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Partridge v. Partridge

Supreme Court of Alaska

May 21, 2010

James R. PARTRIDGE, Appellant,
v.
Erlinda PARTRIDGE, Appellee.

Rehearing Denied Oct. 4, 2010.

Page 681

[Copyrighted Material Omitted]

Page 682

Donna C. Willard, Law Offices of Donna C. Willard, Anchorage, for Appellant.

Herman G. Walker, Jr., and Linda A. Limón, Limón & Walker, Anchorage, for Appellee.

Before: CARPENETI, Chief Justice, FABE, WINFREE, and CHRISTEN, Justices.

OPINION

CHRISTEN, Justice.

I. INTRODUCTION

James and Erlinda Partridge obtained a final decree of divorce in June 2008. James appeals the trial court's property division which allocated cash and income-expending assets to him and the marriage's most significant cash-producing asset to Erlinda. He argues that the trial court's allocation violates AS 25.24.160(a)(4), which requires that property divisions " fairly allocate the economic effect of divorce." James also claims the trial court erred by mischaracterizing assets, failing to value each party's pension, and failing to consider his contributions of separate property to the marriage. Because the trial court's property division was not an abuse of discretion, we affirm it. But we remand for further proceedings because the trial court did not credit James for some of the marital debts he paid during the separation period, and because the trial court credited both parties with the full value of marital pension payments they received during the separation period without determining whether they spent these funds on normal living expenses.

II. PROCEEDINGS

James and Erlinda Partridge were married in 1987. Erlinda filed a complaint for legal separation in February 2006 and converted

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it into a complaint for divorce in May of that year.

The case was tried in December 2007 and April 2008. The trial court determined that the legal date of separation was June 30, 2006, that a fifty/fifty property division was appropriate, and that the total value of the marital estate was $7,666,445. The court awarded James assets valued at $3,667,251 and Erlinda assets totaling $4,013,130 and ordered Erlinda to make an equalizing payment of $172,940 to James by December 31, 2009. If Erlinda made the equalizing payment after December 31, 2009, it was to be subject to 7.75% interest retroactive to April 28, 2008. Both parties filed motions for reconsideration which the trial court denied. James appeals.[1]

III. FACTS

The Partridges accumulated a substantial estate during their marriage. James retired from his job as a pilot for Northwest Airlines in 1996 with a monthly pension of $6,784. Erlinda retired in 2001 after working for thirty-three years as a flight attendant. She receives an annuity payment of $789 per month attributable to pre-marital employment. This annuity will continue indefinitely. She also receives a monthly pension payment of $1,312 that will cease when she turns sixty-five and becomes eligible for social security. At trial, Erlinda was sixty-one years old and James was sixty-nine. No children were born during their marriage, and the superior court observed that both parties were in " basically good health."

A. Kent Corporate Park

The Partridges owe much of their prosperity to an investment in four warehouses located in Kent, Washington known as " Kent Corporate Park" (KCP). The four buildings sit on two separate parcels. Lot three contains buildings " A" and " B" with approximately 65,601 square feet of rentable space and a monthly base rent of $28,168. Lot four contains buildings " C" and " D" with 72,553 square feet of rentable space and a monthly base rent of $32,837. The two lots were separately owned until 1998 when the Partridges' predecessor-in-interest purchased them. If the two parcels had been owned separately at the time of trial, the owner of lot four would have needed an easement across lot three to access the only available road.

The Partridges acquired KCP in 2001. The acquisition was the culmination of two tax-exempt exchanges spanning the previous decade, with each exchange resulting in ownership of an investment property of successively greater value.[2] The trial court adopted Erlinda's $9,027,288 valuation of KCP. At this value, KCP had a total divisible equity of $3,541,375. James never actively disputed KCP's status as marital property at trial; he referred to it as " held jointly" and as a " marital asset" on several occasions.

Although KCP's equity comprises half of the marital estate, it produced nearly two-thirds of the Partridges' monthly income at the time of trial.[3] A manager handled the day-to-day operation of the warehouses and performed " [n]inety-eight percent" of the business management for KCP during the marriage. Notably, six-figure maintenance burdens such as a roof replacement and flooding repairs created negative cash flow for KCP in some recent years.

James had exclusive access and control over income from KCP during the separation period. This included his unilateral settlement of a lawsuit arising from a tenant's environmental contamination of part of KCP for $400,000. James did not inform Erlinda of the settlement amount until compelled to do so by the court.[4] He spent much of the

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approximately $259,000 in net settlement proceeds to purchase property in Wasilla. James also took twenty-two monthly draws of $8,000 each and $120,000 of additional draws from KCP during the separation period. Erlinda received no income from KCP during this time and testified that she borrowed funds from family members to pay her living expenses. The trial court awarded KCP entirely to Erlinda.

B. Wasilla Property

In the summer of 2006, James purchased a home and several residential lots on Lake Lucille in Wasilla. James used income from KCP to make a down payment on the home and to purchase two adjoining lots. Erlinda co-signed on the note for the purchase of the house, but not on the adjacent lots. She testified that she signed for the house because " [James] couldn't buy the Lake Lucille house without my signature.... I agreed to sign so he could have a place to heal." James testified that the house and lots were marital property because he had hoped at the time of purchase that he and Erlinda would reconcile and live together in a new home built on one of the lots.[5]

While living on the Lake Lucille property prior to and during trial, James spent nearly $70,000 on mortgage payments and insurance for the Lake Lucille home. He also used approximately $67,000 to renovate it and improve the adjoining lots. These improvements were made without consulting Erlinda and using funds over which she had no control, but James characterized them as marital expenses.

In his closing argument, James again characterized the Lake Lucille home and adjacent lots as marital property, but he asked that the court award them to him so he could continue living there. The trial court determined that the house and adjacent lots were James's separate property. The court explained:

Although Ms. Partridge's name is on the house, she's not on the adjoining lots. And it's clear to me from the testimony that the Wasilla home was not intended to be a joint investment by the parties.
Mr. Partridge has made a number of improvement[s] on the property where he seeks to reside, but those were not improvements that were made as joint decision[s], to cut down trees and put in doors and other things. Those were decisions that he made for property that he alone has resided in. So I don't see that the Wasilla property and adjacent lots should be considered ...

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