Wagner v. Wagner , 386 P.3d 1249 ( 2017 )

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THE SUPREME COURT OF THE STATE OF ALASKA
RICHARD L. WAGNER, )
) Supreme Court No. S-15989
Appellant, )
) Superior Court No. 4FA-10-01286 CI
v. )
) OPINION
FELICIA A. WAGNER, )
) No. 7145 – January 13, 2017
Appellee. )
)
Appeal from the Superior Court of the State of Alaska,
Fourth Judicial District, Fairbanks, Michael P. McConahy,
Judge.
Appearances: Richard L. Wagner, pro se, Fairbanks,
Appellant. Felicia A. Wagner, pro se, Portland, Oregon,
Appellee.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
and Carney, Justices.
MAASSEN, Justice.
I. INTRODUCTION
A woman’s premarital student loan was consolidated with other student
loans incurred during marriage. Her husband argued at the couple’s divorce trial that he
should not be responsible for the consolidated loans because they contained the
premarital debt and because his wife had wasted loan proceeds by gambling. The
superior court, however, held the parties equally responsible for the loans, finding that
it was impossible to extricate the premarital loan from the consolidated loans and that the
amounts were all marital debt primarily used to support the family while the wife
attended school. It further found that the husband had failed to prove a waste of marital
assets.
The husband argues on appeal that these findings were erroneous and that
the superior court was biased against him. Concluding that the court’s findings are
supported by the evidence and that there is no merit to the bias allegation, we affirm the
superior court’s judgment.
II. FACTS AND PROCEEDINGS
Felicia and Richard Wagner married in 1993, separated in 2009, and filed
for divorce in February 2010. In June 2011 the superior court determined that Richard’s
failure to appear at the couple’s divorce trial was voluntary and unexcused, and
proceeded without him.1 Richard appealed; we reversed and remanded for the superior
court to determine whether Richard could show good cause for his failure to appear.2 On
remand the superior court found that Richard’s reasons for missing trial were “feeble”
and “would not be good cause to excuse a represented party,” but because he was self-
represented it granted him a new trial.
At the second trial Richard was represented by counsel and Felicia was not.
The issues were limited. Richard argued that he should not be liable for Felicia’s student
loans, including one that was premarital and several that were obtained during the
marriage. Although these loans were consolidated during the marriage, he argued that
he should not be liable for the premarital portion and that Felicia had wasted much of the
1
Wagner v. Wagner, 299 P.3d 170, 171-72 (Alaska 2013).
2
Id. at 176.
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marital loan proceeds by her online gambling. According to Felicia, however, the loan
proceeds were used primarily to pay the family’s rent while they lived in student
housing.
The superior court concluded that Felicia’s consolidated student loans were
entirely marital debt. Lacking evidence about how to “track, back out, or otherwise
quantify the value” of the premarital portion, the court was unable to determine “what,
if any, of the total loan amount in the context of the subsequent refinancing during the
course of the marriage[] is non-marital.”
The superior court also found that Richard had failed to prove that Felicia
wasted marital assets. The court credited Felicia’s testimony that the student loans were
used for marital purposes, including her tuition and the couple’s rent, noting that the
parties did not otherwise earn enough during the marriage to support themselves. The
court held each party responsible for half the loans’ principal and half their interest.
Richard appeals the superior court’s decision not to subtract the premarital
loan from the consolidated loans and challenges the court’s conclusion that Felicia did
not waste marital assets by gambling. He also raises for the first time an argument that
the superior court was biased against him.
III. STANDARDS OF REVIEW
A trial court’s “equitable division of marital assets involves three steps:
(1) determining what property is available for distribution, (2) finding the value of the
property, and (3) dividing the property equitably.”3 We review the first and second
steps, which involve factual findings “as to the parties’ intent, actions, and contributions
3
Limeres v. Limeres, 320 P.3d 291, 296 (Alaska 2014) (citing Beals v. Beals,
303 P.3d 453, 458 (Alaska 2013)).
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to the marital estate” and the “valuation of property,” for clear error.4 We review the
third step, “the equitable allocation of property,” for abuse of discretion.5 A property
division is an abuse of discretion if it is clearly unjust; it will also be set aside if it is
based on a clearly erroneous factual finding or mistake of law.6
“We review de novo the question of whether a judge appears biased, which
is assessed under an objective standard.”7
IV. DISCUSSION
A. The Superior Court Did Not Clearly Err When It Found That Felicia’s
Premarital Loan Was Transmuted Into Marital Debt Through Loan
Consolidation.
