Johns v. Johns

• Decision Date: 26 September 1997
• Docket Number: No. S-7510,S-7510
• Citation: 945 P.2d 1222
• Parties: Greg R. JOHNS, Jr., Appellant, v. Betty Jo JOHNS, Appellee.
• Court: Alaska Supreme Court

Page 1222

945 P.2d 1222

Greg R. JOHNS, Jr., Appellant, v. Betty Jo JOHNS, Appellee.

No. S-7510.

Supreme Court of Alaska.

Sept. 26, 1997.

William T. Ford, Anchorage, for Appellant.

Brian E. Hanson, Pearson & Hanson, Sitka, for Appellee.

Before COMPTON, C.J., and MATTHEWS, EASTAUGH, FABE and BRYNER, JJ.

OPINION

EASTAUGH, Justice.

I. INTRODUCTION

Greg Johns argues that the superior court erroneously resolved property division issues in his divorce proceeding by: (1) treating the F/V ANGIE LEE as marital property; (2) treating the Individual Fishing Quotas (IFQs) as marital property; (3) retaining jurisdiction over roe-on-kelp permits; (4) valuing the marital residence; and (5) distributing the marital property on an equal basis. We affirm.

II. FACTS AND PROCEEDINGS

Greg Johns and Betty Jo Johns were married in September 1984, and separated in October 1993. Betty Jo did secretarial work during the marriage, and has been employed as a secretary with the Sitka School District since 1989. Greg has fished since childhood, and makes his living as a commercial fisher. When he married Betty Jo, he owned a sixteen-foot skiff, a hand troll permit, a power troll permit, and the F/V RADAR.

During the marriage, the parties purchased several substantial assets, including the F/V ANGIE LEE to help expand Greg's fishing business and a marital residence in Sitka. The vessel was titled in both parties' names as joint tenants.

The parties were granted a divorce in January 1996. In its written findings, the trial court awarded fifty percent of the marital assets to each party. The court awarded to Betty Jo the parties' marital residence subject to a $102,300 mortgage balance, and awarded to Greg the assets of the fishing business, including the F/V ANGIE LEE. The vessel was fully paid for at the time of trial. The court determined that the net value of the assets awarded to Betty Jo was $98,100 (representing a total value of $200,400 minus the $102,300 mortgage balance). The assets awarded to Greg were unencumbered; their value was $217,230. The trial court offset this disparity in value of the assets awarded by requiring Greg to pay approximately $60,000 to Betty Jo. ¹ Greg appeals various aspects of the property division.

III. DISCUSSION

A. Standard of Review

Trial courts have broad discretion in dividing property as part of divorce proceedings. See AS 25.24.160(a)(4); Doyle v. Doyle, 815 P.2d 366, 368 (Alaska 1991). Property division in divorce proceedings involves three steps: (1) determining what property is available for distribution; (2) valuing that property; and (3) allocating the property equitably. Lundquist v. Lundquist, 923 P.2d 42, 46-47 (Alaska 1996); Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983).

The trial court may only divide property characterized as "marital." The first step in any property division is, therefore, determining whether property is marital or separate. See Lundquist, 923 P.2d at 47. "The trial court's characterization of property as marital or separate is reviewed for an abuse of discretion." Id. However, when the court makes a legal determination in the course of taking this step, that determination is reviewed de novo. Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).

B. Treating the F/V ANGIE LEE as Wholly Marital Property

Greg contests the superior court's determination that the F/V ANGIE LEE was marital property. Greg contends that any contributions of premarital assets to the purchase of the vessel, such as the proceeds from the sale of a home in Craig ² and the sale of the F/V RADAR, ³ should be credited to him and the vessel itself should be considered his separate property.

With a few exceptions, all assets acquired by the parties during their marriage are marital property. ⁴ Lundquist, 923 P.2d at 47. In addition, "if the parties by their actions demonstrate an intent to treat any separate property as a marital holding," it is treated as marital property. Id. In Rhodes v. Rhodes, 867 P.2d 802, 805 (Alaska 1994), we held that a fishing vessel acquired by the husband prior to marriage was properly considered marital property where the parties during their marriage had refinanced the vessel with a loan that was paid off with marital earnings, and the wife had co-signed for the loan and assumed joint and several liability.

In this case, the parties purchased the F/V ANGIE LEE during their marriage, and took joint title to the vessel. Although holding joint title is not determinative of intent to treat property as marital, it creates " 'rebuttable evidence that the owner intended the property to be marital.' " Lundquist, 923 P.2d at 48 (citations omitted). Betty Jo's father co-signed for the initial bank loan, and loaned the couple the initial down payment for the vessel. Betty Jo and Greg were jointly and severally liable for the initial loan. During their marriage, the parties also modified or refinanced the loan, using joint funds earned primarily from Greg's fishing business to repay the loan.

