Opinion
No. 55804-8-I.
June 12, 2006.
Appeal from judgments of the Superior Court for King County, No. 03-3-11429-8, Laura Gene Middaugh, J., entered December 12, 2004 and January 25, 2005.
Counsel for Appellant(s), Wendy Rae Gelbart, Attorney at Law, 4957 Lakemont Blvd SE Ste C4, Bellevue, WA 98006-7801.
Patricia S. Novotny, Attorney at Law, 3418 NE 65th St Ste a, Seattle, WA 98115-7397.
Counsel for Respondent(s), Shelby R. Frost Lemmel, Wiggins Masters PLLC, 241 Madison Ave N, Bainbridge Island, WA 98110-1811.
Stella Lea Pitts, Stella L. Pitts Associates PLLC, 1411 4th Ave Ste 1405, Seattle, WA 98101-2223.
Charles Kenneth Wiggins, Wiggins Masters PLLC, 241 Madison Ave N, Bainbridge Island, WA 98110-1811.
Affirmed by unpublished per curiam opinion.
Joan Kayser appeals from orders entered in the dissolution of her marriage to George Frank. She argues that the division of property was inequitable, and the court abused its discretion by awarding too little maintenance. Kayser has not shown that the court abused its discretion. We affirm.
Kayser and Frank married in 1979. Frank is a cardiologist. The couple planned on Frank retiring early (before the age of 65), but their plans changed when the stock market crashed in 2000. He later decided to continue working to pay for their younger son's college education. At the time of trial, he worked 80 percent of the time, earning $352,000 per year. Kayser has a Ph.D. in special education, but she worked outside the home very little for most of the marriage, and not at all during the last 14 years of it. The parties separated in January 2004 after having accumulated approximately $9 million in community property. Frank also owned separate real property worth almost $300,000.
Kayser petitioned for dissolution and asked the court to award her 60 percent of the couple's assets. The court, however, found that a `fifty-fifty' split was appropriate. Therefore, the court awarded half of the community property to Kayser and half to Frank. The court also awarded Kayser maintenance in the amount of $10,000 per month through December 2004. Starting January 1, 2005, Kayser was to receive $7,500 per month for 12 months, as long as Frank remained employed at least half time. At the end of 12 months, or when the husband ceased working at least half time, whichever came first, Kayser was to receive $5,000 per month until December 2015 or upon either party's death, Kayser's remarriage, or if Frank permanently retires or changes to a job that pays $100,000 or less per year. The court defined `permanent' to mean a change lasting at least 12 consecutive months. Additionally, if Frank has provided notice of his intent to make a permanent change in his job status, but the change does not last 12 months and he returns to work earning more than $100,000 per year, Kayser may seek to have maintenance reinstated.
The court determined the community's interest in the JMJ partnership, which owns an apartment complex, could not `be physically divided' and, therefore, awarded that property to Frank. He was to pay Kayser one half of the property's $1,642,500 value, less one quarter of the outstanding encumbrance on the building. Kayser was awarded a judgment for that amount, which was amortized over 30 years with interest at 6.038 percent, a balloon payment in five years, and a payoff in 10 years.
On appeal, Kayser argues that the trial court's distribution of property and maintenance award are inequitable because they do not achieve the equal division of assets that the court intended. But she has not shown that the court abused its discretion.
In a marriage dissolution, the court shall make a disposition of the property, whether community or separate, that appears just and equitable after considering all relevant factors including, but not limited to:
(1) The nature and extent of the community property;
(2) The nature and extent of the separate property;
(3) The duration of the marriage; a
(4) The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to a spouse with whom the children reside the majority of the time.
RCW 26.09.080. Similarly, the court may award maintenance to either party in a dissolution action in an amount and for a period of time as the court deems just, after considering all relevant factors including, but not limited to:
(a) The financial resources of the party seeking maintenance, including separate or community property apportioned to him, and his ability to meet his needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party;
(b) The time necessary to acquire sufficient education or training to enable the party seeking maintenance to find employment appropriate to his skill, interests, style of life, and other attendant circumstances;
(c) The standard of living established during the marriage;
(d) The duration of the marriage;
(e) The age, physical and emotional condition, and financial obligations of the spouse seeking maintenance; and
(f) The ability of the spouse from whom maintenance is sought to meet his needs and financial obligations while meeting those of the spouse seeking maintenance.
