Gordon v. Gordon.

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Electronically Filed
Supreme Court
SCWC-12-0000806
04-JUN-2015
07:55 AM

IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

---o0o---

SUSAN P. GORDON, Respondent/Plaintiff-Appellee,

vs.

IRA GORDON, Petitioner/Defendant-Appellant.

SCWC-12-0000806

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-12-0000806; FC-D NO. 10-1-6664)

June 4, 2015

RECKTENWALD, C.J., NAKAYAMA, McKENNA, AND POLLACK, JJ., AND
CIRCUIT JUDGE KUBO, ASSIGNED BY REASON OF VACANCY

OPINION OF THE COURT BY POLLACK, J.

Hawaiʻi law follows a framework based on partnership

principles for the division of marital partnership property

during divorce proceedings. This opinion addresses the

application of partnership principles and a family court’s

discretion to deviate from an equal division of property when

there are equitable considerations justifying such deviation.
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Of central importance in this case is the family court’s duty to

provide sufficient documentation of its findings for its

division of marital partnership properties so that the parties

and reviewing court may ensure the division is equitable and

free from miscalculations or other errors.

I. BACKGROUND

This case arises out of the Family Court of the First

Circuit’s 1 (family court) August 22, 2012 divorce decree

dissolving the marriage between Ira Gordon (Ira) and Susan

Gordon (Susan). 2

A. Factual Background

1. Relationship Prior to Marriage

Susan and Ira, who married in December of 1997, first

met in Las Vegas in the summer of 1992. At the time they met,

Ira was living in Hawaiʻi and was married but separated. Between

1992 and 1993, Ira made several trips to Las Vegas to work and

to spend time with Susan, who lived and worked in Las Vegas.

Susan also made several trips to Hawaiʻi to visit Ira, and she

would typically stay with Ira at his residence during her

visits.
1
The Honorable Francis Q.F. Wong presided.
2
This case involves a consolidated appeal from the family court’s
August 22, 2012 Decree Granting Absolute Divorce and the family court’s
November 28, 2012 Order re: Plaintiff’s Motion and Declaration For Post-
Decree Relief Filed September 26, 2012.

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In 1993, Susan moved to Hawaiʻi to live with Ira at his

residence. On January 12, 1995, Susan purchased a residence,

which the parties moved into a few months later. By the time

Ira’s divorce was finalized on March 14, 1996, Ira and Susan had

been living together at the residence purchased by Susan for one

year. Susan paid the mortgage on the residence without

contribution from Ira during this time.

2. Marriage and Tax Liability

Ira and Susan were married on December 16, 1997, and

they subsequently filed their joint tax return for 1997. Ira

was responsible for filing and paying the taxes. The parties

received a home interest tax deduction in the amount of $40,605

for the residence initially purchased by Susan. The 1997 joint

tax return, which was considered by the family court to be the

best evidence of the parties’ pre-marital property, listed

thirteen rental properties and three businesses. The return

included reference to three Texas properties owned by Susan, and

several properties that were distributed to Ira in the divorce

decree relating to his prior marriage.

The parties continued to live in the residence

initially purchased by Susan until July 2010. During that time,

the parties twice obtained equity lines of credit against the

residence. The first line of credit was $150,000, and it was

used primarily for the down payment on two investment

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properties, with the remaining $58,119.67 balance being

deposited into a bank account held by Susan.

The second line of credit in the amount of $450,000

was obtained in March 2010, and the family court found that the

parties obtained it, in part to satisfy the couple’s outstanding

tax liability. On March 12, 2010, Ira deposited $280,000 from

the second equity line into his personal bank account, and he

withdrew $103,000 from that account in the form of a cashier’s

check payable to the Internal Revenue Service (IRS), with the

memo line stating “various tax returns.” However, this payment

did not satisfy the couple’s entire debt owed to the IRS, and by

the time of trial, the couple still owed approximately $140,000

to the IRS originating from past tax liability for the principal

amount of $116,000, plus penalties and accruals. Susan

testified that she believed the $280,000 had been used to pay

off the parties’ entire tax debt.

3. Ira’s Girlfriend

At some point as early as the beginning of 2009, Ira

began dating a woman, whom he eventually lived with at one of

Susan and Ira’s properties. 3 On May 20, 2009, Ira opened a

3
The record is unclear as to when Ira began dating and living with
his girlfriend. Ira initially testified that the relationship began in late
2009, but when confronted at trial with the fact that he purchased airline
tickets for his girlfriend and her daughter in December 2008, Ira admitted
the relationship began in early 2009. Additionally, Susan testified that Ira
had been living with his girlfriend and her daughter since August 2009.

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massage parlor for his girlfriend, which was listed on Ira and

Susan’s 2009 joint income tax return. In 2010, the massage

parlor was raided by Honolulu police, resulting in the arrest of

Ira’s girlfriend for prostitution, and Ira paid at least $10,000

out of the business’s account for her criminal defense.

As mentioned earlier, Ira deposited $280,000 from the

second equity line into his personal account, which Susan

believed would be used to satisfy their tax liability.

Following his deposit of the money, Ira made purchases of

jewelry for his girlfriend on March 13, 2010, and April 9, 2010,

totaling over $30,000. He also traveled with his girlfriend and

her daughter to the Big Island and Las Vegas, and he remodeled

the unit they all lived in together.

4. Separation and Divorce

On July 24, 2010, Ira and Susan argued at their

residence regarding Ira’s infidelity and his desire to end the

marriage. 4 That month, Ira permanently left the residence he

shared with Susan, and Susan filed for divorce on July 28, 2010.

The family court found that the exact date at which Ira “moved

out” of the marital residence was “unclear,” but the family

4
Susan alleged that Ira assaulted her and threatened to kill her,
which resulted in Ira’s arrest on the same day. On August 5, 2010, the case
against Ira for the alleged incident was formally classified “no action” by
the prosecutor’s office.

