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Wiegers v. Richards-Wiegers

Supreme Court of Alaska

May 11, 2018

CHARLES WIEGERS, Appellant,
v.
AMY RICHARDS-WIEGERS, Appellee.

          Appeal from the Superior Court of the State of Alaska, No. 4FA-14-01739 CI Fourth Judicial District, Fairbanks, Bethany Harbison, Judge.

          Mary-Ellen Meddleton, Anchorage, for Appellant.

          Daniel L. Callahan, Callahan Law Office, Fairbanks, for Appellee.

          Before: Stowers, Chief Justice, Winfree, Maassen, and Bolger, Justices. [Carney, Justice, not participating.]

          OPINION

          WINFREE, JUSTICE.

         I. INTRODUCTION

         A couple divorced after nearly 30 years of marriage. The former husband appeals the superior court's valuation of his corporate stock and its characterization of the former wife's retirement health benefits as non-marital property. We affirm the court's stock valuation, but we reverse its characterization of the retirement health benefits as non-marital. We therefore remand for valuation of the health benefits and reconsideration of the equitable distribution of the marital estate.

         II. FACTS AND PROCEEDINGS

         A. Facts

         Amy Richards-Wiegers and Charles Wiegers married in 1987; they separated in 2014, and their divorce was finalized in 2016. Two assets important to the equitable division of their marital estate are the focus of this appeal.

         1. Charles's A & A Roofing Company, Inc. stock

         In the early 1990s Charles became an officer and shareholder of A & A Roofing Company, Inc., a closely held corporation selling and installing commercial and residential roofing. At separation Charles was the president of A & A Roofing and owned 7, 652 shares, about 47% of the company's outstanding stock.

         A & A Roofing's shareholders have a Shareholders' Agreement restricting the transferability of and setting the price for its stock. The price may be modified at any time by a vote of shareholders holding 75% of the voting shares "to reflect any amount they agree to be the then current fair market value of the [s]tock." No particular valuation method is identified, but in 1983 the company adopted a valuation calculation referred to as "Method 2, " a liquidation calculation first used in the 1970s by its then-existing sole shareholder for estate planning purposes. Although Method 2 is not dictated by the Shareholders' Agreement, it has been used for about 35 years to value A & A Roofing's stock.

         Since 2010 Method 2 has been used to value A & A Roofing's stock four times: $211/share effective January 1, 2010; $220/share effective December 31, 2010, in anticipation of a shareholder's retirement; $184/share effective January 1, 2013, following a distribution of cash and assets to facilitate the prior shareholder's retirement; and, most recently, $179/share effective January 1, 2015, just before Charles's divorce trial. On June 11, 2015, the three then-existing shareholders signed an "Unanimous Written Consent in Lie[u] of Special Meeting by Shareholders" "determining] the 'Fair Market Value' of A & A Roofing Co., Inc. as of January 1, 2015 [to be] $179/share." The $ 179/share value was recorded in the corporate minutes on December 9, 2015, about the time the divorce trial started.

         2. Amy's retirement health benefits

         Amy began working for the University of Alaska in 1979, with a brief break in service in 1980. Her position was covered by the Alaska Public Employees' Retirement System (PERS). Amy's PERS Tier 1 retirement health benefits vested in 1985 after five years of employment, before the marriage. Amy continued working for the University until January 1999, 18.7 total years of PERS service, accruing 11.7 years during the marriage. Amy was eligible to retire and access her retirement health benefits in July 2016 at age 55, and indicated at trial she would do so.

         B. Proceedings

         The divorce trial took place over four days between December 2015 and May 2016. A & A Roofing's certified public accountant testified to the company's use of Method 2 for stock valuation and other aspects of A & A Roofing's business. Amy called a certified public accountant, who is also a business valuation expert, to testify about business valuation methods other than Method 2. Neither provided an independent valuation of A & A Roofing stock.

         The superior court issued a March 2016 order that Amy's PERS retirement health benefits were a premarital asset as a matter of law because they were fully vested prior to the marriage. In June the court determined, among other things, that Charles's A & A Roofing stock value was $217/share under the "true asset approach as described in [Amy's expert's] testimony." The court's division of the marital estate incorporated these determinations.

         Charles appeals.

         III. STANDARD OF REVIEW

         "There are three basic steps in the equitable division of marital assets: (1) deciding what specific property is available for distribution, (2) finding the value of the property, and (3) dividing the property equitably."[1] The first step, characterizing property as marital or non-marital, involves mixed questions of law and fact; "we review the superior court's legal conclusions de novo and its factual findings for clear error."[2]The second step, factual determination of property value, is also reviewed for clear error.[3] "Clear error exists when we are 'left with a definite and firm conviction that the superior court has made a mistake.' "[4] The third step, equitable property distribution, is reviewed for abuse of discretion[5] and "we will not disturb the result unless it is clearly unjust."[6]

         IV. DISCUSSION

         Charles briefed two issues on appeal: whether the superior court erred by (1) finding the value of Charles's A & A Roofing stock to be $217/share, and (2)determining Amy's PERS retirement health benefits were non-marital.

         A. The Superior Court Did Not Clearly Err By Valuing Charles's A & A Roofing Stock At $217/Share.

         Charles argues the superior court's valuation of his corporate stock is clearly erroneous because the court relied upon unsupported expert testimony to reach it. Charles contends the correct fair market value, as determined by the company's Method 2 valuation formula, is $ 179/share. Amy supports the court's valuation, arguing that Method 2 is not an appropriate calculation of fair market value and that her business valuation expert testified in support of the court's valuation.

         1. The superior court's reliance on Amy's expert's "true asset" valuation is ...


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