Opinion
Supreme Court No. S-11231.
June 22, 2005.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Michael L. Wolverton, Judge. Superior Court No. 3AN-91-05375 Civil.
Michael W. Flanigan, Walther Flanigan, Anchorage, for Appellant.
Patrick J. McKay, Law Offices of Patrick J. McKay, Anchorage, for Appellee Crawford.
Before: Bryner, Chief Justice, Matthews, Eastaugh, Fabe, and Carpeneti, Justices.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
This case is before the court for the third time. In Williams I, we held that Camille Williams (formerly McVey) was entitled to Civil Rule 60(b)(6) relief because she and her ex-husband, William McVey, made a mutual mistake when they entered into their property settlement agreement on August 12, 1992. Williams I required the superior court to award Camille "one-half of the value of the marital portion of William's civil service pension — valued as of the date the parties entered into the property settlement agreement, August 12, 1992." In Williams II we vacated the superior court's award because it turned on information, William's actual date of death, that was unknown on the settlement date. On the last remand, the superior court valued Camille's share at $8,801.50, plus interest, and found that William's estate was entitled to attorney's fees as the prevailing party under Civil Rule 82. Camille appeals. We hold the superior court properly complied with our mandate by valuing the pension based solely on information available to the parties on the settlement date, including how William's health affected his life expectancy; and by not awarding Camille some portion of William's life insurance. However, we reverse the prevailing-party determination.
Williams v. Crawford, 982 P.2d 250, 254-56 (Alaska 1999).
Id. at 256.
Williams v. Crawford, 47 P.3d 1077 (Alaska 2002).
II. FACTS AND PROCEEDINGS
William and Camille divorced in April 1992. Their property settlement agreement, which was incorporated into the divorce decree, provided that Camille would receive a share of William's civil service pension in the form of survivorship benefits. But neither party knew that under federal regulations Camille could not receive William's survivorship benefits if she remarried before age fifty-five. Camille did remarry before age fifty-five; in fact, she had already remarried when she entered into the property settlement agreement on August 12, 1992. When Camille discovered the mistake, she moved for post-judgment relief under Civil Rule 60(b)(6), seeking to be named the beneficiary of William's life insurance policies. The superior court granted Camille's motion, but William died unexpectedly in June 1995 before complying with the order.
Id. at 1078.
Id.
Id.
Id.
Id.
William's estate then moved for relief from the order. The superior court granted the motion, concluding that federal law precluded the court from changing William's beneficiary designation.
During a series of further superior court proceedings to determine what, if anything, Camille should get in lieu of survivorship benefits, the parties disputed the meaning of the pension provision in the settlement agreement. Camille argued that William had agreed to provide her with a guaranteed monthly annuity, and asked that the estate pay for the cost of buying an equivalent annuity. Rejecting her argument, the superior court found that Camille bargained for survivorship payments, which, had she not remarried, she would have received upon William's death up until her own death. Using standard mortality tables to calculate the parties' life expectancies, the court determined the value of the survivorship benefits as of the settlement date, August 12, 1992. The court rejected Camille's argument that William would not have lived as long as the table predicted because of his alcoholism:
Williams I, 982 P.2d at 252.
Id.
Id. at 252-53.
The illness from which Mr. McVey was suffering on August 12, 1992 did not cause, although it appears to have contributed to his accidental death on June 28, 1995. On August 12, 1992, Mr. McVey's illness was not irreversible. Had Mr. McVey then stopped drinking, it is not possible to predict whether he would have lived for a period longer or shorter than the time predicted in the Standard Mortality Tables relied upon by [certified public accountant Ronald] Greisen. Accordingly, I reject the assertion by [Camille] that Mr. Greisen's testimony should be disregarded because he relied on an incorrect estimate of the life expectancy of Mr. McVey.
Furthermore, even though the court valued the benefits, it denied any recovery to Camille because it lacked jurisdiction to enforce the settlement agreement and she had not asked for Civil Rule 60(b) relief. Camille appealed.
Id. at 253.
Id.
We held that Camille was entitled to relief under Rule 60(b)(6) and that the survivorship benefits provision was the parties' means of dividing William's pension. We remanded the case for valuation of "one-half of the value of the marital portion of William's civil service pension — valued as of the date the parties entered into the property settlement agreement, August 12, 1992."
Id. at 256.
Id.
Id.
