Grove v. Grove

         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 ...