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court’s findings repeatedly referred to the “July 2010” date as

the time at which the parties separated.

In August 2010, without Ira’s knowledge and consent,

Susan changed the beneficiary designation on Ira’s existing life

insurance policy; obtained another life insurance policy, naming

herself as the beneficiary and authorizing the premium to be

paid out of Ira’s checking account; and terminated their home

equity line, removing around $7,000.

Susan first learned of her and Ira’s outstanding tax

liability when she received a letter from the IRS notifying her

that her monthly social security check of $484 would be

garnished in the amount of $72.60 for nonpayment of taxes.

Susan filed for innocent spouse relief, but her application and

subsequent appeal were both denied by the IRS.

Susan remained at the couple’s marital residence until

it was sold on May 24, 2011, in conjunction with the divorce

proceedings. The family court found that Susan’s only regular

sources of income were her monthly social security check, money

given to her by her sister, and the periodic disbursements made

from the marital funds that were held in escrow at the time.

However, statements from Susan’s personal bank account indicate

that from December 2009 to April 2012, approximately $390,000

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was deposited into her account. 5 In her Income and Expense

Statement filed November 7, 2011, eight months before trial,

Susan stated that her monthly personal expenses amounted to

$1,390.

At the time of trial, Susan was living in a rented

room in Waikiki and was renting a vehicle because the one left

in her possession was broken-down. Ira was living at the

property he moved into with his girlfriend and was receiving

regular income from three businesses, including the massage

parlor.

B. Court Proceedings

On July 28, 2010, Susan filed a Complaint for Divorce

against Ira in the family court. A two-day divorce trial took

place in June of 2012.

On July 17, 2012, Ira filed a closing argument,

proposed findings of fact and conclusions of law, and a property

division chart identifying and valuing the assets at the date of

marriage and date of the trial’s conclusion. On July 18, 2012,

Susan filed a closing argument and proposed findings of fact and

5
The record also indicates the following: from February 2010 to
March 2010, Susan donated $23,550 to her sister’s convent; from February 2010
to March 2012, Susan received $98,034.74 in purported reimbursements from the
convent; and from April 2010 to March 2012, Susan “cashed out” $49,221.91 out
of her personal bank account, including $7,168.59 on September 7, 2010, in
the form of a money market account.

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conclusions of law, and, on August 22, 2012, she filed a

proposed divorce decree.

1. Family Court Minute Order and Ira’s Motion for
Reconsideration

On July 24, 2012, the family court, by minute order,

adopted Susan’s recommended findings of fact and conclusions of

law with modifications. On August 3, 2012, Ira filed a motion

for reconsideration of the family court’s minute order decision

and the amended minute order. Ira contended that the family

court made a multitude of errors in its property division. Ira

pointed out that the family court made the “colossal mistake of

$538,200” by awarding real property to Ira that was no longer in

the parties’ possession as it was sold prior to 2005.

2. Divorce Decree

On August 22, 2012, the family court filed its

Findings of Fact and Conclusions of Law, Decree Granting

Absolute Divorce (Decree), and Order Denying Defendant’s Motion

for Reconsideration, Filed August 3, 2012.

In its Decree, the family court found that the

equities in this case were skewed in favor of Susan, and the

court concluded that the record fully supported deviation from

equal distribution of the marital estate to a 75%/25%

distribution in favor of Susan. The court found that Ira’s

“actions throughout the relationship, including the pre-

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partnership phase through and including the post-filing phase,

time and again placed [Susan] in worsening financial

circumstances.” In its Findings of Facts and Conclusions of

Law, the family court noted that there were valid and relevant

considerations authorizing a deviation from the partnership

model. The family court stated that it would use the

outstanding federal tax liability as a factor to deviate from a

strict 50/50 division although the court noted that it had a

“sufficient basis” to allocate the entirety of the debt to Ira.

The court also found the liquidation of Susan’s three Texas

properties and a bond she held prior to the marriage to be valid

and relevant considerations in deviating from the marital

partnership model.

The family court found that Susan purchased the

couple’s marital residence for $685,000 on January 12, 1995, and

the court noted that Susan paid for the property as follows: (1)

$21,674.13 in deposit/earnest money; (2) $486,500.00 in the form

of a mortgage; and (3) $200,000 as an option payment. The court

concluded that “these funds” constituted a pre-marital capital

contribution to the partnership.

With respect to one of the Texas properties, the

family court found that the property was not encumbered by a

mortgage, was sold in February or March 1999, and generated

proceeds in the amount of $29,270.40, which also constituted a

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pre-marital capital contribution to the partnership. In regard

to the other two Texas properties, the family court found that

the properties were encumbered by a mortgage and were sold at

some point during the marriage. The court additionally found

that Susan was entitled to a pre-marital credit for the value of

the bond Susan liquidated in support of the marital partnership.

As for Ira’s pre-marital capital contributions, the

court found that Ira “brought numerous real properties into the

economic partnership and marriage” with Susan and that the best

evidence reflecting this was Ira’s first divorce decree and

separation agreement. The family court also found that these

properties “were not unencumbered by debt.” However, the family

court did not make any findings as to the value of Ira’s pre-

marital contribution but instead found “that the appraised

values of the properties are irrelevant to [Ira’s] equity

interest in the properties.”

In its Decree, the family court divided the parties’

real properties into three groups: (1) properties awarded to

Susan; (2) properties awarded to Ira; and (3) properties to be

sold with the proceeds to be awarded 75% to Susan and 25% to

Ira. The Decree awarded three properties to Susan and ten

properties to Ira, while designating four properties for sale

and distribution of the proceeds. The family court awarded Ira

the property that Ira previously raised in his motion for

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reconsideration as being no longer in the parties’ possession

having been sold prior to 2005. The escrow account for the

parties’ marital residence, which was to be sold, was first to

be used to pay the existing IRS debt in full before being

distributed to the parties.

