstructive behavior results in insufficient evidence, and a party that fails to present adequate evidence cannot later challenge its sufficiency on appeal. In National Bank of Alaska v. J.B.L. K. of Alaska, Inc., the court determined that a trial court's damage award for breach of a non-compete covenant was erroneous as it should have included only net lost profits. However, the bank could not appeal the decision due to its failure to provide additional evidence. Illinois courts hold that parties are responsible for presenting evidence on the value of marital assets, as underscored in In re Marriage of Smith. This case highlighted that despite multiple hearings on property division, neither party provided sufficient evidence for the court to make a fair division of assets. The court found adequate evidence regarding the future value of Jay's retirement benefits. If Jay retired on January 1, 1985, he would receive an annual benefit of $3,083 starting at age 65, with a life expectancy of 12.4961 years, leading to a calculated present value of $38,525.47. Jay contended this valuation was erroneous for not being discounted to present value. The court agreed, stating that the division of a vested pension can be approached either by awarding a present value lump sum or retaining jurisdiction for future payments. The trial court did not apply either division method, necessitating a remand for a proper valuation of Jay's benefits. Regarding Patricia's retirement, the court found Jay's argument against its valuation meritless, as her retirement plan was public record. Jay's failure to present a valuation at trial waived his right to contest it on appeal. Finally, Jay argued that the court improperly considered fault in dividing the marital estate, which is another point of contention in the case. The equitable division of marital assets is influenced by factors such as the duration of the marriage and the conduct of each party, as established in Merrill v. Merrill. Alaska Statute AS 25.24.160 allows courts to divide property justly, regardless of fault. In this case, the superior court found that the defendant was favored due to the plaintiff's disruptive relationship with a third party, which contributed to domestic violence, with the plaintiff being the aggressor. The plaintiff manipulated marital property for personal gain and maintained his lifestyle post-separation, leading the court to conclude that a 60-40 asset split was more equitable than an equal division, compensating the defendant for the plaintiff's financial misconduct. The court clarified that under no-fault divorce principles, fault cannot justify a larger share of marital property; rather, the plaintiff's dissipation of assets during separation warranted the reduced share. Patricia argued that the court erred by not compensating her for approximately $55,000 of marital assets dissipated by Jay after their separation. The superior court determined that the couple remained economically linked until their divorce date, October 31, 1986, and acknowledged the inability to reclaim specific assets already disposed of by either party. Although Patricia did not dispute the timing of their economic separation, she argued for compensation for Jay's expenditures post-separation. The court referenced Brooks v. Brooks, affirming its authority to recapture dissipated marital property. In Brooks, the husband transferred marital property to his children from a previous marriage without the wife's consent. The trial court included this property in the marital estate and compensated the wife, Patricia, with a larger share of the remaining assets due to the husband's dissipation of marital property. However, the court incorrectly believed it could not recapture dissipated assets, leading to a reversal of the property division and a remand for the trial court to recapture the dissipation and determine an appropriate property division using the Merrill factors, while avoiding double counting. Patricia also contended that the trial court erred by excluding a $14,000 retroactive earnings payment earned by her husband, Jay Hartland, prior to the evaluation date. The trial court deemed these commissions as deferred income not yet received. Citing Schober v. Schober, Patricia argued that vested or earned but unreceived compensation is divisible property. The court agreed, finding the exclusion of the commissions from the marital estate to be a legal error, and reversed it for proper division. Additionally, Patricia claimed a $24,000 commission earned by Jay prior to the evaluation should have been included in the marital estate. She accused Jay of manipulating the transaction to retain the commission as separate property. The superior court found no evidence of wrongdoing on Jay's part regarding the transaction’s cancellation and reinstatement. This factual finding was reviewed under the clearly erroneous standard, and the court determined that the findings were not clearly erroneous, as the arguments regarding subsequent evidence were not properly presented to the trial court. Patricia raised the issue of attorney's fees in her motion, to which Jay responded with affidavits regarding the cancellation and reinstatement of an annuity transaction. Patricia reiterated her position in opposition to Jay's motion for a new trial, suggesting that a new trial on retirement benefits would necessitate