Greg argues that Betty Jo's name was placed on the title solely because the bank required it. Nevertheless, he did not object to Betty Jo's name being placed on the title. Betty Jo argues that the parties always intended to treat the F/V ANGIE LEE as joint property.

Based upon the foregoing, the trial court did not err in finding that the F/V ANGIE LEE was a wholly marital asset.

C. Determining that the Individual Fishing Quotas (IFQs) Were Marital Property Subject to Division

The qualifying years for the federal Individual Fishing Quota (IFQ) program for halibut and black cod (sablefish) are 1988, 1989, and 1990. 50 C.F.R. § 676.20(a)(1)(i) (1994). As a result of Greg's participation in these fisheries during one of the qualifying years, he was eligible under the IFQ program to apply for "quota shares" to fish for both halibut and black cod. Under the IFQ program the initial quota shares of qualified fishers are proportional to their historical landings on vessels owned or leased during the "base years" of 1984 through 1990 for halibut, and 1985 through 1990 for black cod. 50 C.F.R. § 676.20(b) (1994). Greg applied for IFQs in these species in October 1994; they were issued to him in 1995. The IFQs are transferable, and Greg and Betty Jo stipulated to their value.

Greg contends that the trial court erred in characterizing the IFQs as divisible marital property. We have previously determined that "[a]n IFQ creates a property interest which, if marital, is subject to division." See Ferguson v. Ferguson, 928 P.2d 597, 600 (Alaska 1996). In Ferguson, we held that a spouse's interest in an IFQ is his or her separate property to the extent that the size of the quota share is attributable to labor performed prior to the marriage, and marital property to the extent that it is attributable to labor performed during the marriage. Id.

Although Greg applied for and received his IFQ shares after the parties had separated, the parties remained married during 1988, 1989, and 1990, the qualifying years for participation in the IFQ program. See 50 C.F.R. § 676.20(a)(1)(i) (1994). Furthermore, the parties were in a married state during 1984 through 1990, the years upon which the size of the "quota shares" is based. See 50 C.F.R. § 676.20(b) (1994). Nevertheless, while Greg concedes that IFQs may be considered marital property, he argues that the "marital character" of the IFQs should not be determined simply based upon whether the parties were married during the qualifying years. Greg's rationale is that his participation as a commercial fisher is lifelong, extending before his marriage to Betty Jo, and that Betty Jo reaped the benefits of his fishing while the parties were married such that the IFQs do not represent "any sort of marital gain or loss."

Greg's IFQ eligibility is based not upon his "lifelong participation" in the halibut and sablefish fisheries, but upon the work he performed during his marriage to Betty Jo. As the trial court noted, in order to fish during the qualifying years for the IFQs, Greg expended marital assets and effort, and Betty Jo is entitled to share in the benefits received from these efforts.

Greg also contends that Ferguson should not control because the court in Ferguson did not consider the "economic impact [on the fisher] of a marital division" of IFQs. Greg contends that the IFQ program acts as a legal disability to fishers, and that quota shares are analogous to workers' compensation benefits or early retirement benefits in that their transferability compensates a fisher for lost future earnings which are not marital property. See Miller v. Miller, 739 P.2d 163, 165-66 (Alaska 1987) (holding that workers' compensation disability benefits received by disabled spouse are marital property only to the extent that they compensate for loss of earnings during the marriage); In re Frahm, 45 Cal.App.4th 536, 53 Cal.Rptr.2d 31, 37 (1996) (holding that whether a spouse's employment termination benefit is separate or marital property is determined by whether the right to payment accrued during marriage).

Unlike workers' compensation benefits, or early retirement benefits, IFQs are not intended to compensate fishers for lost future earnings, but to conserve the sablefish and halibut fisheries. See Ferguson, 928 P.2d at 598. Greg's IFQs are marital assets that he may transfer at any time, but they were not issued as a substitute for lost future earnings. Fishers who transfer their IFQ shares may engage in other employment. We conclude that the trial court did not err in finding that Greg's IFQs are marital property.

D. Retaining Jurisdiction over Greg's Herring Roe-on-kelp Permits for Possible Future Division

During the marriage, Greg purchased interim roe-on-kelp permits for herring roe harvests near Craig and near Hoonah. The State has limited the issuance of interim permits and is expected to eventually issue permanent limited entry permits for these...