On remand, the superior court adopted the estate's method for valuing William's pension. The court totaled the pension benefits William received as of his death, applied the coverture fraction to determine the marital portion of the pension, and awarded Camille half of the resulting figure. Camille petitioned for review, arguing that it was error for the lower court to value the pension benefit based on the actual date of William's death. We agreed that the pension's value should be based on William's life expectancy as of August 12, 1992:
Williams II, 47 P.3d at 1079.
Id.
Id. at 1079.
On remand, the superior court should determine the actuarial value of William's pension on August 12, 1992 by multiplying William's life expectancy on that date by the expected annual pension benefit, and by discounting to present value. In calculating that value and determining William's life expectancy as of August 12, 1992, however, the superior court may consider evidence relevant to the state of William's health to the extent it bears on his life expectancy and to the extent it was known on August 12, 1992.
Id. at 1080.
On remand, the superior court reconsidered William's life expectancy as of August 12, 1992. The court stated that it had "considered all of the evidence presented" at hearings in 1996, 1997, 1999, and 2003. This would include information the parties learned about only after the August settlement date. But only referring to facts known before the settlement date, the court found that his life expectancy did not extend beyond October 1995 because his health would continue to decline due to his alcoholism:
Mr. McVey was suffering from substantial liver damage, as well as active, chronic alcoholism on August 12, 1992. . . . The Court does not find it more likely than not that Mr. McVey would suddenly quit drinking . . . when there is evidence on the record that Mr. McVey failed at least three (3) in-patient alcohol treatment programs, and further evidence that Dr. Morgan told Mr. McVey in October, 1990 that he would only live for five years (at best) if he did not stop drinking. Despite the fact that he had lost his pilot's license and had suffered the loss of his marriage due to alcohol, on July 30, 1992 Mr. McVey reported to Dr. Aarons that he was drinking a quart of hard liquor a day.
The court based its calculation of the plan's value on William's expected retirement date — November 1994 — because as of August 12, 1992, the parties had not anticipated that his poor health would force him to retire seven months early.
The court awarded Camille $8,801.50, plus interest of 10.5 percent per annum until paid. The court valued the pension as the amount of William's contributions, or $58,567, which was also the amount that William or his estate had been paid, because William would not have received more in payments than what he contributed if he had retired in November 1994 and died in October 1995. One-half the marital portion equaled 17.9 percent of $58,567, or $10,483.49. The court then discounted this for the 2.3 years between the settlement agreement and William's expected retirement, using a discount rate of 7.9 percent, to reach $8,801.50. The court also held the estate was entitled to attorney's fees and costs as the prevailing party under Rule 82. Camille appeals.
129 months of marriage divided by 360 months of qualified service and then multiplied by one-half.
III. STANDARD OF REVIEW
Whether a lower court on remand has correctly applied this court's mandate is a question of law reviewed de novo. Similarly, "[t]he applicability of estoppel principles to a particular set of facts is a legal question over which we exercise independent review." On questions of law, this court adopts "the rule of law most persuasive in light of precedent, reason, and policy" without deferring to the lower court's decision.
Williams II, 47 P.3d at 1079.
AVCP Reg'l Hous. Auth. v. R.A. Vranckaert Co., 47 P.3d 650, 654 (Alaska 2002) (quoting Powers v. United Servs. Auto Ass'n, 6 P.3d 294, 297 (Alaska 2000)).
Norcon, Inc. v. Kotowski, 971 P.2d 158, 164 n. 3 (Alaska 1999).
An abuse-of-discretion standard applies to reviewing determinations of prevailing-party status for Rule 82 fees. Abuse of discretion occurs when a decision is "arbitrary, capricious, manifestly unreasonable, or improperly motivated."
Buoy v. ERA Helicopters, Inc., 771 P.2d 439, 448 (Alaska 1989).
Hillman v. Nationwide Mut. Fire Ins. Co., 855 P.2d 1321, 1326-27 (Alaska 1993).
IV. DISCUSSION
A. The Superior Court Properly Complied with Our Mandate.
Camille argues that the superior court violated our mandate by considering post-August 12, 1992 evidence. She also argues that the first life expectancy finding became the law of the case and collateral estoppel precluded the court from reconsidering it. Lastly, she asserts that she should have been awarded a portion of William's life insurance because allowing his "self-destructive activities" to reduce her benefits would be inequitable. We hold that the superior court properly rejected Camille's arguments in compliance with our mandate.