reopening the $24,000 commission issue. The superior court did not address this commission issue, rendering it unavailable for appeal. The superior court awarded Patricia $5,000 in attorney's fees and 25% of her costs from the divorce action, despite her incurring $19,000 in actual fees. Jay contended that any fee award was erroneous, while Patricia insisted she deserved a greater amount. The court clarified that the prevailing party rule does not apply to divorce fee awards; instead, it considers the economic conditions of both parties. Given Jay's unwarranted delays and additional costs incurred, the court's decision to award Patricia $5,000 and 25% of her costs was deemed appropriate. Additionally, the court awarded Patricia $1,100 for attorney's fees related to enforcing the divorce decree. This fee was justifiable as it pertained to post-judgment modifications, which fall outside the divorce judgment exception to Civil Rule 82. Jay's motion for relief from judgment under Alaska Civil Rule 60 (b)(6) was denied by the superior court, which found that it should have been filed under 60 (b)(1) and ruled that Jay's attorney's actions did not amount to "excusable neglect." On appeal, Jay maintained that his motion was correctly filed under clause (6), but the court noted that such relief is not available if the other clauses are inapplicable. The superior court's denial of Jay's motion was upheld, as no abuse of discretion was found. Clause (6) addresses extraordinary circumstances not covered by prior clauses, explicitly excluding time-barred relief from the first five clauses. Patricia contends that relief under clause (1) is unwarranted as Jay's attorney's actions do not meet the standard of "excusable neglect." The court agrees, referencing Rill v. State, which establishes that an attorney's failure to act responsibly constitutes inexcusable neglect, leaving clients with a malpractice remedy instead. Negligent errors by counsel are often denied relief outside default settings, as noted by legal commentators. Jay's claims against his former attorney—failure to conduct necessary discovery and recognizing a conflict of interest—are deemed inexcusable neglect not warranting relief under Rule 60(b)(1). Regarding relief under the catch-all provision of Rule 60(b)(6), only extraordinary cases qualify, and this case does not meet that threshold. The court finds that both parties contested the issues vigorously, and Jay's alleged malpractice, even if proven, likely did not materially affect the outcome. Relief is inappropriate when a party makes a deliberate choice later regretted, as highlighted by legal precedents. Jay's assertion that his attorney's negligence led him to an unfavorable child custody agreement does not justify relief, given he was presented with an informed choice. The court ultimately affirms the denial of Jay's claim for relief under Rule 60(b). Additionally, Jay contests the trial court's contempt ruling, arguing that reliance on his attorney's advice was not contemptuous and that contempt power should not be used for non-support issues in a divorce decree. Judge Craske ordered the transfer of specific stocks to Patricia, with deadlines for transfers outlined. After the stocks were not transferred, Patricia moved for enforcement of the divorce decree, prompting Jay to file a motion for a stay. On May 8, 1987, Jay indicated in an affidavit that the transfer of American Express stock would require at least two months. The trial court denied his motion for a new trial on July 17, 1987, and granted Patricia's motion to enforce the divorce decree, ordering Jay to transfer and execute necessary documents for the American Express, PEP Boys, and Lenora Explorations stock. The court found that Jay had intentionally manipulated assets for his benefit, failing to comply with the divorce decree without satisfactory explanation. Jay claimed he began the transfer process shortly after the court's order, but evidence showed he did not request the PEP Boys stock until August 11, 1987, and the American Express stock until early September. On August 21, 1987, Jay sought to stay proceedings pending appeal, stating the stocks would be ready by late September. Patricia then moved for an order to hold Jay in contempt for non-compliance with the divorce decree. On September 8, 1987, Jay claimed Patricia could have sold her stocks at any time, but Patricia was informed she could not sell while stock certificates were being ordered. A telephonic argument occurred on September 11, and on September 24, the court ordered Jay to show cause why he should not be held in contempt, denying his motion for a stay. After his counsel received the PEP Boys and Lenora Explorations stock certificates on October 13, 1987, they were delivered on October 19, coinciding with a significant market drop. The American Express stock was not delivered until November 4, 1987. On February 11, 1988, Patricia sought an evidentiary hearing on contempt. Following Jay's opposition, the court determined an evidentiary hearing was warranted. After reviewing Lori Stone's deposition instead of a live hearing, the court found Jay in contempt on April 13, 1988, for willfully failing to transfer the stock. It ruled his actions caused Patricia financial losses of $28,810, holding him liable for these damages along with her attorney's fees and costs related to the contempt proceedings, pursuant to AS 09.50.040. Jay's actions were assessed for contempt based on established criteria from L.A.M. v. State, which requires a valid court order, notice of the order, the ability to comply, and a willful failure to comply. Jay claimed he did not willfully fail to comply because he acted on his attorney's advice, but this defense was deemed insufficient. The court referenced McKnight v. Rice, indicating that a party must comply with court orders and cannot use counsel's advice as justification for non-compliance. The court had clearly communicated the order to transfer stock, and both Jay and his counsel were aware that delaying tactics were inappropriate. Additionally, Jay contested the use of contempt powers in enforcing non-support aspects of a divorce decree, arguing it misinterpreted the court's order as a money judgment enforcement. However, Alaska Civil Rule 70 allows for contempt when a party fails to execute specific acts ordered by the court. Judge Craske correctly held Jay in contempt for not transferring stock to Patricia, as the order pertained to specific property, not monetary judgment enforcement. Patricia was awarded $28,810 in damages for Jay's failure to comply, but the record does not clarify if the stock was sold or if it was sold as a whole. For Patricia to recover actual damages, she must have sold the stock within a reasonable timeframe after receiving it from Jay, as retaining the stock while awaiting a potential increase in value could lead to double recovery. The measure of damages will be based on the difference in stock value at the time Jay should have complied versus when Patricia sold it. The superior court's contempt finding is affirmed, but its award of damages related to the delay in transferring stock is vacated, and the matter is remanded for a proper damages determination. Patricia obtained a writ of execution on November 13, served it to Shearson Lehman Brothers, and on November 20, Jay sought to quash the writ, proposing alternative assets instead of cash payment. Patricia opposed this, arguing it was another attempt to gain the same relief previously denied. After a telephonic hearing, the court quashed the writ on the condition that Jay pay the $9,800 due. The court later awarded Patricia $2,060.10 in attorney's fees, deeming Jay's motion "repetitive, frivolous, and an abuse of court procedure." Jay contended that the motion was justified, but Patricia maintained that the fee award was appropriate under Rule 77(l), which allows for costs against frivolous motions. The court found Jay's motion did not present valid defenses and was intended solely to delay proceedings. Additionally, the court reversed the division of the marital estate, remanding it for the recapture of dissipated assets and proper division using the Merrill factors. The recalculation of Jay's retirement benefits is also remanded for a present valuation, and the court is instructed to reconsider the inclusion of commissions earned by Jay but not paid until post-divorce due to his employer's probation program. The court vacated the damages award related to contempt and remanded the issue for determination of the appropriate amount of damages, while affirming the court's decisions on other matters. The ruling is categorized as AFFIRMED in part, REVERSED in part, and REMANDED for consistent proceedings. Key points include: 1. The parties failed to present evidence valuing the pension or retirement benefits, leading to the trial court's inability to assign these values, as seen in referenced cases. 2. The respondent obstructed valuation efforts and cannot challenge the outcome on appeal due to this obstruction. 3. The excerpt discusses potential present values of the pension using different discount rates, indicating that the trial court should determine an appropriate discount rate on remand, allowing parties to present evidence if needed. 4. Regarding pre-marital property, AS 25.24.160 allows the court to invade pre-marital property if equitable balancing requires it. The court noted that Jay's expenditures were justified to support himself, yet awarded Patricia a larger share due to Jay’s excessive spending. 5. Rule 60(b) allows for relief from judgments under certain conditions, but Patricia's argument for relief was deemed inappropriate since her motion fell outside the one-year limit after the judgment notice, which is defined by the written judgment date, not the oral findings. The final written judgment in this case was entered on March 23, 1987, along with the clerk's certification, which allowed Jay's motion under Rule 60(b) filed on November 6, 1987, to be considered within the one-year timeframe. Jay cited two cases—In re Contempt of Rapanos and Proudfit Loose Leaf Co.—to argue that reliance on counsel's advice is a defense against contempt; however, these cases involved criminal contempt where a client relied in good faith on counsel's interpretation of a court order, which does not apply here. The court clarified that the order to transfer stock was clear and indicated that the absence of a stay meant that delaying the transfer was not justified. The court dismissed Jay's reasoning for waiting for a new trial regarding retirement benefits as unpersuasive. Additionally, AS 09.50.040 allows the court to award monetary compensation to a party harmed by contempt, in addition to any imposed penalties.