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Herring v. Herring

Supreme Court of Alaska

May 13, 2016

KELLEY PATTON HERRING, n/k/a Kelley Patton, Appellant,

          Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Andrew Guidi, Judge. Superior Court No. 3AN-13-05718 CI.

         Douglas C. Perkins, Hartig Rhodes LLC, Anchorage, for Appellant.

         Rhonda F. Butterfield, Wyatt & Butterfield, LLC, Anchorage, for Appellee.


         FABE, Justice.


         A divorcing couple reached a settlement agreement that was incorporated into a divorce decree issued by the superior court. The settlement provided that the qualified marital portion of the husband's pension would be distributed to the wife and the nonqualified portion would be distributed to the husband, subject to a provision for equitable reallocation if the values of those portions changed significantly. The settlement also described four firearms and ammunition that the husband would deliver to the wife. After the decree issued, the wife's portion of the pension declined in value and the husband's portion increased, so the wife filed motions attempting to obtain information about the reasons for this change in value and attempting to enforce the settlement agreement's equitable reallocation provision to compensate for the changes. She also argued that the husband had not delivered the specific guns bargained for at settlement. After motion practice and an evidentiary hearing, the superior court ruled for the husband in all respects, and it awarded enhanced attorney's fees against the wife. The wife appeals.

         We conclude that the significant change in the relative values of the parties' pension accounts triggers the verification and reallocation provision of their settlement agreement. Accordingly, we reverse the superior court's denial of the wife's motion for an equitable reallocation and remand for an equitable reallocation according to the parties' agreement. Because the husband is no longer the prevailing party, we also vacate the superior court's award of attorney's fees to the husband. We affirm the superior court's decision as to the parties' firearms.


         A. Divorce Settlement

         Kelley Patton and Gary Herring were married in Texas in 1981. Patton filed for divorce on March 11, 2013, and the parties legally separated on March 31, 2013. Patton and Herring were both residents of Alaska at the time.

         The parties participated in a mediation to negotiate the terms of their divorce. Leading up to this mediation, Patton had attempted to obtain financial information from Herring, and Herring appeared reluctant to provide full information. The superior court judge had informed Herring that he was required under Alaska Civil Rule 26.1 to provide signed releases allowing Patton to access his financial account information. When Herring failed to provide the required releases, Patton filed a motion to compel, and the superior court granted the motion on November 1, 2013, the day after the mediation.

         Despite the lack of complete financial information, the parties proceeded with the mediation on October 31, 2013. Both parties were represented by counsel at the mediation. The parties reached a settlement and signed a document listing the agreed-upon distribution of their assets. Three of those assets are disputed in this appeal: Herring's Retirement Accumulation Plan from BP (BP pension), a Fidelity Roth IRA account, and several firearms. The parties' agreement was later typed and presented in a spreadsheet. The agreement specified that 100% of the " qualified portion" of the BP pension would go to Patton, while the " nonqualified portion" would remain with Herring. But the agreement contained the caveat that the parties needed to verify that the BP pension could be divided by a Qualified Domestic Relations Order (QDRO) and that they " must see numbers the percentages are based on[:] current values." The agreement next provided that 45% of the Fidelity Roth IRA account would be distributed to Patton and 55% would be distributed to Herring, but it explained that this transfer was subject to an equalization mechanism that the parties had created to deal with the uncertainty of the BP pension's value. Finally, the agreement provided that Patton would receive " four guns previously discussed plus ammo."

         After some discussions regarding the appropriate terms for dividing the BP pension account, the parties used the Fidelity website to generate a QDRO reflecting their agreement that 100% of the qualified marital portion of the BP pension would go to Patton, while 100% of the nonqualified and nonmarital portions would remain with Herring. Based on the parties' elections in filling out the QDRO form online, the QDRO also specified that Patton was " not entitled to any early retirement subsidy." At this point the parties did not know the exact amount that each would be awarded from the BP pension account because the QDRO had not yet been executed.

         The parties then submitted to the court their draft findings of fact and conclusions of law, representing their settlement agreement, along with the typed version of the original agreement. The superior court held a settlement hearing on December 10, 2013. Patton was represented by counsel at this hearing, but Herring represented himself. At the hearing, the superior court discussed certain elements of the settlement with the parties to make sure they agreed on the terms.

         As the court described the settlement agreement, it provided that the parties would distribute the BP pension according to the terms set out in the property division, but that the exact amount of the qualified and nonqualified portions would not be known until a QDRO had been executed for the account. The parties therefore agreed to hold part of their Roth IRA account in " escrow" and use that amount to make any necessary adjustments after the exact values of the qualified and nonqualifed portions of the BP plan were established. The court explained that, " based on the extent to which their expectations were met or were unmet from the time of the mediation," the parties would " use the Roth IRA retained portion . . . to essentially compensate one or both parties to some extent for what they didn't get by way of the QDRO that they expected to get." Near the conclusion of the hearing, the superior court verified that both parties " underst[ood] that . . . except for the specific areas that [they were] leaving open as subject to further negotiation, which relate to the BP QDRO and the subsequent allocation of the Roth IRA, . . . everything [was] finalized and . . . concluded." Both parties testified that they understood and that they agreed with the terms as the court described them.

