Appeal
from the Superior Court of the State of Alaska, Superior
Court No. 1WR-16-00034 CI First Judicial District, Wrangell,
Kevin G. Miller, Judge pro tem.
Robert
S. Spitzfaden, Gruening & Spitzfaden, APC, Juneau, for
Appellant/Cross-Appellee.
Michael P. Nash, Law Offices of Michael P. Nash, P.C.,
Wrangell, for Appellee/Cross-Appellant.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
WINFREE, JUSTICE.
I.
INTRODUCTION
Alaska
has long recognized unique legal standards for property
disputes between two people ending a domestic partnership.
Our case law has treated the end of a domestic partnership as
coextensive with both the end of a marriage-like relationship
and the end of the partners' cohabitation, as has
generally been the case in the appeals we have decided. But
this appeal presents the novel factual circumstance of a
couple who continued living together after their
marriage-like relationship ended. We must therefore clarify
several aspects of our domestic partnership case law to
decide this appeal, including when and how a domestic
partnership terminates, when post-partnership payments must
be reimbursed, and how the trial court should award
attorney's fees. Applying these clarified standards, we
conclude that most of the trial court's property
distribution was correct but that some minor aspects were in
error. We therefore remand for the trial court to revise its
property division.
II.
FACTS AND PROCEEDINGS
DeWayne
Tomal and Jeanette Anderson began living together in Wrangell
in 1998. The following year Tomal bought beachfront land off
the Zimovia highway (the Zimovia property); they began
working to make it their permanent home. Anderson initially
worked full time making the property habitable but later was
sporadically employed, while Tomal sometimes worked on the
property and sometimes earned money from other employment.
The couple eventually restored a cabin on the property to
serve as their primary home; they also docked Anderson's
float house at the beach.
Tomal
began experiencing financial difficulties shortly after he
and Anderson began living at the Zimovia property. They took
out a loan secured by the property to pay some of his debts,
and Tomal granted the property to himself and Anderson as
tenants-in-common to secure financing. Anderson then took
over managing the couple's finances; her practice was to
transfer money from the couple's joint bank account into
her personal savings account, where the funds earned
interest, then back into the joint account to pay bills.
Tomal and Anderson each deposited their earnings into the
joint account and Anderson used the commingled funds to pay
joint expenses like the mortgage, credit cards, and
utilities.
Tomal
took a salaried construction job in 2005; he began accruing a
pension and continued contributing his earnings to the joint
account. His work required him to live away from the Zimovia
property during the construction season, usually from March
to November. Anderson continued living and working at the
property.
In July
2011 Tomal returned to the property during the construction
season and discovered Anderson's money transfers from
their joint account to her personal account. Tomal confronted
Anderson and asked her not to transfer money into her
personal account. Tomal then opened a separate bank account
and began transferring money from the joint account into his
separate account. Tomal also began depositing his earnings
into and paying bills from the separate account. By the end
of 2011 there was little money left in the joint account.
Early
in 2012 Anderson told Tomal that she would no longer sleep in
the same house as him. When Tomal returned from his seasonal
construction work in the following winters, Anderson slept in
the float house while he was home. Anderson remained in the
cabin in 2015, after living in the float house in the winter
became too difficult to manage. The parties cooked their own
meals, did their own laundry, and engaged in separate
employment while living in the same home.
Anderson
obtained counsel in 2015 and proposed partitioning the
Zimovia property. Tomal did not agree to the partition. Tomal
filed suit against Anderson in 2016; he claimed that she was
liable for her share of the Zimovia property expenses he had
been paying and for unauthorized expenditures she had made
with his earnings and credit card. Anderson denied making any
unauthorized expenditures with Tomal's money and
counterclaimed for a domestic partnership property division.
The
superior court held a three-day bench trial in February and
March 2017. Tomal and Anderson both testified about their
relationship, living arrangements, finances, and property.