Richard first challenges the superior court’s decision that responsibility for
Felicia’s student loans should be shared equally. Felicia obtained student loans from a
number of sources; these included a 1992 premarital loan with a principal amount of
4
Id. (citing Beals, 303 P.3d at 459). The first step may also involve legal
questions with regard to the characterization of property as marital or separate, id., but
no such questions are raised in this case.
5
Id. (citing Beals, 303 P.3d at 459).
6
Jones v. Jones, 942 P.2d 1133, 1136 (Alaska 1997) (first citing McDaniel
v. McDaniel, 829 P.2d 303, 305 (Alaska 1992); then citing Malone v. Malone, 587 P.2d
1167, 1167 (Alaska 1978) (per curiam); and then citing Wanberg v. Wanberg, 664 P.2d
568, 570 (Alaska 1983)).
7
Sagers v. Sackinger, 318 P.3d 860, 863 (Alaska 2014).
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$1,313,8 federal loans during the marriage totaling $27,272,9 and a state loan during the
marriage of $29,610.10 In July 2004 she consolidated several of these loans, including
the premarital loan, into two new loans.11 Richard argues that the superior court erred
when it held him liable for the part of the consolidated loans he says is attributable to
Felicia’s premarital debt.
Generally, a spouse is not liable for the other spouse’s premarital debts or
liabilities.12 “Whether an initially nonmarital debt transmutes into a marital liability is
a question of intent and acceptance.”13 But “[d]ebt incurred during marriage is
presumptively marital; the party claiming otherwise must show that the parties intended
8
In March 1993, when repayment of this loan was scheduled to begin,
Felicia owed $1,480.16 including interest; future interest was at eight percent. The 2004
loan consolidation paid off $928.42, which was apparently all that remained of the debt.
9
As of February 2011, $46,738 was owed on the consolidated federal loans.
10
By March 2009 the estimated outstanding principal and interest of the
Alaska Commission on Postsecondary Education loan was $46,341.29. By February
2011 the estimate had dropped to $41,642, presumably because Felicia’s wages and
Permanent Fund Dividend were being garnished to pay the loan.
11
Debt consolidation pays off the original loans and creates a new loan based
on the balance of the original loans. See Debt Consolidation, BLACK’S LAW DICTIONARY
(10th ed. 2014); Doug Rendleman & Scott Weingart, Collection of Student Loans: A
Critical Examination, 20 WASH. & LEE J. CIV. RTS. & SOC. JUST. 215, 259-61 (2014),
http://scholarlycommons.law.wlu.edu/cgi/viewcontact.cgi?article=1367&context=crsj.
12
AS 25.15.050.
13
Ginn-Williams v. Williams, 143 P.3d 949, 956 (Alaska 2006), superseded
in part on other grounds by statute, Gulf Opportunity Zone Act of 2005, Pub. L. No.
109-135, § 404(a), 119 Stat. 2577, 2633-34 (codified as amended at 26 U.S.C. § 152(e)),
as recognized in Dodge v. Sturdevant, 335 P.3d 510, 511 n.5 (Alaska 2014).
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it to be separate.”14 In Richter v. Richter, for example, a couple borrowed money from
the husband’s mother to pay off the wife’s student loans; upon divorce the husband
argued that his wife should bear sole responsibility for repaying the debt to his mother.15
We rejected the husband’s argument because “[t]he loan from [the husband’s mother]
was acquired during the parties’ marriage and therefore became presumptively marital
debt.”16 The husband did not prove that the couple intended the loan to remain separate;
he was thus unable to overcome the presumption that the loan was a marital debt.17
The consolidated loans in this case, too, were incurred during the marriage
and were “presumptively marital debt.”18 It was therefore Richard’s burden to prove that
the couple intended to keep separate the amount of the consolidated loans, if any, that
could be attributed to the premarital debt. But apart from generally denying that he knew
anything about Felicia’s student loans — an assertion the superior court found not
credible — Richard did not present evidence that the couple intended part of the
consolidated loans to remain separate debt of Felicia’s. Nor did he provide an
evidentiary basis on which the court could calculate what that separate amount might be.
The superior court did not clearly err when it found that the full amount of the
consolidated loans was marital debt.
14
Richter v. Richter, 330 P.3d 934, 938 (Alaska 2014).
15
Id. at 938-40.
16
Id. at 939.
17
Id. at 939-40.
18
See id. at 939.
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B. The Superior Court Did Not Abuse Its Discretion When It Equally
Allocated Responsibility For The Marital Debt.
