Herring v. Herring ( 2016 )

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
KELLEY PATTON HERRING, )
n/k/a Kelley Patton, ) Supreme Court No. S-15886
)
Appellant, ) Superior Court No. 3AN-13-05718 CI
)
v. ) OPINION
)
GARY DWAYNE HERRING, ) No. 7105 – May 13, 2016
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Andrew Guidi, Judge.
Appearances: Douglas C. Perkins, Hartig Rhodes LLC,
Anchorage, for Appellant. Rhonda F. Butterfield, Wyatt &
Butterfield, LLC, Anchorage, for Appellee.
Before: Stowers, Chief Justice, Fabe, Winfree, Maassen, and
Bolger, Justices.
FABE, Justice.
I. INTRODUCTION
A divorcing couple reached a settlement agreement that was incorporated
into a divorce decree issued by the superior court. The settlement provided that the
qualified marital portion of the husband’s pension would be distributed to the wife and
the nonqualified portion would be distributed to the husband, subject to a provision for
equitable reallocation if the values of those portions changed significantly. The
settlement also described four firearms and ammunition that the husband would deliver
to the wife. After the decree issued, the wife’s portion of the pension declined in value
and the husband’s portion increased, so the wife filed motions attempting to obtain
information about the reasons for this change in value and attempting to enforce the
settlement agreement’s equitable reallocation provision to compensate for the changes.
She also argued that the husband had not delivered the specific guns bargained for at
settlement. After motion practice and an evidentiary hearing, the superior court ruled for
the husband in all respects, and it awarded enhanced attorney’s fees against the wife.
The wife appeals.
We conclude that the significant change in the relative values of the parties’
pension accounts triggers the verification and reallocation provision of their settlement
agreement. Accordingly, we reverse the superior court’s denial of the wife’s motion for
an equitable reallocation and remand for an equitable reallocation according to the
parties’ agreement. Because the husband is no longer the prevailing party, we also
vacate the superior court’s award of attorney’s fees to the husband. We affirm the
superior court’s decision as to the parties’ firearms.
II. FACTS AND PROCEEDINGS
A. Divorce Settlement
Kelley Patton and Gary Herring were married in Texas in 1981. Patton
filed for divorce on March 11, 2013, and the parties legally separated on March 31, 2013.
Patton and Herring were both residents of Alaska at the time.
The parties participated in a mediation to negotiate the terms of their
divorce. Leading up to this mediation, Patton had attempted to obtain financial
information from Herring, and Herring appeared reluctant to provide full information.
The superior court judge had informed Herring that he was required under Alaska Civil
Rule 26.1 to provide signed releases allowing Patton to access his financial account
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information. When Herring failed to provide the required releases, Patton filed a motion
to compel, and the superior court granted the motion on November 1, 2013, the day after
the mediation.
Despite the lack of complete financial information, the parties proceeded
with the mediation on October 31, 2013. Both parties were represented by counsel at the
mediation. The parties reached a settlement and signed a document listing the
agreed-upon distribution of their assets. Three of those assets are disputed in this appeal:
Herring’s Retirement Accumulation Plan from BP (BP pension), a Fidelity Roth IRA
account, and several firearms. The parties’ agreement was later typed and presented in
a spreadsheet. The agreement specified that 100% of the “qualified portion” of the BP
pension would go to Patton, while the “nonqualified portion” would remain with
Herring. But the agreement contained the caveat that the parties needed to verify that the
BP pension could be divided by a Qualified Domestic Relations Order (QDRO) and that
they “must see numbers the percentages are based on[:] current values.” The agreement
next provided that 45% of the Fidelity Roth IRA account would be distributed to Patton
and 55% would be distributed to Herring, but it explained that this transfer was subject
to an equalization mechanism that the parties had created to deal with the uncertainty of
the BP pension’s value. Finally, the agreement provided that Patton would receive “four
guns previously discussed plus ammo.”
After some discussions regarding the appropriate terms for dividing the BP
pension account, the parties used the Fidelity website to generate a QDRO reflecting
their agreement that 100% of the qualified marital portion of the BP pension would go
to Patton, while 100% of the nonqualified and nonmarital portions would remain with
Herring. Based on the parties’ elections in filling out the QDRO form online, the QDRO
also specified that Patton was “not entitled to any early retirement subsidy.” At this point
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the parties did not know the exact amount that each would be awarded from the BP
pension account because the QDRO had not yet been executed.
