Layton v. O'Dea, Supreme Court No. S-18056

CourtSupreme Court of Alaska (US)
Writing for the CourtBORGHESAN, Justice.
Citation515 P.3d 92
Parties Orville Wesley Jenkins LAYTON, Appellant, v. Mary Tabitha O'DEA, f/k/a Mary Tabitha O'Dea-Layton, Appellee.
Docket NumberSupreme Court No. S-18056
Decision Date12 August 2022

515 P.3d 92

Orville Wesley Jenkins LAYTON, Appellant,
v.
Mary Tabitha O'DEA, f/k/a Mary Tabitha O'Dea-Layton, Appellee.

Supreme Court No. S-18056

Supreme Court of Alaska.

August 12, 2022


Orville W. J. Layton, pro se, Anchorage, Appellant.

David S. Houston, Houston & Houston, PC, Anchorage, for Appellee.

Before: Winfree, Chief Justice, Maassen, Carney, Borghesan, and Henderson, Justices.

OPINION

BORGHESAN, Justice.

I. INTRODUCTION

A man appeals the superior court's order dividing property upon divorce. We reject his arguments that the superior court (1) improperly denied his motion to continue trial, (2) incorrectly allocated marital debt to him, (3) improperly authorized sale of the marital home before finalizing the property division, and (4) showed bias against him. But we agree with his arguments that it was error to (1) decline to consider whether his wife's separate property was transmuted to marital property through contract and (2) find that no portion of earnings on the wife's separate investments was marital when the taxes on those earnings were paid with marital funds. We therefore reverse the judgment and remand for further proceedings.

II. FACTS AND PROCEEDINGS

A. Facts

Orville Wesley Jenkins Layton and Mary Tabitha O'Dea married in May 1981. They have one adult child. Layton retired in 2017 after a career as a federal government attorney. O'Dea has worked as a school secretary since 2003.

The parties separated in September 2019, when Layton moved out of their Eagle River home. O'Dea filed for divorce in October.

B. Proceedings

1. Pre-trial motions and hearings

O'Dea moved for interim relief in November 2019, requesting interim possession of the marital home, interim support, and interim attorney's fees. Layton, representing himself,

515 P.3d 98

filed a cross-motion for interim relief, requesting authorization to use funds from investment accounts containing an inheritance O'Dea had received from her mother. Following a January 2020 hearing, the superior court granted O'Dea interim possession of the home and interim support and denied Layton's cross-motion, reasoning that any claims pertaining to O'Dea’s inheritance would be addressed in later proceedings.

At the January hearing, the court set a trial date in July. In May, approximately 10 weeks before trial, Layton moved for a 60-day continuance. He explained that the COVID-19 pandemic had made it difficult to secure legal representation, and he needed more time to hire an attorney and allow that attorney to prepare for trial. The court denied Layton's motion without explanation.

Around that time, O'Dea moved for permission to put the marital home on the market. O'Dea alleged that the home had been privately appraised at $380,000 and that sale of the home would allow the parties to pay off their substantial debts, including a $322,803.90 mortgage. The court denied O'Dea’s motion to sell the marital home, finding that there were no exceptional circumstances justifying the sale at that time.

2. Trial

The July divorce trial, held via videoconference, featured testimony from Layton and O'Dea and focused primarily on the parties’ marital debts, the marital home, and O'Dea’s inheritance.

a. Credit card and second mortgage debts

The parties incurred substantial debt during the marriage, including debt on several credit cards. O'Dea submitted evidence that the marital debt on their American Express credit card was $14,330.84 as of December 2019. She proposed in the property table attached to her trial brief that the full amount be allocated to Layton. There was undisputed evidence that the marital debt on three other credit cards totaled $8,729.27.

