Opinion
No. 63397-0-I.
November 8, 2010.
Appeal from a judgment of the Superior Court for King County, No. 07-3-06505-2, Helen Halpert, J., entered March 30, 2009.
Affirmed by unpublished opinion per Ellington, J., concurred in by Leach, A.C.J., and Grosse, J.
In this dissolution matter, we are asked to review the characterization of a pension and the resulting distribution of property, an alleged limitation on mother's sole decision-making authority under the parenting plan, and the fees award. The trial court did not abuse its discretion, and its one factual error had no effect on the outcome. We affirm.
BACKGROUND
Carl and Katherine Bohm began living together in November 1998 and married in May 1999. Katherine had recently been laid off, and the couple agreed she would stay home to care for Carl's two children from a prior marriage and for their own daughter (born in 2000). This remained the arrangement throughout the Bohms' marriage.
Before the marriage, Carl had worked for Weyerhaeuser for 104 months, from September 1976 to May 1985, and had returned to Weyerhaeuser in March 1994. Upon his return, he negotiated that his basic pension calculation would recognize his previous months of employment. At the end of 1994, Carl became eligible for a supplemental pension which also recognized his previous employment.
Carl had a successful career at Weyerhaeuser. In 1995, he was promoted to director of mill supply. In 2001, he was promoted to vice president of the containerboard business. By 2003, he was a company officer. Katherine undertook a number of social obligations connected to Carl's visible position at the company.
Carl and Katherine separated in September 2007 after nine years of marriage.
The parties agreed that November 1998, when Katherine and Carl began living together, was the beginning of their marriage for the purpose of their dissolution proceedings.
Carl was laid off in November 2008. Weyerhaeuser treated his departure as a retirement, making him eligible to receive pension benefits. Weyerhaeuser's pension administrator credited him with 298 months of service. Carl chose to cash out his basic pension for a lump sum payment of $878,387. His supplemental pension benefit is paid in increments of about $45,000 per year over five years, beginning in 2008.
Carl's actual time with the company was 280 months.
At the time of trial in December 2008, Katherine was 49 years old and Carl was 57. Their daughter Caroline was eight. Carl was paying postsecondary support for his two children from his prior marriage.
The court awarded Katherine all her separate property, 60 percent of the community assets, $50,000 cash from Carl's separate property, two years of maintenance at $7,000 per month (for a total of three-and-a-half years of support after separation), $30,000 of the $40,000 she requested for attorney fees, and the option to remain in the family home with Carl paying the mortgage until the home sold. The court awarded Carl 40 percent of the community assets and his remaining separate property.
Taking into account Carl's lump sum payment of maintenance for 2009 to 2010, as well as his responsibility for certain community expenses relating to the family home (but not 2010 to 2011 maintenance payments), Katherine received about 37 percent of the total marital estate ($806,272.39), and Carl received about 63 percent ($1,387,972.26).
Katherine asserts the effect of the court's distribution of property is 25 percent to Katherine and 75 percent to Carl. From our review of the record and decree, this is inaccurate.
In characterizing Carl's basic pension, the court used the time-rule method, by which the separate and community aspects of a pension are derived by dividing the years (or months) of marriage concurrent with the pensioner's service (here, 106 months) by the total years (or months) of service during which benefits were earned. The court determined that the appropriate denominator was Carl's actual length of service, 280 months, instead of the 298 months credited by the pension administrator. Thus, the court characterized 38 percent of Carl's basic pension as community property.
See In re Marriage of Rockwell, 141 Wn. App. 235, 251-52, 170 P.3d 572 (2007) (citing Bulicek v. Bulicek, 59 Wn. App. 630, 646-37, 800 P.2d 394 (1990)).
In characterizing Carl's supplemental pension, the court used a modified time-rule method. Because of the specialized nature of the benefit, the court used the 166 months that Carl was eligible for the supplemental pension as the denominator, instead of either the total 280 months Carl worked for Weyerhaeuser or the 298 "months of benefit" as defined by the pension administrator. The numerator remained 106 months. Thus, the court characterized 64 percent of Carl's supplemental pension as community property.
The court found that Katherine had earned $100,000 per year before marriage. The court also found that, upon reentry into the workforce, Katherine's earnings would probably not exceed $2,051 per month, the median earnings for a woman her age.
The court valued Carl's Roslyn home at $215,000 and his Mercerwood Shore Club interest at $2,500.
