Opinion
Supreme Court No. S-12293.
September 26, 2007.
Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Mark Rindner, Judge, Superior Court No. 3AN-97-81 P/C.
Appearances: Robert C. Erwin, Palmier ~ Erwin, LLC, Anchorage, for Appellant Mark Dykman.
Tonja Woelber, Tonja Woelber, Attorney at Law, P.C., Anchorage, for Appellee Wells Fargo Alaska Trust Company, N.A.
Before: Fabe, Chief Justice, Matthews, Eastaugh, Bryner, and Carpeneti, Justices.
NOTICE
Memorandum decisions of this court do not create legal precedent. See Alaska Appellate Rule 214(d). Accordingly, this memorandum decision may not be cited for any proposition of law or as an example of the proper resolution of any issue.
MEMORANDUM OPINION AND JUDGMENT
Entered pursuant to Appellate Rule 214.
I. INTRODUCTION
In 2004 Mark Dykman agreed to create a $100,000 trust fund to pay his child support obligations to his son D.P.'s trustee, Wells Fargo, with the remaining principal, if any, reverting to Dykman once D.P. turned eighteen. A subsequent dispute arose between Dykman and Wells Fargo about the appropriate investment mix for the trust fund account. The superior court agreed with Wells Fargo and issued an order approving a conservative investment scheme. Dykman argues that the superior court misinterpreted the trust agreement. Because the trust agreement expressly states that the trust investment would be conservative and acceptable to Wells Fargo, we affirm.
II. FACTS AND PROCEEDINGS
Mark Dykman is the biological father of D.P., who was born in 1993. In 1999 Dykman, D.P.'s mother, D.P. (who was represented by an attorney and a guardian ad litem), and the State of Alaska Child Support Enforcement Division stipulated to a child support arrangement for D.P. Under this stipulation, Dykman would pay D.P.'s trustee, Wells Fargo, $1,300 per month in child support via an irrevocable trust until D.P. reached eighteen years of age.
The 1999 Stipulation states that the National Bank of Alaska would serve as trustee. Wells Fargo merged with the National Bank of Alaska in 2000 and thus assumed the role of D.P.'s trustee.
Dykman was unable to keep up with his child support payments to Wells Fargo and did not set up the trust fund required under the 1999 stipulation. The parties modified their agreement in 2004 ("the 2004 Agreement"). Under the 2004 Agreement, Dykman was to pay into a trust fund $20,000 in overdue child support. Another $100,000 was also to be paid into trust and treated as an independent fund. Wells Fargo, as D.P.'s trustee, would own the independent fund, but the fund itself would be placed with G. Pete Fields of Capital Resource Group, Inc. The parties further agreed that "[t]he investment of the [independent fund] would be a conservative investment vehicle and should be spelled out and acceptable to Wells Fargo." Once D.P. turned eighteen years old, the balance of the independent fund, if any, would revert to Dykman. The 2004 Agreement was approved by the superior court. A controversy subsequently arose regarding the balance of fixed income investments to equity investments with respect to the independent fund. Wells Fargo argued that a conservative seventy-five percent fixed income-twenty-five percent equity investment mix was appropriate because the purpose of the trust was to provide consistent payment for child support: "The underlying principle is that it is more important to be able to provide for D.P.'s needs through his minority than it is to garner the highest rate of return possible, when the latter is offset by the risk of loss." Dykman argued for a twenty-five percent fixed income-seventy-five percent equity investment mix so that Fields could better use his expertise to increase the principal that would revert to Dykman when D.P. turned eighteen. Dykman argued that the nature of the trust account was irrelevant because he is obligated to pay the $1,300 regardless of whether the trust corpus is exhausted early.
After a hearing on the issue, the probate master recommended that the superior court approve Wells Fargo's proposed order to adopt its conservative investment mixture. The superior court accepted the probate master's recommendation and issued Wells Fargo's requested order.
Dykman appeals this order.
III. DISCUSSION
Dykman argues that the superior court erred in interpreting the 2004 Agreement to require a conservative investment acceptable to Wells Fargo. He claims that "[t]here would be no need for the expertise of G. Pete Fields in handling the investment if the contract is interpreted to demand only the most conservative investments." He also asserts that he reasonably expected that some of the principal of the trust would revert to him enhanced by Fields's investments when D.P. turned eighteen.
This court generally reviews questions of contract interpretation de novo. Contracts are interpreted to "give effect to the reasonable expectations of the parties."
Afognak Joint Venture v. Old Harbor Native Corp., 151 P.3d 451, 456 (Alaska 2007).
Exxon Corp. v. State, 40 P.3d 786, 793 (Alaska 2001) (quoting Stepanov v. Homer Elec. Ass'n, 814 P.2d 731, 734 (Alaska 1991)).
The 2004 Agreement unequivocally states that the independent fund investment would be both conservative and subject to the approval of Wells Fargo: "The investment of the account would be a conservative investment vehicle and should be spelled out and acceptable to Wells Fargo." Thus, the superior court did not depart from the parties' agreement when it approved Wells Fargo's proposed investment mix. It simply enforced the agreement by its own terms. In light of this provision, it is unreasonable for Dykman to expect that Fields would have a free hand to invest the independent fund. Further, Fields's expertise as an investor is still relevant. He will have a smaller amount to invest in equities than Dykman would like but the amount is nonetheless not an insignificant fraction of the entire independent fund.
IV. CONCLUSION
The superior court's order approving Wells Fargo's proposed investment mix for the independent fund is AFFIRMED.