The parties then submitted to the court their draft findings of fact and
conclusions of law, representing their settlement agreement, along with the typed version
of the original agreement. The superior court held a settlement hearing on December 10,
2013. Patton was represented by counsel at this hearing, but Herring represented
himself. At the hearing, the superior court discussed certain elements of the settlement
with the parties to make sure they agreed on the terms.
As the court described the settlement agreement, it provided that the parties
would distribute the BP pension according to the terms set out in the property division,
but that the exact amount of the qualified and nonqualified portions would not be known
until a QDRO had been executed for the account. The parties therefore agreed to hold
part of their Roth IRA account in “escrow” and use that amount to make any necessary
adjustments after the exact values of the qualified and nonqualifed portions of the BP
plan were established. The court explained that, “based on the extent to which their
expectations were met or were unmet from the time of the mediation,” the parties would
“use the Roth IRA retained portion . . . to essentially compensate one or both parties to
some extent for what they didn’t get by way of the QDRO that they expected to get.”
Near the conclusion of the hearing, the superior court verified that both parties
“underst[ood] that . . . except for the specific areas that [they were] leaving open as
subject to further negotiation, which relate to the BP QDRO and the subsequent
allocation of the Roth IRA, . . . everything [was] finalized and . . . concluded.” Both
parties testified that they understood and that they agreed with the terms as the court
described them.
On the day of the hearing, the superior court signed the QDRO presented
by the parties and issued a divorce decree. Patton then moved for entry of her proposed
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findings and conclusions, which reflected the parties’ agreement by providing that Patton
would receive “100% of the qualified marital portion of the . . . BP pension . . . , which
has an approximate present value of $1,388,856, subject to verification that the qualified
marital portion of the pension can be transferred in whole to Plaintiff [Patton], including
dividends, interest, gains and losses thereon.” They provided that Herring, in turn,
would retain “100% of the marital and non-marital portions of the nonqualified amount
of the . . . BP pension[], which has an approximate present value of $125,835, including
dividends, interest, gains and losses thereon.” The proposed findings and conclusions
then spelled out the mechanism for escrow and equitable reallocation in the event that
these BP pension amounts differed significantly from the amounts estimated at the time
of settlement. It provided that Patton would receive:
45% of the Fidelity GDH Roth IRA account . . . , which has
a total approximate value of $350,234 . . . , except that:
i. $140,000 will be held in escrow and not distributed
from said Roth IRA account pending verification of
the amounts distributed according to paragraphs 8j
[regarding Patton’s portion of the BP pension] and 91
[regarding Herring’s portion of the BP pension]
below;
ii. In the event that the amounts of said distributions
materially differ from the approximate values set forth
in paragraphs 8j and 91 below, the parties may either
agree on a reallocation of the Fidelity GDH Roth IRA
to adjust for any such material difference, or if they
cannot agree, they may submit this issue to the Court
for it to determine an equitable reallocation . . . .
The proposed findings and conclusions contained an essentially identical provision
allocating the remaining 55% of the Roth IRA account to Herring and explaining this
same “escrow” mechanism.
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Finally, the proposed findings and conclusions provided that, “[u]nless
otherwise agreed by both parties,” Patton would receive “four guns now in the
possession of [Herring], including . . . a shotgun [and] an Uzi with folding stock in a
black factory case,” as well as “500 rounds of 9 mm ammo, one case of shells for the
shotgun, [and] four magazines for the Uzi.” The proposed findings and conclusions gave
the parties 30 days to “work cooperatively and promptly to execute all documents and
make all other arrangements necessary to transfer property awarded herein to the other
party.”
Herring objected to certain terms in Patton’s proposed findings and
conclusions. At this point the parties still did not have final information about the value
of the BP pension’s qualified and nonqualified portions, and both parties appeared to
believe that the value of Herring’s portion had fallen. But the court concluded that any
such shortfall could be addressed through the equitable adjustment mechanism that had
been designed by the parties as reflected in the findings and conclusions. The court
explained that “[t]he language in the proposed [findings and conclusions] accurately
tracks the agreement . . . made during the December 10 settlement conference, which
address[es] uncertainty concerning the amounts the parties will receive when [the]
defendant’s [pension] is QDRO’d.” The superior court further explained that the
“[p]laintiff’s description of how the parties agreed to address the issue, including the
mechanism of holding back $140,000 in ‘escrow,’ is accurate.” Accordingly, the court
entered these findings and conclusions in January 2014. Neither party challenges the
validity or accuracy of the findings and conclusions, though they debate the
interpretation of some of their terms.