Tomal also presented testimony from a pension-valuation
expert setting three different values for his pension based
on when the relationship might have terminated, an accounting
expert who analyzed the couple's financial transactions,
and a real estate appraisal expert who valued the Zimovia
property.
The
court issued a written decision in April dividing the
property. The court found that Tomal had not proved his
misappropriation claims and that the parties were in a
domestic partnership requiring equal division of property.
The court found that the domestic partnership terminated in
2012, when Anderson told Tomal she no longer would sleep in
the same house as him. The court also resolved various
valuation disputes and included about $50, 000 of Tomal's
pension as partnership property. The court awarded Tomal the
Zimovia property, valued at $275, 000, and ordered him to
make Anderson an equalization payment of a little less than
$100, 000. The court declined to credit Tomal for
post-separation property expense payments, reasoning that
"as cotenants, [the parties] continued to both
contribute to the household in roughly equal fashion with ...
Tomal making the necessary payments to maintain the household
and ... Anderson doing other regular maintenance and
upkeep."
Tomal
sought reconsideration of the denial ofpost-separation
expenses, and he sought prevailing party attorney's fees
and costs.[1] Anderson asked that the court amend its
judgment to grant her the Zimovia property, and she sought to
enjoin Tomal from entering the property, citing a fear of
domestic violence. Anderson attached a police report to
support the reasonableness of her fear, which Tomal moved to
strike as hearsay. Anderson also sought attorney's fees
and litigation costs.
The
court denied Tomal's reconsideration motion and
Anderson's motions to amend the judgment and for a
preliminary injunction. The court admitted the police report
as evidence but excluded the hearsay statements it contained,
except for one statement by a police officer. The court
declined to award Tomal prevailing party attorney's fees,
reasoning that the "divorce exception"
applied.[2] The court instead awarded Anderson just
over $500 in litigation costs in light of her "relative
economic disadvantage" and nothing in attorney's
fees because she did not provide sufficient factual support
for an award.
Both
parties appeal.
III.
DISCUSSION
This
appeal presents several novel issues of domestic partnership
law. Anderson appeals the trial court's finding that the
parties' domestic partnership terminated in 2012,
requiring us to clarify when a domestic partnership
terminates. Tomal appeals several of the court's rulings,
requiring us to clarify when credit for post-separation
property expense payments is appropriate and when the divorce
exception to prevailing party attorney's fees applies to
domestic partners. Both parties challenge aspects of the
court's property distribution, requiring us to clarify
both the appropriate legal standards for domestic partnership
property distribution and the standards of review we will
apply on appeal in such cases. We therefore begin by
explaining the standards courts must use to divide property
acquired during a domestic partnership, and how we will
review that decision-making on appeal, before addressing the
parties' arguments.[3]
A. Legal Standards For Domestic Partnership Property
Distribution [4]
Property
acquired by domestic partners during a domestic partnership
should be distributed according to the partners'
intent.[5] But property acquired after the
partnership terminates is governed by the ordinary rules of
Alaska property law.[6] The first step in distributing domestic
partnership property therefore is to assess when the
partnership began and ended. Relevant to this appeal, when a
domestic partnership ends is a question of fact; the trial
court must assess when the partners stopped cohabiting in a
marriage-like relationship.[7] We will review the trial
court's finding of when a domestic partnership ended for
clear error.[8]
The
second step is to classify each item of property held by the
parties as partnership property or separate property based on
applicable law. A statute or a valid contract between the
parties-express or implied-will control the classification in
the first instance.[9] But absent a controlling statute or a
valid contract between the parties, property must be
classified strictly according to the parties'
intent.[10] "In some cases, the parties'
intent with respect to all or broad classes ofproperty will
be easy to infer based on evidence that 'the parties
formed a domestic partnership and intended to share in the
fruits of their relationship as though married justifying an
equal division of their property.' "[11] But not
all property acquired during a partnership necessarily is
intended to be partnership property: "We emphasize that
simply living together is not sufficient to demonstrate
intent to share property as though married, and, moreover,
