Rohde v. Rohde, S-17876

CourtSupreme Court of Alaska (US)
Writing for the CourtMAASSEN, Justice.
PartiesTROY A. ROHDE, Appellant, v. ANNETTE L. ROHDE, Appellee.
Decision Date15 April 2022
Docket NumberS-17876

TROY A. ROHDE, Appellant,
v.

ANNETTE L. ROHDE, Appellee.

No. S-17876

Supreme Court of Alaska

April 15, 2022


Appeal from the Superior Court of the State of Alaska, No. 3 AN-19-07529 CI Third Judicial District, Anchorage, Herman G. Walker, Jr., Judge.

Troy A. Rohde, pro se, Anchorage, Appellant.

Robin A. Taylor, Law Office of Robin Taylor, Anchorage, for Appellee.

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

OPINION

MAASSEN, Justice.

I. INTRODUCTION

In a property division following divorce, the superior court determined that the marital estate should be divided 60/40 in the husband's favor because of his lower earning potential. But the court then considered the husband's sale of the marital home; it found there were remodeling expenses and financial dealings that were inadequately explained and contributed to a loss of marital equity, and it decided to offset that loss by dividing the wife's retirement savings plan 70/30 in her favor. And because the

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retirement savings plan was the most significant marital asset, this allocation of it resulted in a property division that highly favored the wife. The husband appeals, alleging errors in the property division, in the child support order, and at trial.

We conclude that the property division failed to follow the proper procedure for addressing the post-separation dissipation of marital assets: first valuing the dissipated asset at the time of separation and then crediting that amount to the responsible spouse in the property division. We also conclude that a figure for the amount of lost marital equity used in the property division was clearly erroneous. We therefore vacate the property division and remand for further consideration. In all other respects we affirm the superior court's judgment.

II. FACTS AND PROCEEDINGS

Troy and Annette Rohde married in 1994 and have three daughters, one of whom was still a minor at the time of trial. Annette worked as a physical therapist and Troy worked part-time in the construction industry. They separated in June 2018.

A. Division of Property

In December 2018 Troy asked Annette to quitclaim her interest in the marital home to him so that he could sell the house to an investor for $ 146, 000. Annette complied, but the deal fell through when the investor learned that the septic system needed to be replaced at an estimated cost of $35, 000.

In January 2019 Troy talked to his friend and sometime employer Yaroslav "Slavik" Lund about remodeling the home to prepare it for sale. According to Troy, Lund's business was "flip[ping] houses"; that is, he would buy a dilapidated property and then "basically strip[] the house down to its skeleton and rebuild[] it." Troy gave Lund a power of attorney to manage the remodel and arrange for the home's sale. But the two men had no written contract or explicit agreement about specific renovations other than, as Troy described it, to "put as much money as we need to into it to get as

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much money as we can out of it." At trial Troy confirmed that he left decisions on the house up to Lund's discretion. The remodel was financed by a man named Thomas Tyler; Troy gave no details of that arrangement.

Troy and Lund first agreed to a sale that would have netted only about $10, 000 to the marital estate. The settlement statement for that proposed deal shows a sale price of $364, 500, a first mortgage balance of $88, 040, a contractor's lien in Lund's name of $45, 000, and a second mortgage in Tyler's name of $186, 339. When Annette learned of this arrangement she demanded documentation justifying such a small recovery of equity.

Lund provided a list of expenses totaling $ 137, 984, a spreadsheet showing that $175, 000 was borrowed to finance the project, and a proposal that Lund would be paid $45, 000 to manage the project. Another spreadsheet listing expenses on the project showed that Lund was paid $2, 000 a month for five months as an "[a]dministration [s]alary" and was entitled to "25% for [p]rofit and [o]verhead" - a total of $40, 873 in addition to the $10, 000 in salary payments. Lund sent Annette a number of receipts showing payments to subcontractors and suppliers, but she protested that they did not add up to the amounts of the liens against the property and that some appeared to be for non-project-related expenses.

The house eventually sold for $364, 500, but Lund's payout was reduced to $36, 500 and Tyler's to $175, 000. The marital estate ultimately received $35, 000.