Because Camille's view is that the superior court has twice failed to follow our mandate, she wants this court to either value her share of William's pension or remand to a different judge. Because we conclude that the court complied with our mandate, we do not reach this argument.
1. The superior court relied on evidence known as of August 12, 1992.
The parties agree that the remand instructions in Williams II required the lower court to rely solely on information known as of August 12, 1992, in determining William's life expectancy. However, they dispute whether the superior court considered only such evidence.
47 P.3d at 1080 ("[T]he superior court may consider evidence relevant to the state of William's heath to the extent it bears on his life expectancy and to the extent it was known on August 12, 1992.").
The superior court relied only on evidence known as of August 12, 1992. Even though the court did not exclude from consideration evidence known after August 12, 1992, the court properly understood that our remand instructions required it to determine the actuarial value of William's pension on August 12, 1992. Furthermore, the specific facts the court relied on to conclude that William probably would not stop drinking and would die in October 1995 were facts known as of August 12, 1992:
Mr. McVey was suffering from substantial liver damage, as well as active, chronic alcoholism on August 12, 1992. . . . The Court does not find it more likely than not that Mr. McVey would suddenly quit drinking . . . when there is evidence on the record that Mr. McVey failed at least three (3) in-patient alcohol treatment programs, and further evidence that Dr. Morgan told Mr. McVey in October, 1990 that he would only live for five years (at best) if he did not stop drinking. Despite the fact that he had lost his pilot's license and had suffered the loss of his marriage due to alcohol, on July 30, 1992 Mr. McVey reported to Dr. Aarons that he was drinking a quart of hard liquor a day.
Camille does not dispute that these facts were known on August 12, 1992. Furthermore, the court does not mention any facts that were known only after the cut-off date in support of its life expectancy finding.
Specifically, Camille objects to the evidence from two doctors, Dr. Rogers and Dr. Aarons. The estate submitted to the trial court eighteen pages of excerpts from Dr. Rogers's lengthy testimony in February 1997. Most of these pages included testimony on what was known about William's health before August 12, 1992. The testimony that discussed facts known after the cut-off date was not among any of the specific facts the court noted in making its life expectancy finding.
Additionally, the estate asked the trial court to read all of Dr. Aarons's December 13, 2002 deposition. Although some of the deposition questions referred to facts known only after August 12, 1992, they were based on the two visits Dr. Aarons had with William a few weeks before the August settlement date. Dr. Aarons testified about the condition of William's liver in early August 1992, and that William told the doctor on July 30, 1992, that he was drinking a quart or more of hard liquor a day. The other questions were directed at establishing that how William's disease actually progressed could have been predicted on August 12, 1992, but the superior court did not refer to these facts as the basis for the life expectancy finding.
Lastly, Camille points out that the court valued the pension as the amount that William and his estate actually received. However, the court chose this amount based on pre-August 12, 1992 facts, rather than on William's actual date of death — June 1995 — as it did in Williams II. The court valued the pension as the amount of William's contributions, or $58,567, because William would not have received more in payments than what he contributed if he had retired in November 1994 and died in October 1995.
Camille points out that the retirement finding is inconsistent with the life expectancy finding because it presumes that William would die in October 1995 yet remain healthy enough to work until November 1994. However, any inconsistency does not affect the outcome. Even if the superior court had anticipated that William would retire in April 1994, the amount he would have received in benefits if he had died in October 1995 would not be greater than his contributions of $58,567.
Therefore the superior court complied with our mandate because it relied on facts known as of August 12, 1992.
2. The superior court could reconsider the previous factual finding on William's life expectancy.
Before Camille's first appeal, the superior court found in 1997 that whether William's alcoholism would affect his life expectancy was unpredictable as of August 12, 1992, because the damage to his liver was reversible if William stopped drinking. Thus the court relied on the standard mortality tables in determining William's life expectancy, a determination that was not essential to the superior court's decision that ultimately denied any recovery to Camille on procedural grounds. On the second remand in 2003, the court accepted new testimony from Dr. Aarons and predicted that as of August 12, 1992, the parties would have expected William not to live beyond October 1995.
Camille argues that because we did not reverse the 1997 finding that William's life expectancy should be determined using the mortality tables, this finding became the law of the case. Therefore, she asserts, without "compelling new evidence to the contrary," which was lacking, the superior court could not revisit the finding in 2003. Alternatively, Camille argues that collateral estoppel or issue preclusion prevents the court from changing the finding.