The family court did not file a property division

chart or other document explaining its categorizations of the

properties and its computations related to the property

division. The court noted that Susan and Ira stipulated to the

appraised values of the properties in existence at the date of

marriage and in the month prior to trial; however, these values

are not clear from the court’s findings.

Susan was awarded a “property settlement” in the

amount of $41,830, “representing the marital assets willfully

wasted” by Ira in “his new romantic relationship.” 6 This amount

appears to correspond to the family court’s finding that Ira

paid at least $10,000 for his girlfriend’s criminal defense and

purchased over $30,000 in jewelry for her.

The family court also awarded Susan monthly alimony in

the amount of $3,000 per month for ten years. The court stated

its reason for awarding alimony:

6
Susan was also awarded $40,875 representing her 75% share of a
business investment and the value of the vehicles awarded to Ira.

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Based on the length of the marriage, the financial conduct
of the parties as it affected the economic partnership of
the parties both pre and post marriage, the small amount of
social security income received by [Susan] as her only
source of continuing income (said source having been
compromised by [Ira]’s actions), and the current age of
[Susan], the Court will award alimony by [Ira] to [Susan] .
. . .

The court also awarded Susan two of Ira’s retirement accounts

and specified that Susan shall be Ira’s sole beneficiary under

his life insurance policy.

The family court awarded Ira his real estate business

and the massage parlor business.

3. Appeal

On September 20, 2012, Ira filed a notice of appeal

from the Decree and the family court’s Findings of Fact and

Conclusion of Law. Ira asked the Intermediate Court of Appeals

(ICA) to vacate the property division and alimony award. Ira

argued that the court erred in deviating from partnership

principles based on Ira’s financial misconduct, in distributing

the parties’ properties without a clear application of

partnership principles or explanation for its division, and in

awarding alimony based on Ira’s financial misconduct rather than

on the factors required by Hawaiʻi law. 7

Susan urged the ICA to affirm the family court’s

Decree. Regarding property division, she argued that the family

7
Ira also argued that the family court erred when a different
judge from the one that conducted the trial signed the Decree.

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court distributed the parties’ marital assets and debts almost

equally, and she maintained that Ira failed to meet his burden

to show that he had any net value assets at the time the

economic partnership began. Susan also argued that the family

court’s alimony award was “very reasonable” considering Susan’s

“dire economic situation” and Ira’s income.

In its Memorandum Opinion issued on November 29, 2013,

the ICA vacated the Decree as it pertained to the property

division and remanded the case for further proceedings. The ICA

affirmed the family court’s deviation from partnership

principles, finding that Ira’s financial misconduct constituted

a “valid and relevant circumstance” as it reduced the marital

estate and “continues to reduce Susan’s income.” The ICA also

affirmed the family court’s awarding of $41,830 to Susan for

wasted marital assets as a result of Ira’s relationship with his

girlfriend. The ICA reasoned that because there was evidence

that the date of final separation could have happened before the

expenditures, the family court did not err in considering the

expenditures in deviating from the partnership model.

The ICA rejected Ira’s argument that the family

court’s property division appeared “arbitrary” absent a property

division chart or justification of its division of marital

property. The ICA found that the “family court was able to

identify and value marital assets without a property division

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chart.” The ICA also found that “the family court’s decision to

award alimony to Susan contrary to Ira’s representations of his

own needs” was not an abuse of discretion in light of the family

court’s “negative credibility findings” with respect to Ira.

Although the ICA found that the family court was able

to identify and value marital assets without a property division

chart, the ICA found that the family court committed reversible

error by distributing a property to Ira that was no longer in

the parties possession at the time of the divorce.

Consequently, the ICA vacated the Decree as it pertained to the

property division and remanded the case for further proceedings.

Ira filed his Application for Writ of Certiorari with

this court following the ICA’s January 3, 2014 Judgment on

Appeal.

II. STANDARDS OF REVIEW

The family court’s findings of facts are reviewed

under the clearly erroneous standard, while the court’s

conclusions of law are reviewed de novo under the right/wrong

standard. Kakinami v. Kakinami, 127 Hawaii 126, 136, 276 P.3d

695, 705 (2012).

“We review the family court’s final division and

distribution of the estate of the parties under the abuse of

discretion standard, in view of the factors set forth in HRS §

580-47 and partnership principles.” Tougas v. Tougas, 76 Hawaii

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19, 868 P.2d 437 (1994) (quoting Gussin v. Gussin, 73 Haw. 470,

486, 836 P.2d 484, 492 (1992)) (footnote omitted). The family

court’s determination of whether facts present valid and

relevant considerations authorizing a deviation from the

partnership model division is a question of law that this court

reviews under the right/wrong standard of appellate review.

Jackson v. Jackson, 84 Hawaii 319, 332-33, 933 P.2d 1353, 1366-

67 (App. 1997).

III. DISCUSSION

Ira raises three issues in his application. First,

whether the family court erred in failing to support its

property division determination with a property division chart

or other documented showing of its categorizations, valuations,

and computations. Second, whether the family court erred in

deviating from partnership principles when it based its

determination of marital property division and alimony on Ira’s

alleged financial misconduct. Finally, whether the family court

erred in its award of alimony to Susan by not considering

Susan’s actual financial need and Ira’s age, health, ability to

pay, and adverse financial condition.

A. Whether the Family Court Failed to Adequately
Support the Property Division

Ira argues that in the absence of a property chart or

other schedule reflecting the family court’s categorizations and

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computations, the reviewing court is faced with an “impossible”

task of trying to determine the basis for the trial court’s

“unexplained property division ruling” in deciding whether the

family court’s division of the property appears to be “just and

equitable.”