that parties who intend to share some property do not
presumptively intend to share all property
"[12] And parties may not intend to share
property equally; for instance, a couple who purchase real
property together may intend to share it according to their
respective investments.[13] The trial court must be attentive to
ensure that it properly determines the parties' intent
for each disputed property item. The trial court's
underlying findings as to the parties' intent are factual
findings reviewed for clear error.[14] The trial court's
classification decisions based on statute, contract, or
intent are applications of law to fact reviewed de
novo.[15]
The
third step is to value the property. The trial court's
property valuations are factual findings reviewed for clear
error.[16]
The
final step is to distribute the property. Unlike in a
divorce, where equitable considerations dictate the final
distribution, the trial court must distribute the property
strictly according to the property's character as
determined by statute, contract, or the parties'
intent.[17] Partnership property generally must be
distributed equally (or unequally if the parties intended
unequal shares), while separate property must be distributed
solely to its owner.[18] But the trial court may assign different
items of partnership property to the parties and order an
equalization payment to ensure that each party receives the
correct total share of partnership property.[19] There may be
a number of reasonable ways to fairly allocate property in
this process; we will review the trial court's allocation
decisions, and its decision to order an equalization payment,
for abuse of discretion.[20]
B.
The Trial Court's Property Distribution
Having
clarified the standards the trial court should use when
distributing property acquired during a domestic partnership,
we now evaluate the trial court's property distribution
in light of these standards. We conclude that, although most
of the distribution is proper, certain aspects are in error.
1.
The trial court did not clearly err by finding that the
domestic partnership ended in 2012.
The
first step is to determine when the partnership began and
ended. The trial court found that "the parties intended
to and engaged in an equal partnership that they expected to
continue indefinitely" and that "the domestic
partnership did not end until 2012 when... Anderson told ...
Tomal that she would no longer sleep under the same
roof."[21] The court also found that "[s]ince
then, the parties became and remain reluctant
co-tenants." This was not clearly erroneous.
We have
emphasized that "simply living together is not
sufficient to demonstrate intent to share property as though
married."[22] By early 2012 the parties had separate
finances and filed separate tax returns; they had not filed a
joint tax return at least since 2005.[23] They lived
separately, whether in different places or different parts of
the same property. Although sometimes living together at the
Zimovia property, each cooked their own meals, did their own
laundry, and engaged in separate employment. And, although
after 20 12 the parties continued to live at, maintain,
improve, and hold the debt on the Zimovia property together,
[24]
this behavior is as consistent with a domestic partnership as
with the trial court's conclusion that "[s]ince
then, the parties became and remain reluctant
co-tenants." We therefore cannot say the court clearly
erred in finding the domestic partnership terminated in 2012;
we have no definite and firm conviction that a mistake has
been made.[25]
Anderson
counters that domestic partnerships are a type of contract
and that she and Tomal did not intend for their contract to
terminate when their relationship did. But Anderson confuses
the legal basis for distributing domestic partnership
property with the domestic partnership itself. A domestic
partnership in Alaska is a marriage-like relationship between
unmarried cohabitants, not a contract. We explained in
Tolan v. Kimball that domestic partnership property
distribution applies even if "the essential elements of
a contract were not present."[26] And, although Anderson
and Tomal undoubtedly could have made a contract to
control their property distribution over any other intent,
[27]
Anderson did not claim in the trial court that such a
contract existed. It was therefore appropriate for the court
to divide Anderson and Tomal's property based on the date
it found the partnership terminated, and we affirm the
court's selected date as not clearly erroneous.
2.
It was error to classify certain property as partnership
property.
The
second step in distributing property acquired during a
domestic partnership is to classify the property based on
statute, contract, or the parties' intent. Tomal argues
that the trial court erred by allocating a portion of his
pension to the partnership because there was no evidence that
the parties intended to share the pension. Anderson argues
that the trial court erred by ...