B. Subsequent Proceedings
The proceedings following the divorce settlement focused on the
verification of, and eventually the dispute over, the values of the two portions of the
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BP pension account. Despite the provision of the findings and conclusions allowing for
“verification of the amounts distributed” from the BP pension account, it appears that
Herring prevented Patton from immediately receiving the information she needed in
order to verify the amounts that would be distributed under the QDRO for that account.
In March 2014 Patton requested another signed release from Herring so that she could
obtain the necessary information from Fidelity, which managed the pension account.
When Herring did not provide the requested release, Patton filed a notice of records
deposition in early April, indicating that she intended to subpoena Fidelity and take a
records deposition directly from Fidelity. Now represented by counsel, Herring filed a
motion to quash the subpoena, which the superior court granted.
Still unable to access information on the amount of the BP pension
distributions, in May 2014 Patton filed a motion to reopen discovery “for the limited
purpose of identifying and quantifying and equitably awarding any additional or
undistributed marital assets.” By the time she filed her reply brief, the QDRO had been
processed and the parties’ respective pension amounts had been divided between them;
thus Patton learned for the first time that her award had decreased substantially. Patton
explained to the court that the value of her portion of the BP pension had “decreased by
$374,000, i.e. a 27% loss in value.” She therefore asked the court to make an equitable
reallocation under the relevant allocation mechanism in the divorce settlement,
emphasizing that “the ‘escrowed’ Roth IRA funds still remain[ed] undistributed” because
final verification of the BP pension amounts had not yet occurred. (Emphasis omitted.)
In response, Herring continued to oppose Patton’s verification efforts, including by filing
a motion for an “order that [Patton] stop accessing . . . Herring’s accounts.”
In June 2014 the superior court granted Herring’s motion and ordered
Patton not to access his accounts “unless specifically authorized by [the] court,” but it
also granted in part Patton’s motion to reopen limited discovery on the amount of the
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disputed BP pension. Because of the “escrow” and reallocation mechanism designed to
account for any difference in the amount of the BP pension distributions, the superior
court concluded that the findings and conclusions “clearly impl[y] that . . . Patton is
entitled to learn the amount of the non-qualified BP [pension account] that . . . Herring
received or would receive.” The superior court added that “the total amount available
in the BP [account] must be known so that the parties and court can determine an
equitable allocation.” The superior court then stayed Patton’s request to equitably
reallocate assets pending further briefing and discovery.
By August 2014 Patton had not received the information she sought
regarding Fidelity’s method of calculating the parties’ shares of the BP pension. She had
nonetheless learned that Herring’s portion of the BP pension, rather than decreasing as
the parties initially believed, had actually increased to roughly $609,000. Given this
significant increase over the $125,000 to $133,000 estimated at mediation — in contrast
to the $374,000 decrease in her own portion — Patton continued her attempt to obtain
information on how Fidelity had calculated the parties’ shares. Herring, in turn, alleged
that the reduction in Patton’s share had resulted from the actuarial adjustment factors
provided in the QDRO, coupled with Patton’s own decision to begin receiving benefits
before Herring retired, which reduced the amount of her share. The superior court
granted Patton’s motion to compel discovery on this point, ordering Herring to sign a
release authorizing Fidelity to provide information regarding the calculation of benefits,
not just the final value of the distributions.
Once she had completed the authorized discovery and obtained the
information she sought, Patton filed a motion to amend the QDRO in January 2015. She
alleged that she had been “erroneously deprived” of the early retirement subsidy, and she
requested that the court issue an amended QDRO with a “simple correction” awarding
this subsidy to her. Herring opposed the motion for an amended QDRO, explaining that
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Patton’s legal and financial advisors had prepared the original QDRO, which explicitly
stated that Patton was “not entitled to any early retirement subsidy.”
Patton had also alleged that Herring had failed to comply with the court’s
property division order regarding the parties’ firearms, claiming that she had not received
the shotgun or the Uzi that had been agreed upon at mediation. Accordingly, she
requested that the court order Herring to show cause why he should not be held in
contempt. Herring countered that he had twice delivered an Uzi in compliance with the
superior court’s findings and conclusions but that Patton had refused it both times,
claiming it was not the one she had bargained for in the divorce settlement. Herring
maintained that “[n]o specific Uzi was bargained for.” The superior court granted
Patton’s motion that Herring appear before the court and show cause why he should not
be held in contempt for failing to deliver the specified firearms.