1. Partnership Principles

Under HRS § 580-47 (2006), 8 the family court has wide

discretion to divide marital partnership property according to

what is “just and equitable” based on the facts and

circumstances of each case. Tougas, 76 Hawaii at 26, 868 P.2d

at 444. Hawaiʻi case law follows a framework based on

partnership principles that provides guidance for family courts

in dividing marital partnership property. Kakinami, 127 Hawaii

at 137, 276 P.3d at 706; see also Tougas, 76 Hawaiʻi at 28, 868

P.2d at 446 (“The partnership model is the appropriate law for

the family courts to apply when exercising their discretion in

the adjudication of property division in divorce proceedings.”);

8
HRS § 580-47 provides that upon granting a divorce, the family
court may “make any further orders as shall appear just and equitable . . .
finally dividing and distributing the estate of the parties, real, personal,
or mixed, whether community, joint, or separate.” In making these orders,
the family court shall consider “the respective merits of the parties, the
relative abilities of the parties, the condition in which each party will be
left by the divorce, the burdens imposed upon either party for the benefit of
the children of the parties, and all other circumstances of the case.” HRS §
580-47(a) (2006). HRS § 580-47(a) was amended in 2011 to also require the
consideration of “the concealment of or failure to disclose income or an
asset, or violation of a restraining order.” See HRS § 580-47(a) (Supp.
2011).

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Gussin, 73 Hawaii at 471, 836 P.2d at 486 (noting that the

partnership model of marriage “provides the necessary guidance

to the family courts in exercising their discretion and to

facilitate appellate review”).

The partnership model distinguishes between marital

partnership property that is brought into the marriage and

marital partnership property that is acquired during the

marriage. 9 Accordingly, Hawaiʻi courts assign values to marital

partnership property using five categories designed to assist

courts in determining the equitable division and distribution of

property between spouses:

Category 1 includes the net market value of property

separately owned by a spouse on the date of marriage; 10

Category 2 includes the increase in the net market value of

Category 1 property during the marriage; 11

9
Marital separate property is not discussed in this opinion.

10
See Tougas, 76 Hawaiʻi at 27, 868 P.2d at 445 (“The net market
value “plus or minus, of all property separately owned by one spouse on the
date of marriage . . . but excluding the [net market value] attributable to
property that is subsequently legally gifted by the owner to the other
spouse, to both spouses, or to a third party.”).
11
See id. (describing Category 2 as the increase in the net market
value of all property whose net market value on the date of marriage “is
included in category 1 and that the owner separately owns continuously from
the” date of marriage to the date of the conclusion of the evidentiary part
of the trial).

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Category 3 includes the net market value of property

separately acquired by gift or inheritance during the marriage; 12

Category 4 includes the increase in the net market value of

Category 3 property during the marriage; 13 and

Category 5 includes the net market value of the remaining

marital estate at the conclusion of the evidentiary part of the

trial. 14 See Tougas, 76 Hawaiʻi at 26, 868 P.2d at 444.

Each partner’s individual contributions to the

marriage, i.e., the values of Category 1 and Category 3, are to

be repaid to the contributing spouse absent equitable

considerations 15 justifying a deviation. See Tougas, 76 Hawaiʻi

at 26, 868 P.2d at 444; see also Helbush v. Helbush, 108 Hawaiʻi

508, 512-13, 122 P.3d 288, 292-93 (App. 2005); Wong v. Wong, 87

12
See id. (describing Category 3 as the date-of-acquisition net
market value, “plus or minus, of property separately acquired by gift or
inheritance during the marriage but excluding the [net market value]
attributable to property that is subsequently legally gifted by the owner to
the other spouse, to both spouses, or to a third party”).
13
See id. (describing Category 4 as the increase in the net market
value of all property whose net market value “on the date of acquisition
during the marriage is included in category 3 and that the owner separately
owns continuously from the date of acquisition to the” date of the conclusion
of the evidentiary part of the trial).
14
See id. (describing Category 5 as the difference between the net
market values, “plus or minus, of all property owned by one or both of the
spouses on the [date of the conclusion of the evidentiary part of the trial]
minus the [net market values], plus or minus, includable in categories 1, 2,
3, and 4”).

15
Hawaiʻi courts frequently refer to “valid and relevant
considerations” and “valid and relevant circumstances” when discussing
deviation from partnership principles. We also use the term “equitable
considerations” in this opinion.

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Hawaiʻi 475, 483, 960 P.2d 145, 153 (App. 1998). Absent

equitable considerations justifying a different result, the

increase in the value of each partner’s individual contributions

to the marriage, i.e., the values of Category 2 and Category 4,

are divided equally between the parties. See Tougas, 76 Hawaiʻi

at 26, 868 P.2d at 445. The value of Category 5, which is the

net profit or loss of the marital partnership after deducting

the other four categories, is to be divided equally unless

equitable considerations merit deviation. Id.; see also

Helbush, 108 Hawaiʻi at 513, 122 P.3d at 293 (“[I]f there is no

agreement between the husband and wife defining the respective

property interests, partnership principles dictate an equal

division of the marital estate ‘where the only facts proved are

the marriage itself and the existence of jointly owned

property.’” (quoting Gussin, 73 Haw. at 482, 836 P.2d at 491)).

In other words, the values of Category 2, Category 4, and

Category 5 are awarded one-half to each spouse absent equitable

considerations justifying deviation from a 50/50 distribution.

Jackson, 84 Hawaiʻi at 332, 933 P.2d at 1366.

The partnership model requires the family court to

first find all of the facts necessary for categorization of the

properties and assignment of the relevant net market values.

Id. at 332, 933 P.2d at 1367. Second, the court must identify

any equitable considerations justifying deviation from an equal

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distribution. Id. Third, the court must “decide whether or not

there will be a deviation,” and in its fourth step, the court

decides the extent of any deviation. Id.