The court has broad discretion in awarding property in a dissolution action and will be reversed only upon a showing of a manifest abuse of discretion. In re Marriage of Harrington, 85 Wn. App. 613, 624, 935 P.2d 1357 (1997). An award of maintenance also is within the court's broad discretion. In re Marriage of Terry, 79 Wn. App. 866, 869, 905 P.2d 935 (1995). A court abuses its discretion if its exercise is manifestly unreasonable or is based upon untenable grounds. In re Marriage of Littlefield, 133 Wn.2d 39, 47, 940 P.2d 1362 (1997). For example, a court may abuse its discretion if it distributes the parties' property without considering factors that are material to the determination of the value of the property. In re Marriage of Landauer, 95 Wn. App. 579, 591, 975 P.2d 577 (1999).
When the court announced its decision in this case, it said it was dividing the property `fifty-fifty.' Therefore, each party would receive half the value of each of their individual retirement accounts, half of the value of their investment accounts, half of the money in their bank accounts, and so on. Because it could not divide the parties' interest in the JMJ partnership, the court awarded that property to Frank and required him to give Kayser a note for half the value of their interest in the partnership. The court indicated that the interest rate on the note would be the statutory interest rate `as of today.'
Kayser contends that the trial court erred because its disposition of the property does not achieve the court's intention of dividing the property equally. She argues that the disposition is inequitable because the court allowed Frank to give her a note for the value of her interest in the JMJ partnership, rather than requiring him to pay her cash for that amount. By awarding the parties' interest in the JMJ partnership to Frank, Kayser argues she: cannot enjoy the use of $668,447 worth of her property; has no control over investment of the property, depriving her of a potential higher return on it; enjoys no appreciation in value, and; must pay tax of the payments she receives. Kayser argues that, in contrast, Frank will: enjoy the continued ownership of the apartment building; earn at least 3 percent in appreciation; receive at least $80,000 in income annually from the property, and; receive tax benefits, including the ability to take a deduction for the amount he pays in interest on the note to Kayser. Thus, Kayser does not contend that the court was required to pay her cash for her share of the couple's interest in the partnership. Rather, she argues that the court abused its discretion because it disregarded evidence that affected the value of the property, including testimony regarding appreciation, rental income, and tax benefits. She suggests that the court's calculation of how much she should receive for her interest in the partnership is not supported by the evidence in the record.
The court explained, however, that it determined the value of the partnership interest by averaging the values given to the property by two appraisers. The appraised values included consideration of the projected income on the property. Likewise, although it is reasonable to assume that the value of the partnership property would appreciate over time, the court did not abuse its discretion by awarding Kayser her share of its current value. Depriving her of the tax benefits of the property does not make the award inequitable.
Kayser argues that the inequity of the disposition is exacerbated because the court ordered interest on Kayser's note from Frank to be 6.038 percent, rather than the statutory interest rate of 12 percent. She suggests that the court orally indicated interest would be at the statutory rate of 12 percent, and then inexplicably and untenably set the rate at 6.038 percent. Kayser contends that the court abused its discretion because it fixed the interest rate on the judgment below the statutory rate without providing an adequate reason for doing so. We disagree.
RCW 4.56.110 provides that `judgments shall bear interest from the date of entry at the maximum rate permitted under RCW 19.52.020 on the date of entry thereof[,]' except in circumstances not relevant in this case. Under RCW 19.52.020, any rate of interest is legal as long as it does not exceed 12 percent per year or four percentage points above the treasury bill (t-bill) rate. The court may reduce the rate of interest on deferred payments when it distributes property in a divorce decree, but it abuses its discretion if it fixes an interest rate below the statutory rate without setting forth adequate reasons for the reduction. In re Marriage of Harrington, 85 Wn. App. at 631.
The actual statute reads as follows:
(1) Any rate of interest shall be legal so long as the rate of interest does not exceed the higher of: (a) Twelve percent per annum; or (b) four percentage points above the equivalent coupon issue yield (as published by the Board of Governors of the Federal Reserve System) of the average bill rate for twenty-six week treasury bills[.]
RCW 19.52.020.