The superior court held an evidentiary hearing on Patton’s motion for an
amended QDRO, her request for equitable distribution of the “escrowed” Roth IRA
funds (which had been stayed since the court’s June 2014 order), and Herring’s alleged
failure to deliver the guns specified in the property division. The hearing took place over
three days in February 2015. The superior court heard testimony from Patton’s financial
expert and from representatives of Fidelity and BP. The court admitted into evidence a
February 2015 letter from Fidelity to Patton’s attorney, which explained how the
amounts of the BP pension benefits had been calculated. The letter explained that
Fidelity had applied its standard actuarial equivalence factors, which reduced the amount
of Patton’s benefit and increased Herring’s benefit because (1) Patton had not received
the early retirement subsidy and (2) she had begun receiving benefits before Herring.
Accordingly, it explained that Patton’s distribution had been reduced by $464,346.04.
Importantly, the letter also clarified that “[t]he difference of $464,346.04 would be
retained by . . . Herring.”
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At the end of the evidentiary hearing the superior court issued a ruling from
the bench, denying Patton’s motion for an amended QDRO and declining to make an
equitable reallocation based on Patton’s reduced benefits. The court later issued written
findings of fact and conclusions of law elaborating on its bench ruling. Focusing only
on the reduction in Patton’s benefits, and not the increase in Herring’s, the superior court
first concluded that “it wasn’t . . . Herring’s fault” that Patton’s benefit had been reduced.
Instead, the court relied on the letter from Fidelity to conclude that the reduction had
been the result of Fidelity’s application of its standard actuarial factors, the effect of
Patton not receiving the early retirement subsidy in the QDRO, and Patton’s decision to
take her benefits before Herring retired. The superior court also concluded that the
parties’ decision not to award the early retirement subsidy to Patton had been a
bargained-for part of their divorce settlement, and thus that Patton “received what she
bargained for.”
Accordingly, the superior court concluded that there was no “basis for
setting aside the settlement” by issuing an amended QDRO. It explained that a divorce
settlement agreement cannot be modified unless there is a mutual mistake by both
parties1 or a unilateral mistake coupled with “fraudulent or inequitable conduct” by the
other party,2 and it concluded that those circumstances did not exist here.
The superior court also concluded that there was no basis for making an
equitable reallocation because the verification period and adjustment mechanism
contained in the divorce settlement “either d[id] not apply or ha[d] expired.” The
superior court found that it was “past the time for equitable adjustment to take place,”
1
See Cook v. Cook, 249 P.3d 1070, 1080-81 (Alaska 2011).
2
Voss v. Brooks, 907 P.2d 465, 468 (Alaska 1995) (quoting 6A RICHARD R.
POWELL, POWELL ON REAL PROPERTY ¶ 901[1][d], 81A-162-163).
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concluding that because “over a year elapsed prior to . . . Patton’s motion to amend the
QDRO,” any equitable adjustment was barred. The superior court also concluded that
the decrease in the value of Patton’s account (and presumably the corresponding increase
in Herring’s) fell outside the equitable allocation provision of the settlement agreement.
Because it concluded that no equitable adjustment was warranted, the superior court
ordered the Roth IRA account to be distributed in accordance with the original divorce
settlement (45% to Patton and 55% to Herring). It ordered that the $140,000 held in
“escrow” pending verification of the BP pension amounts also be released in the same
ratio.
Finally, the court briefly explained that it found Herring’s testimony on the
firearms issue to be “more persuasive” than Patton’s testimony. The superior court
therefore concluded that “the weapons previously offered to [Patton] by . . . Herring”
were sufficient to satisfy the terms of the settlement, and it gave the parties 30 days to
arrange for transfer of the firearms.
Herring then moved for an award of full attorney’s fees, totaling nearly
$30,000 plus over $500 in costs, alleging that “Patton engaged in both vexatious and bad
faith conduct in initiating and continuing to pursue this post-divorce litigation over and
over.” Patton opposed the motion for full fees, arguing that she had brought her claims
in good faith and that Herring’s own obstructive conduct had contributed to the lengthy
litigation. The superior court awarded Herring 80% of his fees (totaling approximately
$22,000) and his full costs. It described Patton’s litigation approach as “aggressive” and
found that there had been “no evidence supporting [Patton’s] allegations that . . . Herring,
or Fidelity, or both, had anything to do with her reduced benefits.” Based on this
ultimate result, the superior court concluded that “Patton engaged in this litigation in bad
faith” and that she had “failed to make reasonable inquiry or exercise due diligence in
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obtaining facts before she began litigation.” The court therefore concluded that an
enhanced fee award was justified.3
Patton appeals the superior court’s denial of her motion for an amended
QDRO, its denial of an equitable allocation from the Roth IRA account, its distribution
of the parties’ firearms, and its award of enhanced attorney’s fees to Herring.