2. Division of Property in This Case

The ICA held that the family court clearly exceeded

the bounds of reason by awarding a non-existent asset valued at

$538,200 to one spouse, necessitating remand to the family court

for re-division of the property. Despite the award of a

property that had been sold several years before the divorce,

the ICA found that the “family court was able to identify and

value marital assets without a property division chart.” The

record, however, indicates otherwise. Thus, we also consider

whether the record in this case is adequate for review of the

equities of the family court’s division of the marital estate.

The family court divided the real estate properties of

the marital estate into three groups: (1) properties to be

distributed to Susan (three); (2) properties to be distributed

to Ira (ten); and (3) properties to be sold with the proceeds to

be divided between Susan and Ira (four). In its division of the

real properties into these three groups, the family court did

not list any of the properties’ outstanding mortgages or net

market values either at the date of marriage or close of

evidence at trial. The family court also did not assign net

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market values to each property according to the categories of

the partnership model.

While the family court made several findings regarding

Susan’s pre-marital capital contribution and the valuation of

her properties, these findings were incomplete. The court found

that the funds Susan used to purchase the marital residence

constituted a pre-marital capital contribution to the

partnership. The family court also found that the liquidation

of one of Susan’s Texas properties constituted a pre-marital

capital contribution to the partnership. However, the family

court did not specify the value of the marital residence or the

Texas property on the date of marriage or the increase in value

of the properties during the marriage. With respect to the

other two Texas properties, the family court found that the

properties were encumbered by a mortgage and were sold during

the marriage, but the court did not determine the proceeds of

the sales or assign values to the property. Additionally, it is

not clear whether the court credited Susan with the proceeds of

the sales of these properties as pre-marital capital

contributions.

With respect to the family court’s findings regarding

Ira’s pre-marital capital contributions, the court found only

that Ira “brought numerous real properties into the economic

partnership and marriage” and that the best evidence of this was

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the divorce decree and separation agreement from his previous

divorce. The family court found that these properties “were not

unencumbered by debt,” but the court did not include in its

findings the net market values of any of Ira’s “numerous real

properties” on the date of marriage or the increase in value of

the properties during the marriage.

As a result, the family court’s findings do not

reflect that the court credited Ira with any pre-marital capital

contributions. The absence of such findings renders it

infeasible for the parties and the reviewing court to understand

the basis for the property division. Further, in the absence of

determinations of pre-marital net market values of assets at the

date of marriage and the close of evidence at trial and a

categorization of the marital assets, the reviewing court is not

able to discern whether or not the family court correctly

calculated its overall property division.

3. Property Division Chart

It is well established that a family court is guided

in divorce proceedings by partnership principles in governing

division and distribution of marital partnership property. See

Helbush, 108 Hawaiʻi at 513, 122 P.3d at 293. It is axiomatic

that a family court cannot satisfactorily fulfill its

responsibility under general partnership principles to determine

each party’s contributions and equitably divide marital property

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without first assessing the net market values of the parties’

respective properties at various time frames. See Jackson, 84

Hawaiʻi at 332, 933 P.2d at 1366 (describing what the partnership

model requires of the family court).

In Higashi v. Higashi, 106 Hawaiʻi 228, 103 P.3d 388

(App. 2004), the ICA held that, in applying partnership model

principles and determining property categorizations, the family

court should utilize a property division chart or other similar

document. Higashi directs the family court to file, as part of

its findings and conclusions, a property division chart that

includes the following:

(1) all of the parties’ assets stating the relevant net

market values of the assets using the five-category scheme of

the partnership model,

(2) the partnership model division of the assets,

(3) the actual division of the assets, and

(4) an explanation of the reasons for the material

differences between the partnership model division and the

actual division. 16 Id.

16
Specifically, Higashi directs the family court to include the
following in its property division chart:

(a) an itemized list of each of plaintiff’s Category 1 and 3
assets/debts, stating (i) the Category 1 and 3 value/amount
of each and (ii) the Category 2 and 4 net market value of
each asset;

(continued. . . )

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A family court that chooses to ignore the sound

recommendation of the Higashi decision runs the risk that its

decision will not appear “just and equitable” to the reviewing

court and the parties. We endorse the recommendation made by

the Higashi court and emphasize that a chart or equivalent

itemization of the information required by the five-category

partnership model is a valuable and important tool for the

family court to properly divide property and afford transparency

to the parties and reviewing court. See Higashi, 106 Hawaiʻi at

230, 103 P.3d at 390 (providing a detailed description of what

the family court’s property division chart should include).

(. . .continued)
(b) an itemized list of each of defendant’s Category 1 and 3
assets/debts, stating (i) the Category 1 and 3 value/amount
of each and (ii) the Category 2 and 4 net market value of
each asset;

(c) an itemized list of each of plaintiff’s and/or defendant’s
Category 5 assets/debts stating the net market value of each;

(d) an itemized statement of the Partnership Model Division of
each of the assets/debts owned/owed at the time of the
divorce;

(e) an itemized statement of the actual division by the court of
each of the assets/debts owned/owed at the time of the
divorce;

(f) an itemized statement of the specifics of each material
difference between (i) the Partnership Model Division and
(ii) the actual division by the court; and

(g) a statement/explanation of the court’s reason(s) for each
material difference.

Higashi, 106 Hawaiʻi at 230, 103 P.3d at 390 (formatting added).

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Given the numerous omissions of property categorizations and net

market values in this case, the record is deficient to enable

meaningful appellate review of the family court’s distribution

of the marital estate.

B. Whether the Family Court’s Deviation from a 50/50
Division of the Marital Estate in Addition to a Deduction
for Marital Waste Was Justified

While the ICA has remanded this case for re-division

of the property, the ICA upheld the family court’s deviation

from partnership principles. Thus, we consider whether Ira’s

dissipation of marital assets through gifts and payments to his

girlfriend and negligently late payments to the IRS constitute

equitable considerations allowing deviation from marital

partnership principles in the division of the marital estate.

In its decision, the ICA found that Ira’s conduct with

respect to the IRS tax debt constituted a valid and relevant

circumstance for deviation from marital partnership principles.