         On the day of the hearing, the superior court signed the QDRO presented by the parties and issued a divorce decree. Patton then moved for entry of her proposed findings and conclusions, which reflected the parties' agreement by providing that Patton would receive " 100% of the qualified marital portion of the . . . BP pension . . ., which has an approximate present value of $1,388,856, subject to verification that the qualified marital portion of the pension can be transferred in whole to Plaintiff [Patton], including dividends, interest, gains and losses thereon." They provided that Herring, in turn, would retain " 100% of the marital and non-marital portions of the nonqualified amount of the . . . BP pension[], which has an approximate present value of $125,835, including dividends, interest, gains and losses thereon." The proposed findings and conclusions then spelled out the mechanism for escrow and equitable reallocation in the event that these BP pension amounts differed significantly from the amounts estimated at the time of settlement. It provided that Patton would receive:

45% of the Fidelity GDH Roth IRA account . . ., which has a total approximate value of $350,234 . . ., except that:
i. $140,000 will be held in escrow and not distributed from said Roth IRA account pending verification of the amounts distributed according to paragraphs 8j [regarding Patton's portion of the BP pension] and 91 [regarding Herring's portion of the BP pension] below;
ii. In the event that the amounts of said distributions materially differ from the approximate values set forth in paragraphs 8j and 91 below, the parties may either agree on a reallocation of the Fidelity GDH Roth IRA to adjust for any such material difference, or if they cannot agree, they may submit this issue to the Court for it to determine an equitable reallocation . . . .

         The proposed findings and conclusions contained an essentially identical provision allocating the remaining 55% of the Roth IRA account to Herring and explaining this same " escrow" mechanism.

         Finally, the proposed findings and conclusions provided that, " [u]nless otherwise agreed by both parties," Patton would receive " four guns now in the possession of [Herring], including . . . a shotgun [and] an Uzi with folding stock in a black factory case," as well as " 500 rounds of 9 mm ammo, one case of shells for the shotgun, [and] four magazines for the Uzi." The proposed findings and conclusions gave the parties 30 days to " work cooperatively and promptly to execute all documents and make all other arrangements necessary to transfer property awarded herein to the other party."

         Herring objected to certain terms in Patton's proposed findings and conclusions. At this point the parties still did not have final information about the value of the BP pension's qualified and nonqualified portions, and both parties appeared to believe that the value of Herring's portion had fallen. But the court concluded that any such shortfall could be addressed through the equitable adjustment mechanism that had been designed by the parties as reflected in the findings and conclusions. The court explained that " [t]he language in the proposed [findings and conclusions] accurately tracks the agreement . . . made during the December 10 settlement conference, which address[es] uncertainty concerning the amounts the parties will receive when [the] defendant's [pension] is QDRO'd." The superior court further explained that the " [p]laintiff's description of how the parties agreed to address the issue, including the mechanism of holding back $140,000 in 'escrow,' is accurate." Accordingly, the court entered these findings and conclusions in January 2014. Neither party challenges the validity or accuracy of the findings and conclusions, though they debate the interpretation of some of their terms.

         B. Subsequent Proceedings

         The proceedings following the divorce settlement focused on the verification of, and eventually the dispute over, the values of the two portions of the BP pension account. Despite the provision of the findings and conclusions allowing for " verification of the amounts distributed" from the BP pension account, it appears that Herring prevented Patton from immediately receiving the information she needed in order to verify the amounts that would be distributed under the QDRO for that account. In March 2014 Patton requested another signed release from Herring so that she could obtain the necessary information from Fidelity, which managed the pension account. When Herring did not provide the requested release, Patton filed a notice of records deposition in early April, indicating that she intended to subpoena Fidelity and take a records deposition directly from Fidelity. Now represented by counsel, Herring filed a motion to quash the subpoena, which the superior court granted.

         Still unable to access information on the amount of the BP pension distributions, in May 2014 Patton filed a motion to reopen discovery " for the limited purpose of identifying and quantifying and equitably awarding any additional or undistributed marital assets." By the time she filed her reply brief, the QDRO had been processed and the parties' respective pension amounts had been divided between them; thus Patton learned for the first time that her award had decreased substantially. Patton explained to the court that the value of her portion of the BP pension had " decreased by $374,000, i.e. a 27% loss in value." She therefore asked the court to make an equitable reallocation under the relevant allocation mechanism in the divorce settlement, emphasizing that " the 'escrowed' Roth IRA funds still remain[ed] undistributed" because final verification of the BP pension amounts had not yet occurred. (Emphasis omitted.) In response, Herring continued to oppose Patton's verification efforts, including by filing a motion for an " order that [Patton] stop accessing . . . Herring's accounts."

         In June 2014 the superior court granted Herring's motion and ordered Patton not to access his accounts " unless specifically authorized by [the] court," but it also granted in part Patton's motion to reopen limited discovery on the amount of the disputed BP pension. Because of the " escrow" and reallocation mechanism designed to account for any difference in the amount of the BP pension distributions, the superior court concluded that the findings and conclusions " clearly impl[y] that . . . Patton is entitled to learn the amount of the non-qualified BP [pension account] that . . . Herring received or would receive." The superior court added that " the total amount available in the BP [account] must be known so that the parties and court ...

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