The parties also had a second mortgage with Loan Depot that according to Layton financed household expenses, repairs, and improvements during the marriage. The second mortgage had previously been addressed at a motion hearing. At that hearing O'Dea testified that the second mortgage debt totaled $17,500. Layton's trial brief asserted that as of July 2020, the debt totaled $16,832.22. In the property table O'Dea submitted with her trial brief, she proposed that the entire $16,832.22 debt be classified as marital and allocated to Layton. No evidence on the second mortgage debt was presented at trial.

b. Marital home

O'Dea testified at trial that she still wished for the marital home to be sold, but that she would not object to Layton keeping the home if he were able to refinance it. She presented evidence on the value of the home: the private appraisal referenced in her pretrial motion to sell the marital home, and a municipal appraisal assessing the home's value at $431,800.

Toward the end of the trial, Layton suddenly dropped out of the virtual hearing.1 The court and O'Dea attempted to contact Layton to no avail. In his absence, the court noted that Layton had not yet testified regarding his position on the fate of the marital home. The court asked O'Dea’s attorney how he "want[ed] to treat that." O'Dea’s attorney responded that O'Dea still wanted the home sold and that the court had authority to order a sale at that time. The court then stated that it wished "to get [Layton's] input" on the issue.

Layton rejoined the virtual trial soon afterward. The court asked Layton for his position on selling the marital home. Layton said he would agree to sell it "[i]f necessary," but "[didn't] think it[ ] [was] going to be a viable option given the economy" at that time.

515 P.3d 99

c. O'Dea’s inheritance

O'Dea inherited several hundred thousand dollars from her mother during the marriage. She testified that after receiving the inheritance, she had her financial advisor deposit the funds into two investment accounts. She testified that she did not discuss setting up those accounts with Layton or involve him in any of her discussions with her financial advisor. O'Dea also testified that she never added Layton to those accounts, that he never contributed money to the accounts, and that she never added marital funds to the accounts. Finally, O'Dea testified that she would take a trip every year to visit her financial advisor to review plans for the investment accounts.

O'Dea testified that she withdrew funds from the investment accounts to purchase a door and remodel the kitchen and bathroom. She testified that she and Layton did not discuss how she would pay for those expenses.

Layton's testimony regarding O'Dea’s inheritance focused largely on the taxes paid on the investment earnings from the accounts. According to Layton, he paid all the taxes on those earnings until O'Dea eventually began assisting in "later years." Layton testified that the annual taxes he paid on the earnings ranged from $6,000-8,000.

3. Post-trial motions for sale of the marital home

In the month after trial O'Dea renewed her motion to permit the sale of the home and requested expedited consideration of that motion. She explained that since she had recently moved out of the home, neither she nor Layton was living there any longer and a sale would allow them to pay off their marital debts. O'Dea stated that their realtor had suggested a proposed listing price of $465,000.

The court granted O'Dea "full authority" to sell the home the day after she filed the motion without waiting for a response from Layton. Layton then moved for reconsideration, arguing that the marital home was not "in a condition to ensure it brings full market price." He proposed waiting until the spring of 2021 to sell the home and renting out the home until then, arguing that would allow time to fix up the property which would then "increas[e] the potential to receive full market value."

The court held a hearing on Layton's motion at which it reiterated its decision to authorize the sale of the marital home, explaining that the home "need[ed] to be sold now" and there was a "perfect selling opportunity." The court reasoned: "Interest rates are down near zero. It makes no sense to wait until the spring to sell the house when [there is] a perfect selling opportunity now." The court added:

It seems to benefit everybody to get that house sold now, get as much money as you can — if it's being put on the market by the real estate agent for more than what it's being assessed at, you've got a better opportunity to sell that house now than if you wait until the spring to make the repairs.

The court also stated that it did not want to "keep[ ] the [parties] financially entangled for the next six months" because they each "need[ed] closure." The court concluded, "[T]he sooner we get ... marital debt paid off ... it's just better for everybody."

Soon afterward, O'Dea agreed to sell the home to a buyer for $430,000 minus $10,500 in closing costs. Layton moved to suspend that sale, objecting to what he alleged were O'Dea’s "unilateral efforts to sell the property." The court denied Layton's motion,...

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