433 P.3d 1090
Alaska2018Background
- Sheila Erwin and William Mendenhall divorced; court awarded Erwin a UnionBanc retirement account (Account) containing seven mutual funds and ordered a 50/50 division.
- Two days before the final judgment, Mendenhall moved shares of three mutual funds (value $164,757.43 on transfer date, Feb 11, 2014) from the Account to another account he controlled.
- Erwin sought an accounting and asked for the value of the missing shares plus any earnings/distributions from the date of transfer until she received compensation. Mendenhall later paid Erwin $164,757.43 in cash.
- Parties disputed the proper measure of the additional lost earnings/distributions; Erwin proposed computing total distributions per share, Mendenhall argued the funds lost value and sought reimbursement. Neither presented expert testimony or an authoritative methodology.
- The superior court found the parties’ methodologies unreliable, awarded Erwin prejudgment interest on the principal (Feb 11, 2014 to Jan 5, 2016) of $11,730.47 in lieu of lost-earnings damages, and later awarded Erwin enhanced attorney’s fees ($35,000) under Alaska R. Civ. P. 82 based on Mendenhall’s bad-faith and vexatious conduct.
Issues
| Issue | Plaintiff's Argument (Erwin) | Defendant's Argument (Mendenhall) | Held |
|---|---|---|---|
| Proper remedy for improperly transferred mutual-fund shares (measure of recovery) | Erwin: she is entitled to the value of earnings/distributions the shares generated while wrongfully withheld; her distribution-based calculation should be used | Mendenhall: funds lost value; Erwin should get only the value of the shares when she received them (no additional earnings); may even owe reimbursement | Court: Neither party proved lost-earnings with reasonable certainty; awarded prejudgment interest on the principal as a substitute for loss-of-use/earnings. |
| Use of compensatory (conversion) damages principles to effectuate property division | Erwin: seeks damages akin to conversion (lost earnings) | Mendenhall: disputes conversion framework and seeks only return of value at receipt | Court: Applying compensatory/ conversion principles to effectuate property division was appropriate, but Erwin failed to prove earnings amount. |
| Adequacy of trial procedure (need for expert testimony/evidentiary hearing) | Erwin: court should have required expert evidence or an evidentiary hearing before denying lost-earnings claim; motion for reconsideration should have been granted | Mendenhall: parties had opportunity to present evidence; no entitlement to extra hearing | Court: Parties had responsibility to present proof and request hearings; Erwin waived evidentiary hearing by not requesting one; no abuse of discretion. |
| Attorney’s fees under Alaska R. Civ. P. 82 for post-judgment enforcement | Erwin: requests full fees and costs as prevailing party; asserts bad-faith conduct justifies full/enhanced award | Mendenhall: disputes amount and contends enhancement must be limited to fees caused by his conduct | Court: Under Rule 82, Erwin was prevailing party; factual findings of Mendenhall’s bad-faith/vexatious conduct were not clearly erroneous; enhanced fee award was within discretion. |
Key Cases Cited
- Rollins v. Leibold, 512 P.2d 937 (Alaska 1973) (conversion damages measured by value at conversion plus interest)
- Bevins v. Peoples Bank & Tr. Co., 671 P.2d 875 (Alaska 1983) (purpose of prejudgment interest is to compensate for loss of use between entitlement date and judgment)
- State v. Hammer, 550 P.2d 820 (Alaska 1976) (lost-profits damages require reasonable certainty)
- Beaux v. Jacob, 30 P.3d 90 (Alaska 2001) (compensatory damages principles and burden of proof for damages)
- Johnson v. Johnson, 239 P.3d 393 (Alaska 2010) (Rule 82 applies to post-judgment domestic-relations enforcement; prevailing-party fee standard)