When the superior court divided the marital estate, it considered the so-called "Merrill factors" codified in AS 25.24.160(a)(4)[1] and concluded that, because Annette's future earning potential was higher than Troy's, the marital estate should be

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divided 60/40 in Troy's favor. But the superior court was not satisfied with Troy's explanation of why the marital estate received only $35, 000 from the sale of the home. Therefore, "to account for [Troy]'s handling of the house sale," the court distributed Annette's 401 (k)-the marriage's only other sizable asset-70/30 in favor of Annette.

Troy moved for reconsideration. The superior court denied his request, finding explicitly that Troy had "dissipated the marital home and deprived the marital estate of that asset" and that it was equitable to offset the dissipation by a 70/30 allocation of the 401(k).

B. Income Imputation

The superior court granted sole legal and physical custody of the couple's minor child to Annette. For purposes of calculating child support, the superior court imputed income to Troy, whose annual earnings as a self-employed construction worker had recently hovered between $30, 000 and $50, 000. The court found that he had been underemployed during the marriage and remained voluntarily underemployed following the parties' separation. The court imputed income to Troy at a "yearly gross salary of $66, 248" based on an hourly wage of $31.85 - the average wage for a carpenter as shown by data from the Alaska Department of Labor.

Troy appeals the superior court's decisions on property distribution and child support. He also contends that several of the court's procedural and evidentiary rulings at trial deprived him of due process.

III. STANDARD OF REVIEW

We review the superior court's distribution of marital assets for abuse of discretion.[2] The court abuses its discretion if it "considers improper factors, fails to

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consider statutorily mandated factors, or gives too much weight to some factors."[3] We review the superior court's findings of fact for clear error.[4] "A finding is clearly erroneous if we are 'left with a definite and firm conviction that the trial court has made a mistake.' "[5] We review the superior court's decision to impute income for abuse of discretion[6] and the amount of income imputed for clear error.[7]

As for the "separate question... whether the trial court applied the correct legal standard in the exercise of its broad discretion... [w]ith respect to legal analysis employed at the trial court level, review is based upon our independent judgment."[8]

We review alleged due process violations using our independent judgment and adopt "the rule of law that is most persuasive in light of precedent, reason, and policy."[9]

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IV. DISCUSSION

A. The Property Distribution Must Be Reconsidered On Remand.

1. There was error in the superior court's dissipation analysis.

Troy challenges the superior court's distribution of marital property on the grounds that the superior court erred in using "different distribution rates" for different parts of the marital estate and in its valuation of the equity in the marital home. Applying the Merrill factors, [10] the superior court divided all marital assets except the 401(k) in Troy's favor, 60/40. The 401(k)-the marriage's largest asset at $301, 244 -the court divided 70/30 in favor of Annette. The court justified this different division by reference to Troy's "handling of the house sale," which it described as "suspect." But because the value of the 401(k) dwarfs the value of the estate's other assets, the result of the division was an asset split that is essentially 70/30 in favor of Annette, a result much different from the one the court reached by analyzing the Merrill factors.[11]

The superior court initially declined to make a "specific finding of dissipation" because "[n]either party argued" the issue. Troy asked the court to "clarify" this aspect of the property division, pointing out the difference between the Merrill factor analysis and the case's actual result. He also contended that the court "ha[d] not made any findings or reached any conclusions that support such a distribution of the marital assets."

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The court's follow-up order clarified its reasoning. This time the court made an explicit "finding that [Troy] dissipated a marital asset, the marital home." The court subtracted the $88, 000 mortgage from the home's $364, 000 sale price to conclude that there was "approximately $276, 000 in equity that should have been part of the marital estate." And because the marital estate received only $35, 000 from the sale, the court concluded that the equity must have been dissipated due to Troy's mismanagement and poorly explained dealings with Lund and Tyler. We conclude that it was error to follow this analytical process instead of our precedent on the recapture of dissipated value; we also conclude that it was clear error to use the house's final sale price - following an extensive remodel - as its value at separation.

a. The proper remedy for dissipation is recapture.

"[T]he question of wasted marital assets arises when a marital asset is lost or diminished after separation but before the time of trial."[12] "The party [who] controls a marital asset during separation may have to compensate the other party...

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