The trial court in this case set interest on the note from Frank to Kayser at 6.038 percent `based on statute and testimony of [Kayser's] expert regarding rate of return.' Kayser argues that the trial court's reason for deviating from the 12 percent statutory interest rate was inadequate. But Kayser's expert, Bea Nahon, testified that the discount rate of 4.205 percent, which was the yield for t-bills that she used in calculating the present value of the parties' projected income streams, was `a conservative rate that any of the parties could invest money in in today's dollars and receive a guaranteed rate of return over a 10-year period.'
Frank's expert, Steven Kessler, disagreed that the t-bill rate was an appropriate measure of how the value of the parties' assets would grow over time. He testified that from 1926 to 2002, equity investments earned approximately 11 percent. In his calculations of the parties' potential earnings, he assumed a `blended rate' of 7 percent. He explained that a blended rate was a more sophisticated approach because it assumed a mix of income and equity assets. But Kessler used a 4.25 percent interest rate when he calculated the interest on the note from Frank to Kayser for her share of the partnership. He considered that rate to be reasonable for interest on a transfer payment because, in his experience, a rate of 4 or 5 percent interest generally was applied. He calculated the interest on the note using a program called `T-Value,' which he said `[a]lmost every CPA uses . . . to do amortizations and present value and future value analysis.'
Kayser argues that the trial court's reliance upon her expert's testimony in setting the interest rate is puzzling because the court considered the experts' testimony on rates of return to be speculative. What the court considered speculative, however, was Kayser's anticipated return on her investments because there was no testimony indicating how Kayser would invest the money awarded to her.
Kayser also argues that the court initially indicated it would order 12 percent interest on the judgment, and then, when the order was put in writing, set interest at 6.038 percent. The court, however, stated that interest was to be set at the statutory rate `as of today,' indicating that the court always intended to set interest at the floating t-bill rate. Under the circumstances in this case, it was reasonable for the court to set interest at 6.038 percent. Kayser's own expert testified that the t-bill rate was a conservative rate of return. The t-bill rate for the month of November 2004 was 2.083 percent. The t-bill rate plus four percentage points (as indicated in RCW 4.56.110) equals 6.083 percent. The court's reason for applying a lower rate was adequate, and the rate imposed is supported by evidence in the record. No evidence in the record indicates that the maximum rate of 12 percent interest was appropriate. The court did not abuse its discretion in imposing the lower rate.
Finally, Kayser argues that the court's award of maintenance is inequitable because Frank can escape his obligation to pay it by taking a year-long sabbatical or earning less than $100,000. She argues that the court unintentionally created a loophole for Frank to avoid paying her. We disagree.
The court ordered Frank to pay maintenance until 2015 unless he retires permanently or takes a job earning less than $100,000 per year. The court defined permanent to mean `at least 12 consecutive months.' Maintenance was fair and equitable, the court found, as long as Frank was working, but it should not continue if he retired: `He should not be forced to work just because of the dissolution while the wife is allowed to remain unemployed and retired.'
Kayser argues that the court's definition of permanent was arbitrary and, therefore, is untenable. But the order as a whole indicates that the court defined `permanent' to clarify that Frank could not avoid paying maintenance by quitting his job and giving notice to Kayser that he was retiring and then return to work a short time later. The decree indicates that if Frank retires and later resumes work earning more than $100,000 per year, Kayser may seek to have maintenance reinstated retroactively and may also recover her attorney fees and costs for reinstating it.
Kayser also argues that the maintenance award was an abuse of discretion because it set maintenance at an amount lower than necessary to leave the parties in comparable financial conditions. But RCW 26.09.090 requires only that the court set maintenance at an amount and for such time as the court deems just, considering relevant factors including the parties' ages and standard of living during the marriage. The maintenance award need not ensure that each party have an equal or comparable income after the dissolution. Furthermore, although Kayser emphasizes the great disparity between the $5,000 she receives in maintenance and Frank's income, she fails to mention that she also receives more than $4,000 per month for her share of the partnership property.
The court properly considered the relevant factors in determining the amount of maintenance to award Kayser. She has not shown that amount awarded for maintenance constitutes an abuse of discretion.
The decision of the trial court is affirmed.
COX, DWYER and GROSSE, JJ., concur.