Wanberg v. Wanberg

• Decision Date: 13 May 1983
• Docket Number: No. 6219,6219
• Citation: 664 P.2d 568
• Parties: Dianne WANBERG, Appellant, v. John WANBERG, Appellee.
• Court: Alaska Supreme Court

Page 568

664 P.2d 568

Dianne WANBERG, Appellant, v. John WANBERG, Appellee.

No. 6219.

Supreme Court of Alaska.

May 13, 1983.

William T. Ford, Anchorage, for appellant.

John S. Hellenthal, Anchorage, for appellee.

Before BURKE, C.J., and RABINOWITZ, MATTHEWS and COMPTON, JJ.

OPINION

RABINOWITZ, Justice.

This is an appeal of a property division entered by the superior court. The court awarded Dianne Wanberg property and rehabilitative alimony in the approximate total amount of $52,500, in the context of a marital estate valued at approximately $704,450. ¹ Dianne challenges the division as an abuse of the superior court's discretion.

The Wanbergs were married for five and one-half years. John Wanberg entered the marriage with substantial assets, consisting chiefly of various real property holdings. ² Dianne calculates John's net worth as $366,000 at the time of their marriage, ³ while John claims that the correct figure is $600,000. ⁴ It is undisputed that Dianne's net worth was $38,000 at the time of the parties' marriage, consisting of clothing, jewelry, and other personal property.

Statutory criteria governing the disposition of property in divorce actions are found in AS 09.55.210(6), which provides:

In a judgment in an action for divorce or action declaring a marriage void or at any time after judgment, the court may provide

(6) for the division between the parties of their property, whether joint or separate, acquired only during coverture, in the manner as may be just, and without regard to which of the parties is in fault; however, the court, in making the division, may invade the property of either spouse acquired before marriage when the balancing of the equities between the parties requires it ....

In this appeal, Dianne Wanberg challenges the failure of the superior court to include certain items of property in the base of properties it concluded were subject to distribution. Dianne contends that the superior court erroneously excluded property acquired after the marriage from the property base. She also claims that the bulk of John's pre-marital holdings should have been made subject to equitable division, because during the marriage these assets were treated by them as joint holdings. ⁵

A. Standard of Review

The standard of review applied by this court in property division cases is to determine whether the trial court's division was within the broad discretion granted by AS 09.55.210(6). We have held that a distribution made within the perimeters of AS 09.55.210(6) will not be disturbed unless it is clearly unjust. ⁶ There is a separate question to be asked by this court on review, however, and that is whether the trial court applied the correct legal standard in the exercise of its broad discretion. With respect to legal analysis employed at the trial court level, review is based upon our independent judgment. Walsh v. Emerick, 611 P.2d 28, 30 (Alaska 1980); Guin v. Ha, 591 P.2d 1281, 1284 n. 6 (Alaska 1979) ("[o]ur duty is to adopt the rule of law that is most persuasive in light of precedent, reason, and policy").

Equitable division of marital assets by the superior court involves a three-step procedure. First, the trial court must determine what specific property is available for distribution. Second, the court must find the value of this property. Third, it must decide how an allocation can be made most equitably. ⁷

The first stage of the process is in large part a legal determination, involving the interpretation of AS 09.55.210(6), and applying legal principles to the facts of the case. AS 09.55.210(6) places all property acquired during the marriage, "whether joint or separate," before the court for purposes of division. ⁸ Furthermore, the statute authorizes invasion of pre-marital holdings of either spouse "when the balancing of the equities between the parties requires it." We have held that the trial court has broad discretion with respect to invasion of pre-marital assets, and that decisions to invade will not be overturned absent a clear abuse of discretion. ⁹

In limited circumstances invasion of one spouse's property acquired before coverture may be required as a matter of law. ¹⁰ One such circumstance is where the parties, by their actions during marriage, demonstrate their intention to treat specific items of property as joint holdings, even though the properties were separately held by one or another spouse prior to coverture. Such intention is manifest when both spouses can be shown to have taken an active interest in the ongoing maintenance, management, and control of specific assets. ¹¹ Where such circumstances exist, basic fairness requires that property treated by the spouses as jointly held be available for equitable division under AS 09.55.210(6).