The parties agreed upon a parenting plan under which Katherine has decision-making authority with respect to most child-rearing decisions. However, the court required that, before Katherine could seek Carl's financial contribution toward Caroline's extracurricular activities, she must obtain his agreement.
The court found no basis for an award of attorney fees to Katherine based on intransigence, but ordered Carl to pay a portion of her fees based on need and ability to pay.
Katherine appeals the court's characterization and distribution of property, the restriction on her decision-making authority under the parenting plan and the court's refusal to find that Carl was intransigent.
Carl conditionally cross-appeals the characterization of his pensions. Because of our disposition, we do not address his argument.
DISCUSSION Characterization of Property
The court must first determine the nature and extent of the community and separate property. The characterization of property is a question of law; review is de novo. Although characterization is a question of law, the method for determining the percentage of property attributable to the community is a discretionary decision based on the facts before the court. In deciding the distribution of property, the court has wide discretion.
In re Marriage of Marzetta, 129 Wn. App. 607, 616, 120 P.3d 75 (2005), overruled on other grounds by, McCausland v. McCausland, 159 Wn.2d 607, 152 P.3d 1013 (2007).
See Rockwell, 141 Wn. App. at 253; see also In re Marriage of Wright, 107 Wn. App. 485, 487, 27 P.3d 263 (2001) (in the exercise of its discretion, trial court determines the value of the community's interest in a pension after considering all relevant factors).
Rockwell, 141 Wn. App. at 251. A court abuses its discretion when it makes a decision on untenable grounds or for untenable reasons. In re Marriage of Littlefield, 133 Wn.2d 39, 46-47, 940 P.2d 1362 (1997). A court's decision "is based on untenable grounds if the factual findings are unsupported by the record; it is based on untenable reasons if it is based on an incorrect standard or the facts do not meet the requirements of the correct standard." Id. at 47.
Earnings arising from services performed during marriage are community property. Pension benefits constitute property rights in the nature of deferred compensation. The portion of a pension acquired during marriage is characterized as community property.
Rockwell, 141 Wn. App. at 251.
Id.
Id.
Katherine challenges the court's use of the time rule method to characterize Carl's pensions, and contends the court should have relied upon the subtraction method. The subtraction method determines the community share of a pension by comparing the percentage gain in the pension during the marriage to the total value of the pension at retirement.
See id. at 251-54 (citing Bulicek, 59 Wn. App. at 638-39, In re Marriage of Chavez, 80 Wn. App. 432, 434-37, 909 P.2d 314 (1996)).
This court addressed both methods of characterization in In re Marriage of Rockwell. There, the wife accumulated 16 years of pension benefits before the marriage in 1978. The parties separated 26 years later in 2004. In characterizing the wife's pension, we found the time rule method more appropriate than the subtraction method because the subtraction method disproportionately undervalued the 16 years of pension benefits earned before marriage. We also noted that "Washington cases have used only the time rule method, not the subtraction method."
141 Wn. App. 235, 170 P.3d 572 (2007).
Id. at 239.
Id.
Id. at 253.
Id. at 254.
Katherine attempts to distinguish this case from Rockwell by asserting that Carl did not accrue significant pension benefits before she and Carl married. This is not correct, as Carl had accumulated over 12 years of benefits before marriage.
Katherine further argues that her contributions to the marriage should outweigh credit earned before marriage because without her hard work and support, Carl could not have achieved his career success at Weyerhaeuser. Katherine's efforts may indeed have bolstered Carl's success at Weyerhaeuser, contributing to his increasing income and his increasing pension benefit. Nonetheless, his ultimate benefit calculation depended upon credits earned during his service with the company before the marriage.
The court evaluated the facts and chose the most accepted method for characterizing the community property portion of Carl's pensions. The court did not abuse its discretion in doing so.
The denominator in the time rule method should generally represent the total number of years (or months) of service for which pension benefits were earned. Katherine challenges the court's inclusion of Carl's first period of work with Weyerhaeuser, arguing that these 104 months should not be included because Carl was not then enrolled in the pension plan. But before the marriage, Carl negotiated retroactive credit for these months of service. The court did not abuse its discretion by including the time associated with those credits in the characterization calculation.
Rockwell, 141 Wn. App. at 251-52.