Camille's arguments are without merit. Our failure to discuss a factual finding does not necessarily mean that the finding has been upheld or left undisturbed. In Williams I, we did not reach the parties' arguments on the adequacy of the life expectancy finding. Instead, we reversed the valuation of the survivorship benefits because we required that the superior court value one-half the marital portion of the civil service pension instead. The 1997 finding was based on the standard mortality tables, rather than on William's health. However, our remand instructions in Williams II explicitly permitted the superior court to "consider evidence relevant to the state of William's health to the extent it bears on his life expectancy." Therefore the superior court could reconsider the life expectancy finding.
Williams I, 982 P.2d at 256.
Williams II, 47 P.3d at 1080.
3. The superior court did not err in not awarding Camille some portion of William's life insurance.
Assuming William's life expectancy is shortened, Camille argues that she is entitled to a portion of his life insurance benefits as an assurance that she will get her equitable share of William's employment benefits. Camille contends the divorce court would not have permitted William's "self-destructive" activities and his "threat of continued drinking" to diminish her marital share.
Camille is correct to point out that some authority supports the idea that divorce agreements to share pension benefits should be read to include protection against the working spouse's untimely death. In Zito v. Zito, we stated that "[b]arring an express understanding to the contrary, an agreement for equitable division of retirement benefits earned during a marriage presumptively encompasses survivor benefits." Furthermore, in McDougall v. Lumpkin, we found an abuse of discretion where the lower court did not require an ex-husband to insure his pension through either life insurance or a surviving spouse annuity to guarantee that his ex-wife would receive her share of his retirement payments.
969 P.2d 1144, 1148 (Alaska 1998).
11 P.3d 990, 996 (Alaska 2000).
However, Zito and McDougall are inapplicable because those cases were not constrained by the unique combination of facts and circumstances presented in this case. In particular, providing Camille with proceeds from William's life insurance would be outside the scope of our prior mandate. We decided in Williams I that the parties did not intend to give Camille a guaranteed annuity upon William's death. The remand instructions directed the lower court to award Camille "one-half . . . the marital portion of William's civil service pension" as an equitable remedy because the parties' actual agreement could not be enforced. Thus the lower court did not err in denying Camille a portion of William's life insurance.
Id. at 253, 256.
B. It Was an Abuse of Discretion To Determine that the Estate Was the Prevailing Party for the Purpose of Rule 82 Fees.
Without explanation, the superior court held the estate was entitled to attorney's fees and costs as the prevailing party under Rule 82. Camille argues that she prevailed, regardless of the outcome of this appeal, because she recovered $8,801.50 plus interest. The estate counters that Camille did not prevail on the main issue because the lower court adopted the estate's view of William's life expectancy and valued Camille's interest at far less than the $90,017 plus interest that she sought.
Rule 82(a) states: "Except as otherwise provided by law or agreed to by the parties, the prevailing party in a civil case shall be awarded attorney's fees calculated under this rule."
A party is considered prevailing when it succeeded on "the main issue" or "the basic liability question and received an affirmative recovery based on its successful litigation of that question, which was substantial in amount." A party may lose some issues and still be the prevailing party. Furthermore, although a recovery does not guarantee prevailing-party status, this court has recognized only two exceptions to the general rule that receiving an affirmative recovery constitutes "prevailing" under Rule 82. Only when a recovery is de minimis or incidental to the main issue is a party properly denied prevailing-party status.
E.g., Alaska Ctr. for the Env't v. State, 940 P.2d 916, 921 (Alaska 1997); Adoption of V.M.C., 528 P.2d 788, 795 n. 14 (Alaska 1974); Buza v. Columbia Lumber Co., 395 P.2d 511, 514 (Alaska 1964).
Ashley v. Baker, 867 P.2d 792, 797 (Alaska 1994) (quoting Hillman, 855 P.2d at 1328).
E.g., Bowman v. Blair, 889 P.2d 1069, 1075 (Alaska 1995) (holding plaintiff who retained ownership of most of disputed items was prevailing party); Day v. Moore, 771 P.2d 436, 437 (Alaska 1989) (holding plaintiff who won one of three claims and defeated a counterclaim was prevailing party).
Hayer v. Nat'l Bank of Alaska, 619 P.2d 474, 476-77 (Alaska 1980).