B. Property Subject to Division

We must first decide whether the superior court correctly determined which properties would be subject to equitable division, and which would not. We hold that the court erred in concluding that AS 09.55.210(6) authorized exclusion of four of the items of property from the base of marital property subject to distribution, because we conclude that the property was either a post-coverture acquisition within the meaning of AS 09.55.210(6), or was treated as a joint holding by the Wanbergs during their marriage.

1. Grandview Heights five-plex

John Wanberg owned the Grandview Heights property before marrying Dianne. In 1976, the Wanbergs negotiated a loan to build a five-plex on this property. John and Dianne collaborated in making design decisions on the five-plex, and together they made alterations in the rental units and the owner units. ¹² Construction was complete by November 1976, and the Wanbergs made the building their personal residence. In December 1976, the Wanbergs negotiated a permanent loan on the five-plex. Both spouses' names were on the deed of trust note. ¹³ During the time that the Wanbergs owned the five-plex, Dianne did janitorial work in the units and common areas, advertised vacancies, showed units entertained prospective tenants and collected overdue rents. ¹⁴

The trial court treated the Grandview property primarily as a pre-coverture asset not subject to equitable division, with the exception of appreciation attributable to the combined efforts of the parties. According to the court's findings, the Grandview lot had a net increase in value of $31,100 during the years of the Wanbergs' marriage, but that only $11,000 of this was a consequence of the erection of the five-plex on the property. ¹⁵ Apparently in recognition of the fact that the five-plex was a joint project of the Wanbergs, the court awarded Dianne $5,500 based upon her share of the "marital asset equity" in the Grandview property.

We hold that the entire equitable value of the Grandview property and five-plex should have been considered by the court in determining this portion of the division. ¹⁶ The Wanbergs consistently combined their efforts in improving and managing the property, and used the building as their joint personal residence for nearly two years. Although Dianne's name never appeared on the title to the Grandview lot, she signed jointly with John when a permanent $120,000 loan was taken against the property. Under these circumstances, we hold that it was an abuse of discretion for the trial court to shield the property from equitable distribution merely by affixing to the property the label of "pre-marital asset." There may well be reason for granting less than an even share in this property to Dianne, but we hold that such a determination must be made through the exercise of the trial court's equitable discretion, to be guided by the factors relevant to such determinations, and to be articulated in terms of those factors.

2. Gambell Street properties

John Wanberg owned two commercial buildings on Gambell Street, which the parties have designated Gambell 1 and Gambell 2. Gambell 1 had two commercial tenants, and also served as the Wanbergs' residence in the early months of their marriage, until November 1976. Gambell 2 also had two commercial tenants. During the years of 1975 and 1976, Dianne contributed to the general management of the two Gambell properties. She worked on the remodeling and redecorating of Gambell 1, entertained tenants, helped with general maintenance, collected rents, accounts payable, paid bills, kept records for the business, and prepared information for the Wanbergs' accountants. Through 1978, while the Wanbergs were not living in Gambell 1, Dianne continued to help with the management of the Gambell properties, collecting rents, and doing bookkeeping for the rental space. Late in 1977, the Gambell properties were placed on the market, and Dianne cleaned the properties in order to put them in saleable condition. In 1978, when other properties owned by the Wanbergs had been sold, Dianne persuaded John not to sell the Gambell properties. ¹⁷ In the same year, the Wanbergs moved back into Gambell 1, after making substantial improvements in the owner unit.

The trial court did not make findings regarding the value of Gambell 1, at the time of the Wanbergs' marriage, or at the time of their divorce, and did not calculate the property's overall increase in value during the marriage. Instead, the court found the property gained $25,000 in value "as a result of the parties [sic] efforts during marriage." Any appreciation in excess of this figure the court ascribed to inflation.

Similarly, the superior court did not make findings with respect to the value of Gambell 2 before or after the Wanbergs' marriage, but concluded that the indeterminate increase in the property's worth was "attributable predominantly and almost solely to the phenomenon [of] inflation." ¹⁸

We conclude that, at least with respect to the trial court's treatment of Gambell 1, we must remand for redetermination. As with the Grandview Heights property, Dianne played an important role in...