III. STANDARD OF REVIEW
We generally “review questions regarding a trial court’s response to a
motion to enforce a [divorce] settlement under the abuse of discretion standard.”4 But
“[i]n making this inquiry, the standard of review is necessarily intertwined with the
substantive law governing settlement agreements.”5 When the parties have reached a
settlement as to property division, “[w]e apply basic contract interpretation principles to
interpret a property division agreement incorporated into a divorce decree.”6 In turn,
“[w]e treat the interpretation of contract language as a question of law and interpret the
language de novo.”7 To the extent that other relevant questions in a divorce case
3
See Alaska R. Civ. P. 82(b)(3)(G) (allowing courts to increase an award of
attorney’s fees for “vexatious or bad faith conduct”).
4
Ford v. Ford, 68 P.3d 1258, 1263 (Alaska 2003) (citing Dickerson v.
Williams, 956 P.2d 458, 462 (Alaska 1998)).
5
Colton v. Colton, 244 P.3d 1121, 1126 (Alaska 2010) (citing Notkin v.
Notkin, 921 P.2d 1109, 1111 (Alaska 1996)).
6
Cook, 249 P.3d at 1077 (citing Burns v. Burns, 157 P.3d 1037, 1039
(Alaska 2007)); see also Mahan v. Mahan, 347 P.3d 91, 94 (Alaska 2015) (citing Villars
v. Villars, 277 P.3d 763, 768 (Alaska 2012)).
7
Cook, 249 P.3d at 1077 (citing Norton v. Herron, 677 P.2d 877, 880
(Alaska 1984)).
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implicate the superior court’s equitable power, “[w]e apply an abuse of discretion
standard to the superior court’s use of its equitable power.”8
We review an award of attorney’s fees under Alaska Civil Rule 82,
including an award of enhanced attorney’s fees, for abuse of discretion.9 Therefore a fee
award “will not be disturbed on appeal unless it is ‘arbitrary, capricious, or manifestly
unreasonable.’ ”10 But because an enhanced fee award under Rule 82(b)(3)(G) “calls
into question [a party’s] litigation conduct and the potential merits of [the party’s]
underlying . . . motions, we assess de novo the legal and factual viability of his [or her]
motions and review relevant findings of fact for clear error.”11
IV. DISCUSSION
A. Declining To Make An Equitable Reallocation, As Mandated By The
Divorce Settlement, Was Error.
Patton argues that the superior court erred by denying her motion for an
equitable reallocation to compensate for the fact that she received 27% less, and Herring
received correspondingly more, than the amounts bargained for at settlement. She
maintains that the parties’ agreement contained specific estimated values with a
mechanism for equitable adjustment if they did not receive the amounts anticipated in
the settlement agreement. And she explains that her request for equitable reallocation
8
Beal v. Beal, 209 P.3d 1012, 1016 (Alaska 2009) (citing Carroll v. Carroll,
903 P.2d 579, 582 n.7 (Alaska 1995)).
9
Johnson v. Johnson, 239 P.3d 393, 399 (Alaska 2010) (citing Hopper v.
Hopper, 171 P.3d 124, 133 (Alaska 2007)).
10
Limeres v. Limeres, 320 P.3d 291, 296 (Alaska 2014) (quoting Ferguson
v. Ferguson, 195 P.3d 127, 130 (Alaska 2008)).
11
Johnson, 239 P.3d at 399 (citing State, Dep’t of Revenue, Child Support
Enf’t Div. v. Allsop, 902 P.2d 790, 795-96 (Alaska 1995)).
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is not a post-divorce modification motion; rather, it is the finalization of the parties’
property distribution settlement. We agree. The parties’ settlement agreement contained
an express provision creating an equitable reallocation mechanism using the Roth IRA
funds to deal with the uncertainty surrounding the value of the BP pension distributions.
Because that mechanism was triggered by the decrease in Patton’s portion and the
corresponding increase in Herring’s portion of the BP pension, an equitable reallocation
is the appropriate bargained-for remedy.
Herring argues that the equitable reallocation mechanism in the settlement
agreement was not triggered because that provision was designed for only two purposes:
first, to protect each party against unauthorized withdrawals by the other, and second, to
protect only Herring against a decrease in the value of his portion due to external factors.
He also contends that the parties agreed on distributions based on percentages, not dollar
values. Although the superior court agreed with these arguments, we conclude that they
conflict with the terms of the parties’ settlement agreement as reflected in the original
findings and conclusions entered by the superior court.