The ICA reasoned that the present and future garnishment of

Susan’s social security check was an appropriate factor for the

family court to consider in deviating from an equal division of

their marital partnership property. Further, the ICA affirmed

the family court’s designation of Ira’s financial misconduct as

a waste of marital assets. In his Application, Ira suggests

that the ICA’s analysis condones the family court’s punishing of

him twice for the same conduct.

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Because the family court appeared to treat Ira’s

financial misconduct as an equitable consideration justifying

deviation from partnership principles and as marital waste

during the divorce to be charged to Ira, we discuss both

concepts below.

1. Deviation from Partnership Principles and Marital
Waste

As discussed, Hawaiʻi law follows a partnership model

that governs the division and distribution of marital

partnership property. Helbush, 108 Hawaiʻi at 513, 122 P.3d at

293. “[W]hile the family court judges are accorded wide

discretion pursuant to HRS § 580-47 in adjudicating the rights

of parties to a divorce, the family court strives for ‘a certain

degree of uniformity, stability, clarity or predictability in

its decision-making and thus are compelled to apply the

appropriate law to the facts of each case and be guided by

reason and conscience to attain a just result.’” Tougas, 76

Hawaiʻi at 28, 868 P.2d at 446 (alteration omitted) (quoting

Gussin, 73 Haw. at 486, 836 P.2d at 492). Accordingly, our law

provides certain parameters for a family judge’s discretion.

While a family court is not required to presume

specific percentage splits in the division of each category of

property, Gussin, 73 Haw. at 481, 836 P.2d at 490, it must

exercise its discretion within the framework provided by our

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law. The family court’s first step is to find the requisite

facts under the partnership model (i.e., utilize the five

categories and assign net market values) before proceeding to

the second step of deciding whether or not the facts present any

equitable considerations warranting deviation from the

partnership model. Jackson, 84 Hawaiʻi at 332, 933 P.2d at 1366.

Whether equitable considerations exist justifying

deviation from partnership principles is a separate issue from

whether or not the court should charge a divorcing party for

wasted marital assets. A family court may charge a divorcing

party for wasted marital assets when, during the divorce, “a

party’s action or inaction caused a reduction of the dollar

value of the marital estate under such circumstances that he or

she equitably should be charged with having received the dollar

value of the reduction.” Higashi, 106 Hawaiʻi at 241, 103 P.3d

at 401.

As discussed below, in the case of marital waste, the

wasted assets are treated as a part of the marital partnership

property that has already been awarded to the spouse responsible

for the waste. This is a separate consideration from whether or

not to deviate from partnership principles. Because these are

distinct legal considerations, we discuss equitable deviation

from the partnership model separately from chargeable deductions

for marital waste.

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2. Equitable Deviation from the Partnership Model

In determining whether the circumstances justify

deviation from the partnership model, the family court must

consider the following:

the respective merits of the parties, the relative
abilities of the parties, the condition in which each party
will be left by the divorce, the burdens imposed upon
either party for the benefit of the children of the
parties, and all other circumstances of the case.

HRS § 580-47(a) (2006); see also Jackson, 84 Hawaiʻi at 333, 933

P.2d at 1367. “Other than relative circumstances of the parties

when they entered into the marital partnership and possible

exceptional situations, the above-quoted part of HRS § 580–47(a)

requires the family court to focus on the present and the

future, not the past.” Jackson, 84 Hawaiʻi at 333, 933 P.2d at

1367. 17 In other words, deviation from the partnership model

should be based primarily on the current and future economic

needs of the parties rather than on punishing one party for

financial misconduct. 18

In its Findings of Facts and Conclusions of Law, the

family court found that there were valid and relevant

17
See also Jacoby v. Jacoby, 134 Hawaiʻi 431, 448, 341 P.3d 1231,
1248 (App. 2014); Epp v. Epp, 80 Hawaiʻi 79, 89, 905 P.2d 54, 64 (App. 1995).
18
Under the 2011 amendments to HRS § 580-47(a), a court must also
consider “the concealment of or failure to disclose income or an asset, or
violation of a restraining order.” See HRS § 580-47(a) (Supp. 2011). These
amendments do not apply in this case. See 2011 Haw. Sess. Laws Act 140, § 3
at 356 (providing an effective date of October 1, 2011, and stating that the
act “does not affect rights and duties that matured, penalties that were
incurred, and proceedings that were begun before its effective date”).

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circumstances for departure from the partnership model. The

family court considered the outstanding federal tax liability

and the liquidation of Susan’s three Texas properties during the

marriage to be equitable considerations. In the Decree, the

court found that the equities in this case were skewed in favor

of Susan, and the court explained that Ira’s “actions throughout

the relationship . . . time and again placed” Susan “in

worsening financial circumstances.” Thus, the family court

apparently found an equitable consideration based on Ira’s

financial misconduct.

The family court focused on Ira’s financial misconduct

while “underemphasiz[ing] the relative abilities of the parties

and the condition in which each party will be left after the

divorce.” See Hatayama v. Hatayama, 9 Haw. App. 1, 11, 818 P.2d

277, 282 (1991). This evidences “a fundamental misunderstanding

of the economic consequence of being married.” Id. Divorce “is

not a vehicle by which one spouse is compensated for having

given more than he or she received during the marriage or for

having had to suffer during the marriage from the other spouse’s

inadvertent, negligent, or intentional inadequacies, failures,

or wrongdoings, financial or otherwise.” Id.; cf. Richards v.

Richards, 44 Haw. 491, 509, 355 P.2d 188, 198 (1960) (explaining

that “respective merits of the parties” as used in HRS § 580-47

does not have “any reference to personal conduct of the spouse”

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but only means the “merits of the respective claims of the

spouses”). Thus, the court’s analysis in deciding whether or

not to apply a deviation should focus on the abilities of the

parties and the circumstances in which each party will be left by

the divorce.