Distribution Of Property And Weight Of Property Characterization
The court's distribution of property in a dissolution action is guided by statute, which requires it to consider multiple factors in reaching an equitable conclusion. These factors include the nature and extent of the community and separate property, the duration of the marriage, and the economic circumstances of each spouse when the division of property takes effect. In weighing these factors, the court must make a just and equitable distribution of the marital property. The court has broad discretion in distributing the marital property, and its decision will be reversed only if there is a manifest abuse of discretion.
RCW 26.09.080.
Id.
Rockwell, 141 Wn. App. at 242-43.
For a just and equitable distribution of property to parties ending a short marriage (less than five years), the court attempts to leave the parties in approximately the same economic condition they enjoyed at the inception of the marriage. For long marriages (25 years or more), the court attempts to place the spouses in roughly equal financial positions for the rest of their lives. For midrange marriages such as this one, the court attempts to "blend the considerations underlying the analyses of both long and short marriages." Absent special factors, community property should be divided more equally than two-thirds to one spouse and one-third to the other. Consistent with this principle, Katherine received 60 percent of the community property. Katherine contends, however, that the court should have left the parties in comparable economic positions because they occupied comparable positions at the time they married. This is not the rule for midrange marriages, and would require a considerable award of Carl's separate property to Katherine. The court weighed the statutory factors, including the economic circumstances of each party, recognizing that Carl has retired and Katherine is eight years younger and employable.
2 Wash. State Bar Ass'n, Family Law Desk Book §§ 32.3(3), at 32-17 (2d ed. 2000 Supp. 2006); see also Bundy v. Bundy, 149 Wash. 464, 466, 271 P. 268 (1928).
Rockwell, 141 Wn. App. at 243; see also Sullivan v. Sullivan, 52 Wash. 160, 164, 100 P. 321 (1909).
2 Family Law Deskbook, §§ 32.3(3), at 32-17 (midrange marriage defined as one lasting between 5 and 25 years).
3 Family Law Deskbook, §§ 65.2(1), at 65-3.
Characterization of property is only one of many factors to be considered in making a division of property. Whether the division is just and equitable is the dispositive question. Katherine argues the court gave undue weight to characterization. She points to a correction the court made to its original opinion letter. In its first letter, the court incorrectly stated the duration of marriage as 162 months instead of 106 months. Application of the corrected number shifted approximately $214,000 to Carl's separate property ledger. Katherine asserts the court made no adjustment to restore equity to the resulting division, and that this shows the court placed undue weight on characterization.
In re Marriage of Donovan, 25 Wn. App. 691, 693, 612 P.2d 387 (1980).
Id.
But the court's corrected opinion did make adjustments to the original award by shifting community assets and liabilities in favor of Katherine. The modified award removed Carl's entitlement to reimbursement for the community's mortgage and home equity line of credit, ordered Carl to pay income tax for the community in 2008, awarded any 2008 tax refund to Katherine, and increased the attorney fees awarded to Katherine. The court also prohibited Carl from seeking modification of the second year of maintenance unless his income falls below $100,000 per year. There is no indication that the court gave undue weight to the characterization of property in this case.
At the parties' request, the court revised this order to allow petitions for modification from either side.
Katherine's Prior Earnings
Katherine assigns error to the court's finding that she made $100,000 per year prior to marriage, stating there is no substantial evidence to support it. Katherine is correct. There is no evidence in the record that Katherine made $100,000 per year prior to marriage.
Error without prejudice is not grounds for reversal, however, and error is not prejudicial unless if affects the outcome. There is no evidence that the court relied upon this supposed fact in making any other ruling. Indeed, the court found that "given the current economic climate, the court is satisfied that there is little possibility of [Katherine] earning more than the median earnings for a woman her age. This amount is $2,051 net per month." The error was therefore harmless.
Qwest Corp. v. Washington Utilities and Transp. Com'n, 140 Wn. App. 255, 260, 166 P.3d 732 (2007); see also In re Welfare of M.G., 148 Wn. App. 781, 791, 201 P.3d 354 (2009).
Clerk's Papers at 191.
Property Values
Katherine challenges the values assigned to Carl's Roslyn home and his interest in the Mercerwood Shore Club as not supported by the evidence.
The court must consider the value of each asset in order to make an equitable distribution of the marital estate. It is within the court's discretion to assign value to property within the scope of the evidence. The court has broad discretion with regard to the weight to give to a property owner's testimony as to the value of his own property.
2 Family Law Deskbook, §§ 31.2, at 31-3.
In re Marriage of Soriano, 31 Wn. App. 432, 435, 643 P.2d 450 (1982).