In our independent review of the terms of the settlement agreement,12 we
apply general principles of contract interpretation.13 First, as we recently explained in
Baker v. Ryan Air, Inc., we give effect to every part of a contract.14 Here, the settlement
reached by the parties expressly stated the anticipated approximate values of Patton’s and
Herring’s portions of the BP pension. And the parties’ original signed agreement
included a handwritten note stating that the parties “must see [the] numbers the
percentages [were] based on.” Moreover, the parties’ equitable reallocation mechanism
12
See Cook, 249 P.3d at 1077 (citing Norton, 677 P.2d at 880).
13
Id. (citing Burns v. Burns, 157 P.3d 1037, 1039 (Alaska 2007)).
14
345 P.3d 101, 112 & n.32 (Alaska 2015).
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contained an express provision holding funds in “escrow” pending verification of those
BP pension amounts. To give effect to the anticipated dollar values and the verification
provision of the parties’ agreement, we conclude that the actual and relative values of the
BP pension distributions to both parties are an integral element of the settlement
agreement.
Herring next contends that the reallocation mechanism does not protect
Patton against a reduction in the value of her portion of the BP account. But this
interpretation, too, is at odds with the relevant provision of the settlement agreement.
Herring’s contention is based on a more general provision of the agreement, which
requires the parties to verify that there have been “no significant transfers or
withdrawals” from any of their financial accounts, but which also states that this
verification was completed by the time the superior court’s findings and conclusions
were entered. The reallocation provision relating specifically to the BP pension and the
Roth IRA account, by contrast, expressly indicates that verification of the BP
distributions is still “pending” and provides for equitable reallocation in the event that
the amounts received “materially differ” from the amounts contemplated at the time of
settlement — regardless of the reason for that difference.
The superior court appeared to believe that the broader provision relating
to possible “transfers or withdrawals” applied to the BP pension, and thus it concluded
that the reallocation mechanism was not triggered because Herring had not made any
transfers or withdrawals from the BP account. But this provision applies to the parties’
other financial accounts rather than the funds at issue here, and it conflicts with the
specific provision relating to the BP pension. Under the contract interpretation principle
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that a specific provision takes precedence over a more general provision,15 we conclude
that only the BP-specific provision applies to the funds disputed here. And the
BP-specific provision contains no limiting language to suggest that it was designed to
protect only Herring and not Patton: It simply mandates equitable reallocation if either
party’s amount received “materially differs” from the amount anticipated by the parties.
So we conclude that the Roth IRA reallocation mechanism was designed to protect both
parties against a change in value of their anticipated shares of the BP account, whatever
the source of that change.
This interpretation conforms with the parties’ intent at the time of
settlement.16 “In determining the intent of the parties the court looks to the written
contract as well as extrinsic evidence regarding the parties’ intent at the time the contract
was made.”17 Here, the superior court’s discussion with the parties at the settlement
hearing shows the parties contemplated that the reallocation mechanism could apply to
both parties. The court explained that the adjustment provision could be used “to
. . . compensate one or both parties to some extent for what they didn’t get by way of the
QDRO.” (Emphasis added.) And when the court recited the agreement at the end of the
15
Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1004 (Alaska 2004) (“In
contracts, as in statutes, ‘where one section deals with a subject in general terms and
another deals with a part of the same subject in a more detailed way, . . . if there is a
conflict, the specific section will control over the general.’ ” (quoting Estate of
Hutchinson, 577 P.2d 1074, 1075 (Alaska 1978))).
16
See Bernard v. Alaska Airlines, Inc., 367 P.3d 1156, 1159 (Alaska 2016)
(“When interpreting contracts, the goal is to ‘give effect to the reasonable expectations
of the parties.’ ” (quoting Larsen v. Municipality of Anchorage, 993 P.2d 428, 431
(Alaska 1999))).
17
Id. (quoting Municipality of Anchorage v. Gentile, 922 P.2d 248, 256
(Alaska 1996)).
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settlement hearing and asked for each party’s acknowledgment that they understood and
agreed with it, the court explained that the parties were “going to have to wait and see
what happens with the BP QDRO and make an adjustment, where both parties may have
to share in whatever loss occurs, but there [would] be some adjustment that occurs with
the Roth IRA.” The parties testified that they understood and agreed with this
characterization of their settlement. Based on these statements during the settlement
hearing, we cannot conclude that the parties intended to limit the equitable adjustment
mechanism to protect only Herring or to address only withdrawals or transfers made by
the parties.