Richard next challenges the superior court’s conclusion that he failed to
prove that Felicia wasted marital assets on gambling. Equal division of marital assets
and liabilities is presumptively correct,19 but the superior court may vary this formula in
order to reach an equitable distribution; a party’s waste of marital assets may be one
reason to vary.20 Although marital waste typically occurs post-separation,21 we
concluded in Jones v. Jones that gambling losses incurred during marriage could be
treated as waste if “there has been unreasonable depletion of marital assets.”22 But proof
of gambling alone does not establish waste.23 We have cautioned judges against
applying their own personal “value judgments concerning the nature of discretionary
spending during a marriage”;24 “[w]hat seems wasteful to one party may be a treasured
19
Limeres v. Limeres, 320 P.3d 291, 296 (Alaska 2014) (citing McLaren v.
McLaren, 268 P.3d 323, 332 (Alaska 2012)).
20
See Merrill v. Merrill, 368 P.2d 546, 547 n.4 (Alaska 1962) (enumerating
factors for the trial court to consider); see also AS 25.24.160(a)(2)(E); Jones v. Jones,
942 P.2d 1133, 1139 (Alaska 1997).
21
Jones, 942 P.2d at 1139.
22
Id.; AS 25.24.160(a)(2)(E). “Unreasonable depletion” typically requires a
showing that a party used marital property with an intent to deprive the other spouse of
his or her proportionate share of the property during a time when the marriage was
breaking down. Jones, 942 P.2d at 1140.
23
Jones, 942 P.2d at 1139-40 & n.7.
24
Id. at 1139.
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source of solace to another, and it should generally not be for a judge to say which is
which.”25
Richard bore the burden of proving that Felicia wasted marital assets by
gambling.26 He testified that he was unaware of the amount of the loans, that Felicia
used the proceeds to fund her gambling addiction, and that he was unaware of the extent
of her gambling losses until he was preparing for trial. Felicia countered that Richard
was “spending the rent money out of the joint account on gambling,” but she also
testified that the student loans were used to pay rent while the couple lived in student
housing, “and [Richard] was well aware of that.”
The superior court’s written findings considered both Richard’s and
Felicia’s testimony about the marital loans and concluded that Felicia’s testimony about
how the money was used was more credible, especially in light of the parties’ tax returns,
low income, receipt of public assistance, and use of student housing during part of the
marriage. Factual and credibility assessments are the responsibility of the trial court,27
and we see no clear error in the superior court’s findings. The superior court did not
abuse its discretion when, on the basis of those findings, it allocated the marital student
loan debt equally.
25
Id.
26
Brandal v. Shangin, 36 P.3d 1188, 1194 (Alaska 2001) (“[T]he party
seeking deviation from the [equal division of marital property] bears the burden of
showing that the property division is clearly unjust.” (citing Julsen v. Julsen, 741 P.2d
642, 645 (Alaska 1987))).
27
Lentine v. State, 282 P.3d 369, 375-76 (Alaska 2012) (quoting In re
Adoption of A.F.M., 15 P.3d 258, 262 (Alaska 2001)).
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C. The Superior Court Did Not Demonstrate Bias Against Richard.
Finally, Richard argues that the superior court demonstrated bias against
him when it “refused to allocate the premarital student loan debt to [Felicia], even though
neither party disputed this debt belonged to [her],” and when it failed to sua sponte
schedule an additional evidentiary hearing once it concluded “that this premarital student
loan debt was too difficult to calculate” on the existing record. But “judicial bias should
not be inferred merely from adverse rulings”;28 besides, we uphold the superior court’s
allocation decision. And the court was not required to give Richard another chance to
prove at a post-trial evidentiary hearing what he failed to prove at trial — even if Richard
had asked for such a chance, which he did not do.29
Our own review of the record “fails to reveal any unfairness in the conduct
of the [proceedings]” or any instances of bias.30 Richard’s arguments appear to be “little
more than evidence of [his] general dissatisfaction with the court’s rulings,”31 and we
conclude that they are without merit.
V. CONCLUSION
The judgment of the superior court is AFFIRMED.
28
Kinnan v. Sitka Counseling, 349 P.3d 153, 160 (Alaska 2015) (quoting
Khalsa v. Chose, 261 P.3d 367, 376 (Alaska 2011)).
29
Indeed, Richard’s counsel admitted in closing argument that “[w]e cannot
determine how much additional” debt in interest and penalties might be associated with
the premarital student loan.
30
Ward v. Urling, 167 P.3d 48, 58 (Alaska 2007) (alteration in original)
(quoting Long v. Long, 816 P.2d 145, 156 (Alaska 1991)).
31
Id. (citing Lacher v. Lacher, 993 P.2d 413, 422 (Alaska 1999)).
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