Worthington v. Worthington, 73 Wn.2d 759, 763, 440 P.2d 478 (1968).
The only evidence presented as to the value of the Roslyn home was Carl's testimony that it was worth between $200,000 and $250,000. That evidence supported the court's valuation of the Roslyn property at $215,000.
The only evidence presented as to the value of the Mercerwood Shore Club interest was a $2,500 estimate from Carl. Katherine testified she had no basis on which to make a determination regarding this asset and accepted Carl's estimate throughout the proceedings. The court's valuation of $2,500 is within the evidence presented.
Decision-Making Authority In Parenting Plan
Under the agreed parenting plan, Katherine has sole decision-making authority because of the conflict between the parties. She contends the court undermined her decision-making authority by requiring her to obtain agreement from Carl before seeking his financial contribution toward Caroline's extracurricular activities.
Katherine relies on Mansour v. Mansour, which involved a parenting plan that gave the mother sole decision-making authority but which required her to consult with the father where extracurricular activities required additional expense. We reversed, reasoning that "the father's financial veto substantially diminishes the mother's decision-making authority." But in Mansour, the mother's sole decision-making authority arose under RCW 26.09.191, under which mutual decision-making is prohibited when the other parent has engaged in physical abuse of the child. Absent such restrictions, however, the trial court has discretion to depart from the provisions of an agreed parenting plan. Such was the case here.
126 Wn. App. 1, 11, 106 P.3d 768 (2004).
Id.
Id. at 10.
See RCW 26.09.070(3), .191; see also In re Marriage of Thier, 67 Wn. App. 940, 944, 841 P.2d 794 (1992) (pursuant to RCW 26.09.070(3), trial court not bound by custody agreement).
Further, the parties' agreed final parenting plan itself places certain restrictions on Katherine's authority. Joint decision-making is required for enrollment in private school if Carl is expected to contribute, for orthodontia, and Katherine must give Carl notice of major decisions about education and nonemergency health care. These provisions indicate that the parties were already prepared to consult one another on certain issues involving Caroline's upbringing and expenses. It was within the court's discretion to add an additional restriction to Katherine's decision-making authority.
Intransigence
Katherine assigns error to the court's denial of her request for $40,000 of her attorney fees on the basis of intransigence.
The court's decision to deny or limit attorney fees is within the court's discretion. A party may be awarded attorney fees based on the other party's intransigence if the other party engages in foot-dragging and obstruction. A reviewing court will reverse an award of attorney fees only if the decision is untenable or manifestly unreasonable.
In re Marriage of Spreen, 107 Wn. App. 341, 351, 28 P.3d 769 (2001).
In re Marriage of Pennamen, 135 Wn. App. 790, 807, 146 P.3d 466 (2006)
Spreen, 107 Wn. App. at 351.
The record supports the court's refusal to find intransigence. There was no abuse of discretion.
Attorney Fees On Appeal
Carl seeks fees for responding to a frivolous appeal, stating that Katherine provides "`no authority for reversal based on existing law, nor does [she] make a rational, good-faith argument for modification of existing law.'" However, an appeal is not frivolous if it presents debatable issues upon which reasonable minds could differ and there is a possibility of reversal. Katherine makes a nonfrivolous argument about the merits and applicability of the subtraction method in this case and raises other debatable issues.
Resp't's Br. at 39 (quoting Delany v. Canning, 84 Wn. App. 498, 510, 929 P.2d 475 (1997)) (alteration in original). Carl also relies on In re Marriage of Healy, 35 Wn. App. 402, 406, 667 P.2d 114 (1983) (an appeal may be so devoid of merit to warrant imposition of sanctions and award of attorney fees).
In re Marriage of Schumacher, 100 Wn. App. 208, 217, 997 P.2d 399 (2000).
Katherine seeks fees based upon relative ability to pay. When considering whether to award attorney fees on appeal in dissolution cases, a court should examine the arguable merit of the issues raised and the financial resources of the parties. The parties' financial affidavits do not indicate that either of them lacks financial resources to pay their own fees. We thus decline to award fees.
In re Marriage of Booth, 114 Wn.2d 772, 779, 791 P.2d 519 (1990); see also In re Marriage of Pennamen, 135 Wn. App. 790, 808, 146 P.3d 466 (2006) (court denied both parties' requests for fees where neither party could afford to pay the other's fees).
Affirmed.
WE CONCUR: