Opinion
Supreme Court No. S-12056.
November 1, 2006.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Kenai, Harold M. Brown, Judge, Superior Court No. 3KN-02-648 CI.
Darrel W. Christensen, Jr., pro se, Soldotna. Kenneth C. Kirk, Kenneth Kirk Associates, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews, Eastaugh, Bryner, and Carpeneti, Justices.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
Darrel and Jenny Christensen separated after Darrel filed for divorce in July 2002. They later attempted to reconcile, but their efforts failed in August 2004, so their case proceeded to trial. The superior court ruled that the parties separated in August 2004, finding that they ceased functioning as an economic unit when their efforts to reconcile finally failed. Relying on this separation date, the court deemed all property acquired by the parties before August 2004 to be marital. On appeal Darrel contends that the parties never functioned as a joint economic unit when they unsuccessfully attempted to reconcile in 2004; accordingly, he insists that the court should have found that they separated two years earlier, in July 2002. Darrel also argues that the superior court abused its discretion by treating his Soldotna residence as part of the marital estate. We affirm. Even under Darrel's view of the evidence, the record amply supports the superior court's factual findings and provides no basis for concluding that the court abused its discretion in determining that the parties finally separated in August 2004. And given this separation date, the superior court correctly treated the Soldotna residence as property acquired during the marriage.
II. FACTS AND PROCEEDINGS
Darrel and Jenny Christensen are the parents of one daughter born in 1994. They married in 1995; from the beginning, their relationship was punctuated by frequent and lengthy periods of separation.
In 2002 Darrel and Jenny contracted to have a new residence built in Soldotna. The couple paid a $1,000 earnest-money deposit.
Shortly thereafter, in July, Jenny moved to Washington state and Darrel petitioned for divorce. This period of separation lasted seventeen months.
During the separation, Jenny started a cleaning business in Washington. Still in Alaska, Darrel began living with a girlfriend in Soldotna. Nevertheless, Darrel and Jenny maintained contact and remained somewhat entangled. During one visit to Washington, for instance, Darrel stayed with Jenny in her apartment. He also spent over $8,000 on a vehicle for Jenny's use.
Near the end of 2003, Jenny returned to Alaska. Darrel asked his girlfriend to move out, and he and Jenny began living together in the Soldotna residence. In a stipulation filed in early January 2004 the parties characterized this reunion as a "reconciliation effort":
[Parties] stipulate to continuing the status hearing presently scheduled in the above-referenced matter for January 7, 2004, before Master Anne Preston, while the parties continue to work on a successful reconciliation, and settling of their differences. Given the fact that Jenny did not return to Alaska until late November, the parties are desirous of rescheduling the status hearing until sometime in May to allow them more time to continue with their reconciliation efforts.
Darrel and Jenny lived together in the Soldotna home for the duration of this attempted reconciliation. They filed a joint tax return, and may also have shared living expenses.
While reconciliation efforts were still underway, Darrel asked his lawyer to draw up a stipulation to dismiss his still-pending action for divorce.
The divorce ction remained pending throughout the reconciliation, however, because Jenny never assented to a dismissal.
Darrel and Jenny's reconciliation attempt lasted eight months, ultimately failing in August 2004. The parties then separated for good.
After August 2004, proceedings on the still-outstanding complaint for divorce resumed. Darrel, now appearing pro se, filed a motion requesting expedited superior court consideration of the couple's date of separation. He argued that the court should consider the parties' date of separation to be July 4, 2002, because their later reconciliation had been brief and because using the August 2004 date would lead to an "unjust division of assets." Superior Court Judge Harold M. Brown denied Darrel's motion for expedited consideration. He assigned the issue to be heard by a master.
Jenny addressed the date-of-separation dispute in her pretrial brief. She urged the court to use August 2004 as the parties' separation date because, in her view, only then did "the parties finally cease to operate as a joint economic unit."
In his pretrial brief, Darrel disputed Jenny's assertion that the couple had acted as a joint economic unit during the "brief" reconciliation. Darrel claimed that he was solely responsible for all living expenses during the reconciliation and that Jenny "did not contribute in anyway." He noted that Jenny did not seek or gain employment during the reconciliation, and asserted that she had not made mortgage payments, paid credit card debt, or shared any living expenses during the reconciliation attempt either.
Jenny's pretrial brief also addressed the characterization of the Soldotna residence. She conceded that if the superior court used Darrel's requested July 2002 date of separation, it should consider the bulk of the home's value to be Darrel's separate property. But she argued that if the court used August 2004 instead, "then the value of the house, less the mortgage, would be included in the estate." In response, Darrel offered Jenny half of the equity he claimed to have "built up" in the home during the parties' final reconciliation attempt.
The parties presented their opposing positions on these points to Master Anna Moran in a one-day trial. Testifying on his own behalf, Darrel maintained that he had been solely responsible for the parties' bills during the reconciliation and emphasized that the parties' action for divorce remained pending throughout the entire reunion period. Jenny rebutted portions of Darrel's testimony, offering testimony of her own that she had shared expenses with Darrel and, in particular, that she had purchased groceries, Christmas presents, and a vacuum cleaner during the parties' reconciliation attempt. Jenny also testified that she believed that the parties had functioned as husband and wife while they lived together in Soldotna.
Two months after the hearing, Master Moran issued findings on the record. Regarding the couple's date of separation, Master Moran ruled that she would accept August 2004 as the "appropriate date" and found that the parties had operated as a "family and economic unit" during their reconciliation attempt:
The date of separation is the date the court uses to distinguish between marital and non-marital property. . . . Plaintiff argues that the date of separation should be . . . July of 2002 which was prior to the filing of his complaint in this case. However, in July of 2003 the parties filed a stipulation to take this matter off the trial calendar so the parties could attempt a reconciliation. Defendant, who had relocated to Washington state and started her own business following the parties' separation in 2002, closed her bank accounts in Washington, moved out of her apartment, and terminated her cleaning business in order to return to Alaska by December of 2003. Defendant did not work after she returned to Alaska. The parties lived together as a family and economic unit for several months, until defendant moved back to Washington in August 2004. This reconciliation is consistent with the parties' pattern of separation and reconciliation; both parties agree that they finally separated in August of 2004. Therefore the court finds August 2004 as the appropriate date of separation.
Regarding the Soldotna home, Master Moran found that Darrel and Jenny had resided there during their reconciliation attempt, and concluded that the property was marital:
The court considers the Soldotna house marital property. It was purchased by plaintiff following the parties' 2002 separation. Plaintiff and defendant resided in the home during their subsequent reconciliation.
Darrel objected to the master's findings in a motion for reconsideration. He argued that Master Moran had adopted the wrong date of separation, and asserted both that he "allowed [Jenny] to reside with him to prove to her [that] the marriage was no longer viable" and that "contact was for the sole purpose of attempting to do what was in the best interest of [the parties and their daughter], not to salvage the relationship." Darrel claimed that the couple had been unable to "communicate even on simple issues" and that "in no way did [Jenny] act as if there was a marital unit" during the time she lived in the Soldotna home — she "would not even assist [Darrel] with such minor tasks as including his laundry with hers." Darrel claimed that he and Jenny "did not get along and avoided each other" during the reconciliation. He also alleged that he had rebuffed Jenny's requests to open a joint checking account and to go to marital counseling.
Jenny also moved for reconsideration, asking the master to reconsider her division of Darrel's retirement accounts. Master Moran granted Jenny's request and issued written "alternative" findings responsive to it. These findings were consistent with the master's earlier on-record findings that the parties had separated permanently in August 2004 and that the Soldotna property was marital.
The superior court treated Darrel's motion for reconsideration as an objection to Master Moran's on-record findings and recommendations. It denied the motion and adopted Master Moran's "alternative" findings.
Darrel appeals.
III. DISCUSSION
Darrel argues that he and Jenny ceased functioning as a joint economic unit in July 2002 and challenges Master Moran's determination of the couple's date of separation, raising factual and policy grounds. He also argues that Master Moran abused her discretion by considering the Soldotna home a part of the marital estate because the home was "acquired . . . and kept as separate property." In response, Jenny argues that Master Moran found the correct date of separation and points out that Master Moran's classification of the Soldotna home hinged on that finding. She asks us to affirm the superior court's decision adopting the master's findings and conclusions.
A. Standard of Review
The date of separation is "the cutoff date for distinguishing marital from non-marital property." We review a trial court's determination of this date for abuse of discretion. We review a trial court's classification of a specific property as marital or non-marital for abuse of discretion except when the classification raises only an issue of law; in that event, we apply our independent judgment. B. Date of Separation
Hanlon v. Hanlon, 871 P.2d 229, 231 (Alaska 1994) (citing Schanck v. Schanck, 717 P.2d 1, 3 (Alaska 1986)) ("Determining the cutoff date for distinguishing marital from non-marital property is a matter for resolution by the trial court on a case-by-case basis; we have declined to treat the matter as an issue of law.").
Tybus v. Holland, 989 P.2d 1281, 1284-85 (Alaska 1999) (citations omitted) ("We review a trial court's . . . determination of the date of separation . . . for an abuse of discretion.").
Veselsky v. Veselsky, 113 P.3d 629, 632 (Alaska 2005) (citation omitted); see also Green v. Green, 29 P.3d 854, 857 (Alaska 2001).
Master Moran found August 2004 to be the "appropriate date of separation" because the parties had operated as a "family and economic unit" during their genuine reconciliation attempt. Darrel argues that the court's finding was both factually incorrect and wrong as a matter of public policy. We have held that the final separation date "is ordinarily the date of the functional termination of the marriage, that is, the date `when the marriage has terminated as a joint enterprise' or `when a married couple [stops] functioning economically as a single unit.'" We have consistently held that it is within a trial court's discretion to find that parties continued to function as a single economic unit until the end of their last meaningful effort to salvage the marriage, notwithstanding the existence of intervening periods of separation.
Hanlon, 871 P.2d at 231 (quoting Schanck, 717 P.2d at 3 n. 7).
See Schanck, 717 P.2d at 3.
Darrel nonetheless argues that the parties ceased functioning as a joint economic unit in July 2002, not August 2004. He notes that as of July 2002 "a complaint for divorce had been filed, Jenny had left the State and established a business in Washington, and both parties were acting as independent individuals." He asserts that "Jenny did not seek or obtain employment, and she did not contribute financially during the period of attempted reconciliation; no joint accounts were established and no property was purchased jointly by the parties." Darrel further notes that "Jenny did not give up her business in Washington" and "she refused to dismiss the divorce case."
In response, Jenny argues that Master Moran was correct to use the August 2004 date for two reasons. First, Jenny argues that during their initial period of separation the parties "intermingled in ways which were not entirely consistent with permanent separation." She notes that Darrel bought her a car and stayed with her in Washington during that time. Second, Jenny also argues that the parties' "marital team effort" continued throughout their eight-month reconciliation. She notes that the parties lived together and filed a joint tax return during their reunion, and she draws our attention to her testimony regarding her purchases of groceries, Christmas presents, and a vacuum cleaner.
Cf. Ramsey v. Ramsey, 834 P.2d 807, 809 (Alaska 1992) ("[T]he date marking the termination point for inclusion of property within equitable distribution . . . marks the end of the marital team effort.").
Even viewing the testimony in the light most favorable to Darrel, we conclude that Master Moran did not abuse her discretion in determining the couple's date of separation to be August 2004. The parties stipulated that their subsequent attempt to reconcile was genuine. In addition, Darrel's testimony regarding his purchase of a vehicle for Jenny in Washington tended to show that the parties remained financially entangled during their July 2002-December 2003 separation. Moreover, Darrel testified that Jenny, having put her business on hold, was unemployed and did not contribute to the family's expenses. Although Darrel apparently presented this testimony to show that the parties did not function as an economic unit during their attempted reconciliation, the testimony could plausibly be viewed as establishing the parties' return to the marital status quo:
Darrel performed the role of family breadwinner while Jenny tended to the parties' daughter, an arrangement that had prevailed throughout the couple's marriage. Furthermore, the parties had stipulated that Darrel's child support obligation would be suspended when the parties were primarily living together.
Darrel suggests that there could not have been a joint enterprise during the reconciliation attempt because Jenny was incapable of making an independent financial contribution to the partnership. But Jenny's financial dependency on Darrel actually reinforces the notion that the parties operated as a single economic unit. Given that they also lived together in the Soldotna residence during their reconciliation and filed a joint tax return, we find no abuse of discretion in Master Moran's determination that the couple's date of separation was August 2004.
Darrel insists that public policy weighs against a rule that treats a failed reconciliation as an event that automatically extends a couple's date of separation. He asserts that a rule of this sort chills reconciliation attempts by encouraging sham reconciliations aimed at increasing the amount of the marital property available for distribution. But whatever merit this policy argument might have in the abstract, we do not find it persuasive here. Darrel acknowledges that "there is no evidence of intentional separation date manipulation on Jenny's part" in this case. And our review of the record convinces us that Master Moran did not automatically extend the parties' separation date based on the mere fact of the attempted reconciliation, but instead determined the date after carefully examining the totality of the evidence concerning the parties' conduct. We thus affirm the superior court's order establishing the date of separation to be August 2004.
C. Characterization of the Soldotna Property
Darrel also argues that even if the court correctly determined the date of separation, Master Moran erred in characterizing the Soldotna residence as marital, because the property was acquired and maintained as separate property. But Darrel has not disputed that the earnest-money deposit put down on the home was drawn from marital funds. Moreover, the superior court's determination that the parties separated in August 2004 effectively establishes that Darrel's payments before that date were made with marital funds.
We have previously recognized that "[m]arital property includes all property acquired during the marriage, `excepting only inherited property and property acquired with separate property that is subsequently kept as separate property.'" We have clarified that "it is only property created by the enterprise of marriage that should be subject to division." Conversely, we have recognized that "property accumulated with income earned after a final separation that is intended to, and does in fact, lead to a divorce is excluded from the category of marital property." Given our decision affirming the superior court's determination of the parties' separation date, it follows that the court did not abuse its discretion in classifying the Soldotna residence as marital property.
Hansen v. Hansen, 119 P.3d 1005, 1009 (Alaska 2005) (quoting Lewis v. Lewis, 785 P.2d 550, 558 (Alaska 1990)).
Schanck, 717 P.2d at 2.
Id. at 4; see also Rodriguez v. Rodriguez, 908 P.2d 1007, 1012 (Alaska 1995) ("Because the property at issue was obtained `during marriage' and the parties subsequently reconciled, we conclude that the superior court did not abuse its discretion in declining to apply the post-separation analysis for the period [when the couple lived apart.]); Burcell v. Burcell, 713 P.2d 802, 805-06 (Alaska 1986) (finding that trial court did not abuse its discretion by considering property to be marital where it was acquired before the parties' permanent separation).
IV. CONCLUSION
We AFFIRM the superior court's order adopting the master's findings and recommendations.