Consequently, Ira’s financial misconduct during the

marriage should not have been considered by the family court

when deciding whether to deviate from an equal division of

marital partnership property in the absence of a finding of

extraordinary circumstances. 19 Instead, the family court should

have focused on the factors set forth in HRS § 580-47(a) in

making its determination of whether or not equitable

considerations justified a deviation from an equal division of

the marital partnership property. Accordingly, the family

court’s decision to deviate from an equal division to a 75/25

division was an abuse of discretion to the extent the family

court considered Ira’s financial misconduct to be a “valid and

relevant consideration.”

Although financial misconduct is not a proper

consideration in determining a deviation from partnership

19
In Hatayama the ICA noted that a spouse’s financial misconduct
may justify a deviation in “extraordinary circumstances.” 9 Haw. App. at 12,
818 P.2d at 283. The family court may, on remand, consider whether this case
presents “extraordinary circumstances.”

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principles in the absence of a finding of exceptional

circumstances, our law does allow for a court to charge a

divorcing party for marital waste during the pendency of a

divorce, which is discussed in the next section.

3. Chargeable Deduction for Marital Waste

Hawaiʻi courts charge a divorcing party for marital

waste during the divorce when doing so would be equitable. See

Chen v. Hoeflinger, 127 Hawaiʻi 346, 358, 279 P.3d 11, 23 (App.

2012); Higashi, 106 Hawaiʻi at 241, 103 P.3d at 401. It is

fundamental to recognize that marital waste is only a chargeable

deduction if it occurs during the divorce; thus, “a reduction of

the value of the marital estate during the marriage, but prior

to the time of the divorce, is not a chargeable reduction.”

Higashi, 106 Hawaiʻi at 241, 103 P.3d at 401. Thus, a court

cannot find that a party’s use of marital partnership property

is chargeable as marital waste without first finding the date on

which the divorce commenced. See id.

The divorce commences on the earliest of the following

dates:

(1) the filing of a complaint for divorce;

(2) the date of final separation (i.e., the earlier of the

date the trial is completed or the unconditional, unmodified

communication from one spouse to the other that the marriage has

ended and divorce is desired); or

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(3) a substantial step is taken toward final separation,

which later occurs, or filing the complaint, which later is

filed. See Higashi, 106 Hawaiʻi at 241, 103 P.3d at 401; Myers

v. Myers, 70 Haw. 143, 151-52, 764 P.2d 1237, 1243 (1988)

(defining the date of final separation).

In the present case, the family court did not make a

finding that the parties’ divorce commenced on a specific date.

While the family court found that Ira purchased airline tickets

for his girlfriend and her daughter in December 2008 and began

dating and living with her in 2009, the court did not make a

specific finding of the date the divorce commenced for the

purpose of determining whether dollar reductions to the value of

the marital estate were chargeable to Ira.

Although the family court found that the exact date at

which Ira “moved out” of the marital residence was “unclear,”

the family court’s findings referred to the “July 2010” date as

the “time of separation.” Notwithstanding the absence of a

finding regarding the date the divorce commenced, the ICA held

that the parties’ divorce date occurred prior to 2010 because

Ira took a substantial step towards the date of separation

through the purchases expended on his girlfriend.

The family court awarded Susan $41,830 representing

wasted marital assets with regard to Ira’s relationship with his

girlfriend. Presumably, the family court awarded Susan this

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amount in light of the $10,000 Ira paid for his girlfriend’s

criminal defense in addition to the $30,000 he spent on jewelry

in 2010. 20 However, the family court should have first

determined the parties’ date on which the divorce commenced

before designating Ira’s expenditures on his girlfriend as

marital waste. If the starting date of the divorce was a date

in early 2009, any subsequent dissipation of marital assets,

which would include the jewelry expenditures, could be

chargeable to Ira as marital waste, and the family court may

accordingly “treat that dollar amount as having been awarded to

the divorcing party who caused that chargeable reduction.” 21

Higashi, 106 Hawaiʻi at 241-42, 103 P.3d at 401-02. However, if

the divorce began in July 2010, Ira’s dissipation of marital

20
Ira’s purchasing of the $30,000 in jewelry for his girlfriend is
closely related to his failure to pay the IRS tax debt in full with the
second home equity line. The family court found that the money Ira used for
the purchase of the jewelry “was intended to be utilized for the payment of
taxes.” On remand, the family court may consider whether the excess
penalties and fees incurred because of Ira’s failure to pay the IRS debt with
the second equity line should be considered a wasted marital asset. This
determination will depend on the court’s determination of the date of the
commencement of the divorce.
21
Instead of considering Ira’s expenditures on his girlfriend as
having been awarded to Ira, the family court awarded Susan a property
settlement to be paid from Ira’s share of the escrow account for the marital
residence, and if the funds from the escrow account were insufficient, Ira
would have to make payment in full within a certain number of days from the
filing of the Decree. The amount of the settlement awarded to Susan appeared
to be the full value of the waste. This is contrary to Higashi, which
requires the court to treat the dollar amount as being a part of the marital
partnership property and treating it as already awarded to Ira. In requiring
Ira to pay the full amount of the waste to Susan, the family court required
Ira to pay more than he was required under the Higashi approach.

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assets could not be considered a chargeable reduction because

the March and April 2010 jewelry purchases would be considered

as having occurred during the marriage. Id. at 241, 103 P.3d at

401.

Thus, absent a finding by the family court regarding

the date the divorce commenced, it is unclear as to whether or

not Ira’s dissipation of marital assets should have qualified as

a chargeable reduction in the division of marital assets. The

ICA therefore erred in affirming the family court’s award to

Susan for wasted marital assets. 22

C. Whether the Family Court Erred by Basing the
Alimony Award on Ira’s Financial Misconduct

In his third question presented, Ira argues that the

family court erroneously based its alimony ruling on its finding

of his financial misconduct while failing to consider Susan’s

“actual expenses” and his “age, health, ability to pay, and

“adverse financial condition after the divorce.” The ICA

declined to find that the family court’s alimony award to Susan

constituted an abuse of discretion in light of the family

court’s finding that Ira was “not credible.”