Indeed, now that one portion of the BP account has decreased and the other
has increased by a corresponding amount, this appears to be exactly the type of situation
that the Roth IRA reallocation mechanism was designed to address. The superior court
concluded that Patton was not entitled to an equitable adjustment because the change in
value was a result of her own decision to begin receiving benefits early: In the court’s
words, “Patton effectively made a choice between ‘more money later’ versus ‘less money
now,’ and chose the latter.” But the QDRO did not explain, and the parties did not
appear to understand, that Patton’s election to begin receiving immediate distributions
would also cause Herring’s benefits to increase, resulting in an allocation of benefits
significantly different from the amounts contemplated at settlement. The parties
expected that they would each receive a specified amount, and these amounts were a
bargained-for part of their ultimate settlement. Instead Herring received both an amount
that turned out to be higher than the $125,000-$133,000 estimated at settlement and the
$464,346 that he received (and Patton lost) as a result of Patton’s early benefit election,
for a total of $609,000 of pension benefit to Herring. This unanticipated shift
substantially changed the percentages of the originally estimated total retirement account
that each party was to receive.
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Now that Herring has received substantially more and Patton has received
substantially less than the amounts that they bargained for, this disparity triggers the
equitable reallocation provision relating to the BP pension and the Roth IRA “escrowed”
funds. It was therefore error to conclude that the reallocation mechanism was not
triggered. And once that provision has been triggered, the appropriate remedy is the
contractual remedy specified by the parties.18 Here, that means the court must make an
equitable reallocation of the “escrowed” Roth IRA funds to account for the disparity in
the BP pension distributions. We therefore reverse the superior court’s denial of the
motion for equitable reallocation, and we remand for an equitable distribution of the
“escrowed” Roth IRA funds in accordance with the parties’ settlement agreement.
On remand, the fact that Patton’s elections played a role in her decreased
benefits could be relevant to the amount she receives in an equitable distribution. But
it does not bar relief completely under the terms of the parties’ settlement, particularly
in light of the windfall that Herring received. While Patton may bear some of the burden
of her own decision to take immediate benefits and any resulting decrease in value, the
increased value of Herring’s distribution and the parties’ original anticipated percentages
of the BP pension must also be considered in determining the appropriate amount of the
equitable reallocation.
The superior court also concluded that Patton’s request for an equitable
reallocation was time-barred because “over a year elapsed prior to [her] motion to amend
the QDRO.” But Patton had originally requested an equitable reallocation in May 2014,
only a few months after entry of the original findings and conclusions confirming the
18
See, e.g., Pierce v. Catalina Yachts, Inc., 2 P.3d 618, 622 & n.18 (Alaska
2000) (allowing parties to prescribe contractual remedies); Kelly v. Miller, 575 P.2d
1221, 1224 (Alaska 1978) (holding that the plaintiff “was limited to contractual
remedies”).
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parties’ settlement agreement. Moreover, she had spent the intervening time attempting
to obtain full information about the amounts of the parties’ BP distributions, so any delay
was due to Herring’s unwillingness to provide this information and not to any delay on
Patton’s part. Finally, the superior court stayed Patton’s request for an equitable
reallocation pending further briefing and discovery. The parties undertook this discovery
and briefing over the following months, and the superior court ultimately addressed
Patton’s motion for an equitable reallocation in March 2015 (at the same time as it ruled
on her motion for an amended QDRO). Given that Patton’s motion had been stayed until
that point, it was an abuse of discretion to conclude that the reallocation was then barred
by the intervening passage of time.
B. The Superior Court Did Not Abuse Its Discretion In Denying Patton’s
Motion For An Amended QDRO.
Patton’s motion for an amended QDRO is properly viewed as a request for
a different remedy addressing the same disparity in the BP pension distributions. The
superior court was correct to conclude that the QDRO cannot be amended. Evidence in
the record from BP representatives indicates that Patton is not permitted to “unwind” her
pension elections after initially executing a QDRO that did not award her the early
retirement subsidy. Moreover, as explained above, the parties created a specific
contractual remedy to account for any changes in the BP pension’s value. Where a
contractual remedy has been specified and bargained for by the parties, the correct
approach is to apply that remedy.19 So the proper remedy here is not an amended
QDRO; it is the application of the contractual provision for equitable reallocation.
Similarly, there is no need to analyze this case under the mistake doctrine,
which sometimes permits reformation of contract or settlement terms. Instead, the proper
19
See Pierce, 2 P.3d at 622 & n.18.
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approach is to give the parties the benefit of their bargain, which includes the contractual
remedy of the equitable reallocation mechanism. We therefore conclude that the superior
court did not abuse its discretion by denying Patton’s motion to amend the parties’
QDRO for the BP pension.