An affirmative recovery means more than zero. See Hillman, 855 P.2d at 1327 n. 13 (distinguishing Buoy, 771 P.2d 439, because in Buoy prior settlements reduced the plaintiff's jury verdict to nothing).
See Hillman, 855 P.2d at 1327-28 (discussing the exceptions in Hutchins v. Schwartz, 724 P.2d 1194, 1204 (Alaska 1986) and Owen Jones Sons, Inc. v. C.R. Lewis Co., 497 P.2d 312, 313-14 (Alaska 1972)).
Hutchins, 724 P.2d at 1204.
Owen Jones, 497 P.2d at 313-14.
Whether Camille was erroneously denied prevailing-party status depends, first, on whether she succeeded on the "main issue" or "basic liability question." Looking at the litigation as a whole, as Camille argues, the "main issue" is whether she was entitled to relief for the mutual mistake made in the 1992 divorce settlement. However, the estate defines the "main issue" as the valuation of Camille's share of William's pension. Although the estate asserts that it has always been willing to pay an equitable amount, it does not contend that it made a Civil Rule 68 offer of judgment that would entitle it to a fee award.
We define "main issue" or "basic liability question" broadly, rather than focusing on narrow contested issues. In Hillman v. Nationwide Mutual Fire Insurance Co., we held that the plaintiffs prevailed because they had established in an earlier appeal that they were covered under the defendant's insurance policy, even though they lost on their bad-faith claims after remand. Similarly, in Ashley v. Baker, we reversed the prevailing-party determination because the plaintiff won on the main issue of establishing a deed's validity, even though the superior court adopted the defendant's interpretation of the deed.
Alaska Ctr. for the Env't, 940 P.2d at 921 (finding that intervenors prevailed, despite winning on only two minor issues out of eleven total issues, because they succeeded on the main issue of the validity of a settlement agreement); Ashley, 867 P.2d at 797; Hillman, 855 P.2d at 1327-28.
Here, the parties initially disputed whether Camille was entitled to any recovery, similar to the Hillman dispute over policy coverage and the Ashley dispute over a deed's validity. We found in favor of Camille in Williams I. On remand, the lower court accepted the estate's argument that William's shortened life expectancy reduced the value of the pension benefits. Although Camille has been awarded less than what she received before her appeal in Williams II, she remains the prevailing party regardless of how the pension is valued because she established that she was entitled to some recovery.
Williams I, 982 P.2d at 254.
Hillman, 855 P.2d at 1323, 1328.
Ashley, 867 P.2d at 797.
47 P.3d at 1079 (noting that Camille's share was valued at $10,700.19).
Additionally, neither the de minimis nor incidental recovery exceptions to prevailing-party status apply. A de minimis recovery occurs when the plaintiff does not receive a "significant damage award on the main issues." However, the court should not penalize plaintiffs who litigate in good faith but recover little: "Otherwise, a plaintiff with a modest recovery who must pay substantial attorney's fees could end up with a net loss." We believe that Camille's award of $8,801.50, plus interest, on a $90,017 claim is "a significant damage award on the main issues." Although she lost the dispute over the valuation method, Camille prevailed on the main issue of being entitled to equitable relief.
Blumenshine v. Baptiste, 869 P.2d 470, 474-75 (Alaska 1994) (holding plaintiff's recovery of $35,372 on a $700,000 claim was not de minimis); cf. Hutchins, 724 P.2d at 1204 (holding that plaintiff was not prevailing party because he was forty percent comparatively negligent and received less than $2,000 on his $275,000 claim).
Blumenshine, 869 P.2d at 474.
Id.
Lastly, Camille should not be denied prevailing-party status under the "incidental recovery" exception. In Owen Jones Sons, Inc. v. C.R. Lewis Co., the plaintiff lost on the main issue, failing to get progress payments refunded for the defendant's work on a partially constructed building that collapsed. The plaintiff recovered only on a minor accounting issue; the payments and the value of the materials the defendant salvaged exceeded the reasonable value of the defendant's services and materials. Camille, by contrast, did not lose on the main issue; her recovery is based on the core issue of valuing her equitable relief.
Id.
V. CONCLUSION
We AFFIRM the award to Camille of $8,801.50 plus interest. However, we REVERSE the determination that the estate was the prevailing party for Rule 82 fees and REMAND so that an award of Rule 82 fees can be made in favor of Camille.