MELVIN B. GROVE JR., Appellant and Cross-Appellee,
v.
CHERYL M. GROVE, Appellee and Cross-Appellant.
Appeal
from the Superior Court No. 3AN-13-05282 CI of the State of
Alaska, Third Judicial District, Anchorage, William F. Morse,
Judge.
John
C. Pharr, Law Offices of John C. Pharr, P.C., Anchorage, for
Appellant/Cross-Appellee.
Kara
A. Nyquist, Nyquist Law Group, Anchorage, for
Appellee/Cross-Appellant.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
WINFREE, JUSTICE.
I.
INTRODUCTION
Parties
in a divorce and property division trial disputed the value
of the husband's post-retirement military medical
benefits. The superior court determined that the benefits
were a marital asset, but declined to value them or account
for their value when dividing the marital estate. The court
instead ordered the husband to pay for comparable medical
benefits for the wife for the rest of her life. The court
also determined that most of the wife's student loans
were marital debt and allocated that debt to her. Both
parties appeal the superior court's decision regarding
the husband's medical benefits; the husband also appeals
the superior court's characterization of the student
loans as marital debt. We affirm the superior court's
characterization of the wife's student loans as marital
debt, but we reverse and remand for the superior court to
assign a value to the husband's post-retirement military
medical benefits and to finalize an equitable distribution of
the marital estate.
II.
FACTS AND PROCEEDINGS
Cheryl
and Melvin Grove married in 1986 and separated in 2011;
Cheryl filed for divorce in 2013. They had no minor children
at the time of separation. Melvin entered the military six
months before the marriage and retired in 2005. He has a
military pension and lifetime military medical benefits
through TRICARE. From 2009 to 2012 Cheryl pursued a
master's degree, incurring substantial student loan debt.
Trial
was held over three days in 2014; the primary asset in
dispute for the marital property division was Melvin's
post-retirement medical benefits. Both Cheryl and Melvin
presented expert testimony valuing his benefits. Cheryl's
expert provided three values ranging from $239, 000 to $284,
000; Melvin's expert provided a value of $124, 400. The
parties also provided testimony about Cheryl's student
loan debt. In a March 2015 order the superior court granted
the divorce and distributed the marital estate.
The
superior court characterized all of Melvin's medical
benefits as marital but declined to assign a cash value,
seeking instead to give Cheryl "half of what Melvin has
. . . but not something different." The court ordered
"Melvin to pay Cheryl an amount of money over time that
will enable her to purchase a reasonably equivalent"
medical insurance policy, "leav[ing] the selection of
that policy to the parties to work out if they can."
Melvin was directed "to deposit the monthly premium into
an account controlled by Cheryl." The court ordered that
Cheryl use the money only to pay for medical insurance
premiums "unless the parties, with the approval of the
Court, agree to an alternate use."
The
superior court characterized most of Cheryl's student
loans as marital. The court credited Cheryl's testimony
that about $50, 000 of her nearly $60, 000 debt was incurred
before separation and that some loan proceeds were used to
pay living expenses. The court allocated that marital debt to
Cheryl in the property division.
Cheryl
moved for reconsideration, arguing that the superior court
had erred by failing to assign a value to Melvin's
medical benefits and to take that value into account in the
property division. Cheryl alternatively requested
clarification of the court's order, raising concerns
about fluctuation of premiums and the timing and duration of
Melvin's payments. In response Melvin disputed the
court's factual finding that the medical benefits were
100% marital, noting that he had entered the military prior
to marrying. And although Melvin stated that the court's
method of distribution for the medical benefits was
"reasonable, " he sought to ensure that Cheryl did
not receive more comprehensive medical insurance than his
TRICARE coverage. Melvin also disputed the court's
finding that Cheryl's student loans were marital debt,
asserting that no portion of the loans was used for living
expenses.
On
reconsideration the superior court refused to change its
distribution of the medical benefits or its characterization
of nearly $50, 000 in student loans as marital debt. The
court "declined to put a fair market value on the
[medical] benefits because of the awkward impact of valuation
of this somewhat contingent asset" and because "it
cannot be easily translated to a liquid value." The
court instead described its order as an alternative and more
appropriate valuation of Melvin's medical benefits. The
court clarified, however, that "Melvin must provide the
coverage for Cheryl until she dies, even if he predeceases
her, " and that Melvin's payments must track any
fluctuations in Cheryl's insurance premiums. The court
rejected Melvin's assertion that Cheryl's student
loans were separate debt, noting that he was merely repeating
or supplementing what he said at trial.
Melvin
appeals the superior court's characterization of
Cheryl's student loans as marital debt, and both parties
appeal the court's method of valuation and allocation of
Melvin's medical benefits.
III.
STANDARD OF REVIEW
Equitable
property distribution on divorce is a three-step process.
"[Characterizing property as either marital or separate,
"[1] the first step, "may involve both
legal and factual questions."[2] "Underlying factual
findings as to the parties' intent, actions, and
contributions to the marital estate are factual
questions."[3] "Findings of fact are reviewed for
clear error, but whether the trial court applied the correct
legal rule ... is a question of law that we review de novo
using our independent judgment."[4] "Second, the trial
court must place a value on the property, a ruling which is a
factual determination reviewed for clear error. To reverse
for clear error, we must be left with a definite and firm
conviction on the entire record that a mistake has been
made."[5] A court's decision whether to value
personal property, however, is a legal question that we
review de novo.[6] We review the third step, the equitable
allocation of property, for an abuse of discretion, reversing
only if it is "clearly unjust."[7]
IV.
DISCUSSION
A.
Characterizing $50, 000 Of Cheryl's Student Loans As
Marital Was Not Erroneous.
Melvin
disputes the superior court's determination that all but
$10, 000 of Cheryl's student loans was marital debt,
arguing that the loans all should be characterized as
separate property. We have held that "there is a
presumption that debts incurred during the marriage are to be
treated as marital."[8] That presumption applies to student
loan debt; in Veselsky v. Veselsky we determined
that absent "evidence showing that the parties intended
the debt to be separate, " a student loan "obtained
during the marriage" was properly characterized as
marital property.[9] InMcDougall v. Lumpkin we
similarly held that student loans should be treated as
marital debt, especially in light of unrebutted evidence that
the spouse pursuing higher education did so with the other
spouse's support, and that "they had sometimes used
the student loans to pay living expenses and non-education
debts."[10]
The
superior court made the following factual findings when
characterizing the loans: (1) "[t]he debt at the time of
the first day of trial (January 2014) was [about $60,
000]"; (2) "roughly $10, 000 of that total was
incurred after separation"; (3) "[a] portion of the
loans was paid directly to the college for tuition and
housing"; and (4) "[a] portion went directly to
[Cheryl] for living expenses." Based on those findings
the court determined that nearly $50, 000 of Cheryl's
student loans was marital debt.
Melvin
asserts that "the loans were used exclusively
for tuition and no part of the student loan funds were used
for living expenses" and "the parties agreed that
the loans would be separate and that [Cheryl] would be
responsible for repaying them." But Melvin has not shown
that the court's factual findings are clearly erroneous
or that he rebutted the presumption that the loans were
marital debt. "[I]t is the function of the trial court,
not of this court, to judge witnesses' credibility and to
weigh conflicting evidence."[11] Cheryl testified that her
loans paid for tuition, housing, and living expenses, that
about $10, 000 of the debt was incurred after separation, and
that Melvin had been supportive of her educational endeavors.
The court credited Cheryl's testimony, "and we will
not re-weigh evidence when the record provides clear ...