Morris v. Morris
| Decision Date | 25 March 2022 |
| Docket Number | Supreme Court No. S-17948 |
| Citation | 506 P.3d 8 |
| Parties | John B. MORRIS, Appellant, v. Andrea L. MORRIS, Appellee. |
| Court | Alaska Supreme Court |
Elizabeth H. Leduc, Gilman & Pevehouse, Kenai, for Appellant.
Notice of nonparticipation filed by Lannette R. Nickens, Nickens Law & Mediation, Kenai, for Appellee.
Before: Winfree, Chief Justice, Maassen, Carney, Borghesan, and Henderson Justices.
A man appeals the division of marital property in his divorce. He argues that the superior court made five errors: crediting the opposing expert's valuation of certain marital property; refusing to credit him for post-separation mortgage and utility payments; treating a particular marital debt improperly; finding that a gift of marital property became his ex-wife's separate property; and declining to offset the property awarded to his ex-wife with money she received from their child's insurance benefit. We affirm the court's order except for its treatment of the marital debt and its conclusion that the man's gift of marital property was not returned to the marital estate by his ex-wife.
John and Andrea Morris married in 2001 and permanently separated in September 2017. Their child was born in 2003.
During the marriage John worked various jobs, including heavy equipment operation and goldsmithing. Andrea primarily worked as a hairdresser until she became disabled by kidney failure
in 2008. Andrea then received Social Security Disability Insurance (SSDI) for herself as well as about $500 a month in Children's Insurance Benefits (CIB) for their child. Andrea was required to spend the CIB funds on the child and submit an annual accounting to the Social Security Administration. Andrea received the CIB funds until November 2018 when John replaced her as the payee.
Throughout the marriage John and Andrea kept separate bank accounts; at trial they disputed who paid for which marital expenses and how much. John testified that he paid for most of the household expenses — including utilities, cars, insurance, and the portion of their mortgage payments not covered by rental income — while Andrea's disability benefit paid for groceries and various items for their child. Andrea, however, testified she paid for her gas, the shared phone bill, most of the food and clothing, and her student loans and medical bills.
In 2007 John and Andrea used money from the sale of his premarital home to purchase their marital home in Kenai; the marital home had a detached garage with an apartment. They rented out the house at $1,400 a month to pay most of the mortgage and lived in the apartment. The rest of the mortgage was paid with John's wages.
Andrea and their child remained in the marital home from September 2017 until Andrea moved to New Mexico in December. John continued to make the mortgage payments. After Andrea left, John moved back into the apartment with the child and rented the main house to his son for a reduced rent of $1,200 per month.
John and Andrea also purchased an investment property in Seldovia in 2017 for $39,500. Shortly after they separated, John sold the property at a loss.
John filed for divorce a month after he and Andrea separated. They reached an agreement on child custody but proceeded to trial to determine the division of their marital estate. The value and distribution of their marital property was contested during a three-day trial.
John testified that they had tried to sell their home seven to nine years earlier for $309,000 and had not had any inquiries. He testified that the house needed to be repainted, it had mold issues, and the roof, septic tank, and deck needed to be replaced.
Each called an expert witness to testify about the home's value. Andrea called John Cristiano, a residential appraiser who had done a property inspection and a sales comparison. Cristiano testified that there was a shortage of houses for sale in the area, the home was in average condition, and the condition of the septic system and well was typical for the area. He appraised the property by comparing it with similar homes in the area, adjusting for factors such as location, quality of construction, and condition. Based on this comparison, he valued the home at $310,000. He testified that his valuation took into consideration the age of the home and "deferred maintenance and repairs." But he acknowledged that he did not notice every issue with the home, and he disagreed with John's expert's valuation because it did not take into account the apartment above the garage.
John called Marti Pepper, a realtor, who valued the property at $258,000. While she acknowledged that Cristiano had a "more sophisticated" system for comparing properties, Pepper testified that Cristiano missed "red flags" such as the apparent condition of the roof, attic, and deck. She testified that one of her comparison properties had an above-garage apartment — albeit unfinished — and another had a bathroom and office in the garage.
John and Andrea also disagreed about how the court should treat jewelry that he had made and given to her while they were married. John testified that the raw materials for these pieces cost approximately $12,000 to $15,000, and that he had given the jewelry to Andrea as a gift. Andrea testified that when she moved to New Mexico, she "left all of his belongings ... and put them in the garage, and the jewelry was part of it, because I didn't want anything to do with him." Later she had acquaintances collect her belongings from the house; there is no evidence that she asked them to retrieve the jewelry. John testified that he never found the jewelry.
They also disagreed about how their child's CIB funds should be considered in the property division. Andrea testified that she was required to provide an annual accounting of her CIB spending to the Social Security Administration and had done so. She testified that she used the money for summer camp, entertainment, school, clothing, and a cell phone for the child, and eventually began putting the money in an account that their child had access to. Andrea testified that when she moved to New Mexico, she received approval to use the money to furnish a bedroom there for the child. John was later granted sole legal and primary physical custody, and Andrea agreed to make him the payee.
The superior court later issued its divorce decree and findings of fact and conclusions of law. The court valued the marital home at $310,000 and assigned the value to John. After noting that it "found both experts to be very credible," the court "ultimately found [Cristiano's] valuation to be ... more accurate." It found that he had "adequately accounted for the deterioration of parts of the home" and that his valuation reflected a shortage of single family homes on the market.
The superior court found that John and Andrea purchased the Seldovia property for $39,500. The purchase was financed by a $15,000 interest-free loan from their child's savings account and a $17,000 loan taken out by John's business and in his name. No mention was made of the source of the remaining $7,500. The court then found that John sold the property for $35,000 but received a net amount of $33,000. The court found that $15,000 was promptly repaid to the child's account, and that John kept the remaining $18,000 as cash "to stay afloat and pay other bills."
The superior court concluded that the $18,000 in proceeds were marital and assigned the value to John. The court also found that the $17,000 loan "should be considered marital debt." However, noting that John asked only that a "$4,500 loss be counted as a marital debt," the court then assigned one half of that debt to John and made no mention of the $17,000 marital debt in its final accounting.
The court found the jewelry John had given Andrea was separate property. It noted that "John's testimony clearly established" they were gifts, and noted that if Andrea had kept them, The court therefore held that it "will not treat the jewelry as marital property or assign value to it."
The superior court found that the SSDI and CIB benefits were "[o]ne of the most contested issues in [the] divorce." After finding that "parts of both parties’ testimony [were] credible," the court found that the funds were "justifiably spent on the various day to day expenses for the family." It therefore did not credit Andrea with the funds she had received.
Finally, the superior court rejected Andrea's request that the court consider John's rental of the house to his son at a below-market rate. It reasoned that because Andrea had enjoyed the benefit of living in the home rent-free from the time the couple separated until she left the state, "an award to Andrea alone would be unequitable." The court also declined to credit John for his post-contribution mortgage and utilities payments.
John filed a motion to reconsider. He asked the court to reconsider its decision to assign him the house rather than to order its sale; its denial of a credit for his post-separation mortgage payments; its analysis of the Seldovia property sale; its ruling that the jewelry was not a marital asset; its treatment of the CIB payments; and its accounting of past-due child support. The court rejected most of the issues raised in the motion but adjusted John's equalization payment to Andrea to account for child support Andrea owed him.
John appeals the superior court's valuation of marital property; its decision not to credit him for post-separation mortgage and utility payments; its treatment of the Seldovia property debt; its finding that the jewelry he had given to Andrea became her separate property; and its decision not to offset the property awarded to Andrea with money she received from their child's CIB funds.1
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