C. The Superior Court Did Not Abuse Its Discretion In Distributing The
Parties’ Firearms According To The Divorce Settlement.
Despite Herring’s attempts to deliver the firearms allocated to Patton in the
divorce settlement, Patton contends that Herring has not yet delivered the particular Uzi
she bargained for, which she refers to as the “marital Uzi.” But Patton has presented no
evidence, other than her own arguments, to show that the gun Herring delivered to her
was not a part of the marital estate. Nor has Patton shown that the Uzi delivered to her
failed to meet the terms of the parties’ agreement as expressed in the superior court’s
findings and conclusions, which specified only that she was entitled to “an Uzi with
folding stock in a black factory case.” Patton has not disputed that Herring offered her
a gun technically conforming to this definition, but she argues that she is entitled to a
different Uzi and that “she will recognize it once she receives it.”
Herring has countered Patton’s contentions by offering a detailed
description of the guns owned by the parties while they were married, in which he
explained that the Uzi he offered her was indeed one of the guns in the marital estate at
the time of separation. To counter Patton’s contentions that she is entitled to a specific
Uzi chambered for 45 ACP ammunition, Herring points to the fact that the divorce
settlement awarded Patton “500 rounds of 9 mm ammo” for her Uzi, and that the Uzi he
attempted to give Patton is indeed chambered for 9 mm ammunition.
Faced with this evidence, the superior court concluded that “Herring’s
account of the settlement with respect to the Uzi is superior in detail, technical
understanding, and internal-logic to that of . . . Patton.” The court therefore found
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Herring’s testimony “more persuasive” than Patton’s. Because “[w]e defer to a superior
court’s credibility determinations,”20 we do not overturn the superior court’s conclusion
regarding the parties’ testimony on this point. We thus conclude that the superior court
did not abuse its discretion in denying Patton’s contempt motion and ordering the parties
to carry out the terms of the divorce settlement by “arrang[ing] for the transfer of the
weapons previously offered to [Patton] by . . . Herring,” which meet the description of
the firearms provided in the settlement agreement.
D. The Award Of Attorney’s Fees Is Vacated.
The superior court awarded Herring 80% of his attorney’s fees and his full
costs. Alaska Civil Rule 82 generally permits an award of partial attorney’s fees to the
prevailing party in a civil dispute,21 but enhanced fees may only be awarded upon
consideration of certain enumerated factors, including a party’s “vexatious or bad faith
conduct.”22 Because we reverse and remand the superior court’s denial of Patton’s
motion for equitable reallocation, Herring is no longer the prevailing party and the award
of attorney’s fees in his favor must be vacated.23
20
Hannah B. v. State, Dep’t of Health & Soc. Servs., Office of Children’s
Servs., 289 P.3d 924, 930 (Alaska 2012).
21
Alaska R. Civ. P. 82(a). Although divorce judgments are generally not
subject to attorney’s fees under Rule 82, we have consistently held that “[t]he divorce
judgment exception to Rule 82 does not apply to post-judgment modification and
enforcement motions” like the proceedings on appeal here. See McGee v. McGee, 974
P.2d 983, 992 (Alaska 1999) (alteration in original) (quoting Lowe v. Lowe, 817 P.2d
453, 460 (Alaska 1991)).
22
Alaska R. Civ. P. 82(b)(3)(G).
23
See, e.g., Cragle v. Gray, 206 P.3d 446, 452 (Alaska 2009) (“We . . . vacate
the attorney’s fees award because [the appellee] is no longer the prevailing party.”). We
take this opportunity to note that enhanced attorney’s fees are not justified where, as
(continued...)
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V. CONCLUSION
We AFFIRM the superior court’s denial of Patton’s motion for an amended
Qualified Domestic Relations Order, but we REVERSE its denial of her motion for an
equitable reallocation and REMAND for a determination of the appropriate equitable
reallocation amount. Accordingly, we VACATE the superior court’s award of attorney’s
fees to Herring. We AFFIRM the superior court’s denial of Patton’s contempt motion
regarding distribution of the parties’ firearms.
23
(...continued)
here, a party litigated in the good-faith pursuit of non-frivolous claims. Even if a party
does not prevail on some (or all) of his or her claims, we have cautioned against
conflating the ultimate success of a motion or claim with the question whether the motion
or claim was frivolous at the outset. See Johnson v. Johnson, 239 P.3d 393, 401 (Alaska
2010). Here, where Patton prevailed on several of her motions before the superior
court — including motions to compel discovery necessitated by Herring’s obstructive
conduct — it is evident that her claims were not frivolous.
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