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Engstrom v. Engstrom

Supreme Court of Alaska

May 15, 2015

ANDREW ENGSTROM, Appellant,
v.
BECKY JO ENGSTROM, Appellee.

Appeal from the Superior Court Application 12/829, 589 Technology Center 3600 of the State of Alaska, First Judicial District, Juneau, Philip M. Pallenberg, Judge.

Kara A. Nyquist, Anchorage, for Appellant.

Blaine H. Hollis, Juneau, for Appellee.

Before: Fabe, Chief Justice, Stowers, Maassen, and Bolger, Justices.

OPINION

MAASSEN, Justice.

I. INTRODUCTION

In this divorce case, the husband appeals from a superior court decision dividing the marital property. He raises two issues with regard to his wife's retirement health insurance benefits: he argues first that the superior court erred in determining the marital portion of those benefits, and second that the superior court erred in the rate it selected for valuing those benefits. We hold that the superior court's resolution of these issues was consistent with our prior cases and therefore affirm it.

The husband also challenges the superior court's award to the wife of a larger share of the marital property, which the court justified on grounds that (1) the wife would have primary care of the couple's child, and (2) the husband was receiving two income-producing businesses created during the marriage. We hold that it was an abuse of discretion to rely on these two justifications for an unequal division and remand for the superior court's further consideration of the equitable division.

Finally, we affirm the superior court's valuation of the husband's 2010 income tax liability, because its finding is supported by the estimates given at trial and it was not required to revise the finding based on the husband's later submission of his actual return.

II. FACTS AND PROCEEDINGS

A. Facts

Andrew (Andy) and Becky Engstrom were married in 1998. Becky had been teaching in the public schools since 1997 and continued to do so during the marriage. In 1998 Andy started a window-cleaning business, Capital City Windows, and he worked primarily as a window washer. He started an online business in 2002 called Volitar Industries, which he used to sell his music, self-produced kits for window-cleaning businesses, and instructional videos. In 2003 the couple had a child. They separated in the fall of 2010.

B. Proceedings

The superior court held a trial on issues of property division and child custody and then issued a written decision. The court awarded sole legal and primary physical custody of the couple's child to Becky; custody is not at issue in this appeal, which concerns only the identification, valuation, and division of the marital property.

One significant property issue involved Becky's health insurance benefits from the Teachers' Retirement System (TRS), in which she enrolled when she started teaching in 1997. It was during her marriage to Andy that Becky completed the eight-year vesting period, making her eligible for a health insurance subsidy upon her retirement. At trial, through the testimony of expert witnesses, the parties disputed how to identify the marital portion of these benefits. Andy contended that the benefits were marital to the extent they vested during the marriage, [1] whereas Becky contended that the marital portion should be based on her years of marriage as a fraction of her total years of employment.[2] The parties also disputed the value of the subsidy; Andy urged adoption of a composite rate that assumed Becky was likely to remarry, whereas Becky argued that her individual circumstances justified applying a lower, individual rate. The superior court adopted Becky's arguments on these two issues.

After identifying and valuing the marital property, the superior court divided it pursuant to AS 25.24.160(a)(4), allocating 58.4 percent to Becky and 41.6 percent to Andy. The court justified the unequal division on two grounds: first, that Andy was receiving income-producing properties in Volitar Industries and Capital City Windows; and second, that Becky would ...


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