Opinion
No. 30530-5-II.
Filed: March 23, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Kitsap County. Docket No. 02-3-00555-7. Judgment or order under review. Date filed: 06/06/2003. Judge signing: Hon. Jay B Roof.
Counsel for Appellant(s), Steven G. Tyner, Attorney at Law, Ste 101, 9479 Bayshore Dr NW, Silverdale, WA 98383.
Counsel for Respondent(s), John Douglas Morgan, Liebert Morgan Fleischbein PS, 9226 Bayshore Dr NW Ste 103, Silverdale, WA 98383-9196.
James and Josephine Nicholas entered into a property settlement agreement prior to formally dissolving their marriage. Mr. Nicholas subsequently believed that the agreement was unfair, and he unsuccessfully sought to delay dissolution proceedings to seek representation. The dissolution court enforced the agreement when it divided the property. Mr. Nicholas appeals, challenging the trial court's determination that the agreement was fair at the time of execution. We affirm.
Facts
The Nicholases were married for approximately 36 years. In March 2002, Ms. Nicholas informed Mr. Nicholas that she wanted a divorce and she then consulted an attorney and began preparing for dissolution proceedings.
The parties listed their major debts and assets, and amicably laid out a rough property settlement agreement. Ms. Nicholas's attorney drafted a settlement agreement based on their stated interests. The Nicholases then discussed the proposed settlement agreement three to four times, during which Mr. Nicholas insisted on specific changes.
Under the settlement agreement, Ms. Nicholas would retain her retirement income and the family home. Mr. Nicholas would retain his retirement and their rental property. Mr. Nicholas agreed to pay Ms. Nicholas $514 per month until the mortgage on the family home was paid off and $300 per month thereafter. Their savings account was to be split equally.
The agreement did not specify the values of these various accounts and properties.
On May 5, 2002, after visiting the rental property, the couple recognized that it was "totally trashed" and would require significant repairs. Report of Proceedings (RP) at 79. The next day they spent about an hour reading over the settlement agreement before signing it at the attorney's office.
Mr. Nicholas suffered from acid reflux at the time he signed the agreement. This apparently was due to work and home related stress. In addition, he claims that Ms. Nicholas "harass[ed]" and "badgered" him into signing the agreement. RP at 64, 87.
The rental property was not appraised until after the parties signed the agreement. Before this time, neither party had a clear understanding of its value and Ms. Nicholas was surprised that it was worth substantially less than the family home.
Mr. Nicholas continued to live in the family home for a few weeks while he served eviction notices to the tenants and repaired the rental property. Ms. Nicholas suggested that he keep some of his valuable personal belongings at the family home to ensure their safe keeping while the tenants remained in the rental property.
Mr. Nicholas moved into the rental property on May 27, 2002. He then discussed the settlement agreement with his sister, who loaned him money to obtain an attorney for the purpose of challenging the agreement.
The Nicholases were scheduled to finalize their dissolution on August 6, 2002. But Mr. Nicholas delayed the proceeding because he intended to challenge the settlement agreement. Ms. Nicholas then brought the action before the trial court, which dissolved the marriage and declared the settlement agreement valid and enforceable.
Analysis
Mr. Nicholas claims that the property settlement agreement is unenforceable because it was unfair at the time he signed the agreement; he argues that he was unaware of the asset values, was "badgered" into signing the agreement, was in poor health, and was not represented by counsel. RP at 64.
RCW 26.09.070 encourages parties to amicably settle disputes related to dissolution. Under this statute, we must consider property settlement agreements binding unless there is evidence indicating that the contract was unfair at the time of its execution. RCW 26.09.070(3). "If the agreement is not unfair, the parties will be held to have waived their right to have the court determine a `just and equitable' division of the property." In re Marriage of Shaffer, 47 Wn. App. 189, 194, 733 P.2d 1013 (1987). Thus, the question for this court is not whether the agreement reflects an equitable distribution of the assets, but whether the agreement was fair when made.
Upon petition for dissolution, a separation agreement "shall be binding upon the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the parties on their own motion or on request of the court, that the separation contract was unfair at the time of its execution." RCW 26.09.070(3).
Washington courts evaluate the fairness of a separation agreement at the time of its execution, applying a two prong test. In re Marriage of Hadley, 88 Wn.2d 649, 654, 565 P.2d 790 (1977). We look at "(1) whether full disclosure has been made by respondent of the amount, character and value of the property involved, and (2) whether the agreement was entered into fully and voluntarily on independent advice and with full knowledge by the spouse of her rights." In re Marriage of Cohn, 18 Wn. App. 502, 506, 569 P.2d 79 (1977) (quoting Hadley, 88 Wn.2d at 654)).