22
Consequently, we do not address Ira’s argument that the family
court and the ICA also erred by penalizing him twice for the asserted
financial misconduct by treating it both as an equitable consideration
justifying deviation from partnership principles and as marital waste.

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However, because the court’s division of property

likely had an impact in determining Susan’s entitlement to

alimony, the ICA should have also vacated the family court’s

alimony award. 23 Kuroda v. Kuroda, 87 Hawaiʻi 419, 430, 958 P.2d

541, 552 (App. 1998) (vacating an alimony award and remanding

for reconsideration in light of the court’s decision to vacate

the corresponding property division of the divorce decree).

Secondly, although the ICA characterized the family

court as having relied on the financial condition of the parties

in determining the alimony award, the family court’s

justification for the award apparently took into account Ira’s

financial misconduct. Because alimony will be re-determined on

remand, we discuss the appropriate circumstances that may be

considered in an award of spousal support.

HRS § 580-47(a) (2006) requires the family court upon

decreeing a separation to take into consideration the following

criteria when making further orders for the support and

maintenance of either spouse: “the respective merits of the

parties, the relative abilities of the parties, the condition in

which each party will be left by the divorce, the burdens

imposed upon either party for the benefit of the children of the

parties, and all other circumstances of the case.” The court

23
We do not suggest that vacating a division of property would
require vacating an award of alimony in all cases.

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must also consider all of the following factors in ordering

spousal support and maintenance:

(1) Financial resources of the parties;

(2) Ability of the party seeking support and
maintenance to meet his or her needs independently;

(3) Duration of the marriage;

(4) Standard of living established during the
marriage;

(5) Age of the parties;

(6) Physical and emotional condition of the parties;

(7) Usual occupation of the parties during the
marriage;

(8) Vocational skills and employability of the party
seeking support and maintenance;

(9) Needs of the parties;

(10) Custodial and child support responsibilities;

(11) Ability of the party from whom support and
maintenance is sought to meet his or her own needs
while meeting the needs of the party seeking support
and maintenance;

(12) Other factors which measure the financial
condition in which the parties will be left as the
result of the action under which the determination of
maintenance is made; and

(13) Probable duration of the need of the party
seeking support and maintenance.

HRS § 580-47(a); Cassiday v. Cassiday, 6 Haw. App. 207,

215, 716 P.2d 1145, 1151 (1985) (“When deciding in a

divorce case whether one party must pay periodic support to

the other, for how long, and how much, the family court

must consider all of the factors enumerated in HRS § 580-

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47(a)[].”), aff’d in part, rev’d in part, 68 Haw. 383, 716

P.2d 1133 (1986).

In its Decree the family court provided four reasons

as the basis for its awarding of $3,000 per month for ten years

to Susan: “the length of the marriage”; “the financial conduct

of the parties”; “the small amount of social security income” as

Susan’s “only source of continuing income (said source having

been compromised by [Ira’s] actions)”; and Susan’s age.

(Emphasis added). While the ICA characterized the family court

as actually relying on the financial condition of the parties

and not Ira’s financial conduct, the family court’s specified

justification for the alimony award appears to have taken into

account Ira’s financial misconduct.

Further, the family court’s Decree incorrectly states

that Susan’s social security check would continue to be

garnished by the IRS. However, given that the family court also

ordered the outstanding IRS debt to be paid in full from the

escrow account of the marital property, there could be no

genuine concern for the future garnishment of Susan’s social

security check.

Additionally, Ira argues that the family court erred

in its alimony award to Susan because it awarded more money than

Susan’s actual needs required. Susan provided the family court

with a statement of actual expenses. In her Income and Expense

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Statement filed November 7, 2011, Susan stated that her monthly

personal expenses amounted to $1,390. In her proposed divorce

decree, Susan requested that the court award her alimony in a

single lump-sum payment of $250,000. In its Decree, the court

ordered monthly alimony in the amount of $3,000 per month for

ten years, totaling $360,000 without making a finding as to the

actual monthly spousal support that Susan would require based on

her demonstrated needs.

Even if Ira is able to pay the additional amount of

alimony, Susan is not entitled to more spousal support than is

required to satisfy her demonstrated needs. See Cassiday, 6

Haw. App. at 215, 716 P.2d at 1151. The family court did not

make a finding that Susan required $3,000 in monthly support and

maintenance. The family court should not have awarded Susan

this amount absent a finding that she required funds beyond the

amount provided in her Income and Expense Statement.

Furthermore, the family court did not make any finding

with respect to the large sums of money (approximately $390,000)

that were deposited into Susan’s personal bank account between

December 2009 and April 2012, which included the reimbursement

checks from her sister’s convent totaling $98,034.74 and the

$49,221.91 in “cashed out” funds.

On remand, the family court should make any award of

alimony in accordance with the factors set out in HRS § 580-

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47(a) (2006). This requires, among other things, consideration

of the needs of both of the parties and Ira’s ability to pay.

IV. CONCLUSION

For the foregoing reasons, the ICA’s January 3, 2014

Judgment on Appeal is affirmed to the extent that it vacates the

family court’s property division. The ICA’s January 3, 2014

Judgment on Appeal and the family court’s August 22, 2012

“Decree Granting Absolute Divorce” are otherwise vacated. This

case is remanded to the family court for further proceedings

consistent with this opinion.

Peter Van Name Esser and /s/ Mark E. Recktenwald
Huilin Dong
for petitioner /s/ Paula A. Nakayama

Samuel P. King, Jr. /s/ Sabrina S. McKenna
for respondent
/s/ Richard W. Pollack

/s/ Edward H. Kubo, Jr.

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