The trial court determined that while the settlement agreement was not equitable, both parties entered into the agreement fully and voluntarily with full disclosure of the property involved and with full knowledge of their rights. In reviewing the trial court's findings of fact, we apply each prong of the Cohn test to determine whether substantial evidence supports the findings. In re Marriage of Rideout, 150 Wn.2d 337, 352, 77 P.3d 1174 (2003).
I. Prong I — Full Disclosure of Property Value
Mr. Nicholas claims that the value of the property included in the settlement agreement was not fully disclosed. Mr. Nicholas asserts that because the contract does not state the values of the property and assets and because Ms. Nicholas had "total control" of the finances, the settlement agreement was unfair. RP at 69.
The appellant in Cohn made a similar argument, stating that she did not know the exact values of the property included in the settlement agreement. 18 Wn. App. at 508. But the court found that because the financial statements were sent to the family residence and were available for her to read, she "reasonably should have had such knowledge" the asset values. Cohn, 18 Wn. App. at 508. The court noted that the underlying rationale of this test is to avoid deliberate concealment of property values. Thus, because there was no showing of concealment, the Cohn Court held that disclosure regarding the property was adequate. 18 Wn. App. at 507-08 (citing Friedlander v. Friedlander, 80 Wn.2d 293, 300, 494 P.2d 208 (1972)).
Cohn deals with an antenuptual agreement, not a property settlement agreement. But we have consistently applied the Cohn test and the rationale of RCW 26.09.070 to both prenuptial agreements and property settlement agreements between spouses. See In re Marriage of Shaffer, 47 Wn. App. 189, 194 n. 1, 733 P.2d 1013 (1987).
Like Cohn, Mr. Nicholas complains that he did not know the value of the various assets included in the settlement agreement. But significantly, Mr. Nicholas testified that he was not concerned with the value of the property at the time he executed the agreement. Ms. Nicholas was also unaware of the specific values of the assets distributed in the agreement.
Financial statements regarding the values of the Nicholases' various accounts were sent to their joint residence. No evidence indicated that Ms. Nicholas deliberately concealed property values from Mr. Nicholas. Moreover, two months passed after Ms. Nicholas told Mr. Nicholas she wanted a divorce until the time he signed the settlement agreement. This was sufficient time to discover the values of the relevant accounts.
Mr. Nicholas's apparent lack of concern about the value of the assets and his failure to inquire during the relevant two month period indicates that he had the ability to determine the values but chose not to do so. Given these facts, substantial evidence supports the trial court's determination that Ms. Nicholas fully disclosed the value of the relevant property.
II. Prong II — Full and Voluntary Agreement on Independent Advice
Under the second prong of the Cohn test, Mr. Nicholas challenges the trial court's determination that the agreement was entered into fully and voluntarily on independent advice of counsel. Mr. Nicholas asserts that he was unable to enter into the agreement fully and voluntarily because he was ill and was "badgered" into signing. RP at 64. He also claims that the agreement is unenforceable because he was not represented by counsel.
Evidence presented to the trial court indicated that at the time the agreement was signed, Mr. Nicholas had acid reflux which impaired his vocal cords. He attributed this physical ailment to the stress of 90 hour work weeks.
Mr. Nicholas failed to present any relevant evidence substantiating his claim that he was badgered into signing the agreement or that he was too ill to make sound decisions. Rather, the evidence showed that the Nicholases were amicable in preparation of the settlement agreement. Ms. Nicholas testified that the couple generally determined who wanted specific assets and that the attorney drafting the agreement incorporated that information. Further, the couple discussed various drafts of the agreement three to four times and Mr. Nicholas made a number of comments and amendments to it.
Although Mr. Nicholas reviewed the final draft in less than an hour before he signed it, the couple had time to discuss the particulars of the agreement before May 6. Ms. Nicholas stated that Mr. Nicholas went over the agreement "with a fine tooth comb." RP at 26. This characterization is supported by specific questions and concerns Mr. Nicholas expressed regarding the agreement.
Mr. Nicholas did not obtain independent counsel to provide him advice on the settlement agreement. But the Cohn Court held that the law does not require under all circumstances that each party have independent legal advice. 18 Wn. App. at 508-509. Rather, the law requires that any legal advice that is given come from an independent source. Cohn, 18 Wn. App. at 509.
Along with the settlement agreement, Mr. Nicholas signed an acknowledgement that Ms. Nicholas's attorney represented only her client's interests and had advised him to seek independent counsel. He presented no evidence that the acknowledgement was coerced or that the attorney drafting the agreement offered any advice to Mr. Nicholas beyond advising him to retain counsel.
Substantial evidence supports the trial court's conclusion that Mr. Nicholas entered into the settlement agreement fully and voluntarily. Because substantial evidence supports both prongs of the Cohn test, we affirm the trial court's enforcement of the settlement agreement.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG, J. and QUINN-BRINTNALL, A.C.J., concur.