Opinion
No. 34155-7-II.
March 20, 2007.
Appeal from a judgment of the Superior Court for Kitsap County, No. 05-3-00061-4, Sally F. Olsen, J., entered November 8, 2005.
Counsel for Appellant(s) Todd Alan Buskirk Buskirk Havers Lindsay, PLLC Silverdale, WA, 98383-7808.
Charles Dale Creason Attorney at Law Poulsbo, WA, 98370-0964.
Counsel for Respondent(s) Paula T. Crane Attorney at Law Silverdale, WA.
Catherine Wright Smith Edwards Sieh Smith Goodfriend PS Seattle, WA.
Reversed and remanded by unpublished opinion per Armstrong, J., concurred in by Bridgewater and Quinn-Brintnall, JJ.
Frederick J. Cox appeals the trial court's division of property following Darlene D. Cox's petition for legal separation. He argues that the trial court erred by including the present value of his pension in its division of assets and also awarding his wife a portion of the pension's monthly payments. Because the trial court essentially distributed the pension twice and, in so doing, created an unequal division, we reverse and remand to the trial court to reconsider its property distribution without counting the pension twice.
FACTS
Darlene D. Cox filed for legal separation from her husband, Frederick J. Cox, in 2005. Darlene and Frederick, both in their seventies, had been married for 17 years.
Because no children were born of the marriage, the only issue at trial was the division of property. The trial court determined that, due to the marriage's length and the parties' ages, it would try to put them in as equal a position as possible with respect to both assets and income.
With respect to income, the trial court divided Frederick's federal pension payments, awarding 70 percent of the monthly payments to Frederick and 30 percent to Darlene. This division gave each a nearly equal monthly income when combined with their social security benefits, Darlene's small pension, and her rental income from property the court awarded to her. But the trial court also set the present value of Frederick's pension at $208,460 to calculate Darlene's share as $62,538 and Frederick's share as $145,922, and it included these amounts in its property division.
An expert calculated the present value of Frederick's pension by determining the value of future payments, including estimated cost of living increases, over Frederick's expected lifespan, and reducing that value by a discount factor based on the interest that sum of money could earn over that period of time. The pension's present value is essentially the cost for a person of Frederick's age to purchase an annuity paying the same amount as his pension.
The trial court ordered the couple's house to be sold and divided the proceeds equally. The court then divided the remaining assets, awarding the parties their respective separate property to the extent possible while maintaining an equal division. The trial court's calculations, including the figures from the present value of the pension, showed that Darlene received $651,799 and that Frederick received $650,101.
The parties had stipulated that Darlene contributed $9,000 of separate property to purchase their house and that Frederick contributed $71,000 of his separate property to the purchase. The court did not make a finding of fact regarding the character of the house or the parties' contributions.
Frederick faults the trial court for (1) awarding each party a share of his monthly retirement income as well as awarding each a share of the present value of the retirement fund, (2) not characterizing the retirement income to Darlene as maintenance, and (3) not considering each party's separate property contributions in dividing the assets. We agree with Frederick only as to the first contention.
ANALYSIS I. Division of Federal Pension
Frederick first argues that the trial court erred by including the present value of his pension in the list of the parties' assets for distribution and also dividing the pension's monthly payments, thus distributing the pension twice.
In an action for legal separation, a court must divide property in a just and equitable manner after considering all relevant factors, including the nature and extent of the community and separate property, the length of the marriage, and the economic circumstances of each spouse. RCW 26.09.080. We review the trial court's property distribution for manifest abuse of discretion. In re Marriage of Landry, 103 Wn.2d 807, 809, 699 P.2d 214 (1985).
Pension benefits are an asset subject to division by the court. In re Marriage of Chavez, 80 Wn. App. 432, 436, 909 P.2d 314 (1996). A trial court may determine the present value of a pension and use that value in its asset distribution. In re Marriage of Kraft, 119 Wn.2d 438, 450, 832 P.2d 871 (1992). If, in making an equal distribution, the court distributes the value of a pension to one spouse, it must offset that value by awarding a proportionately greater share of the remaining property to the other spouse. Kraft, 119 Wn.2d at 449-50.
Alternatively, a trial court may distribute an interest in the pension benefits as they are received. In re Marriage of Pilant, 42 Wn. App. 173, 179 n. 2, 709 P.2d 1241 (1985). In Pilant, we clarified the rules for determining the present value of a pension, but we noted that this step would not be necessary if the trial court distributed the pension payments as received, Pilant, 42 Wn. App. at 179 n. 2, an approach we encouraged in Chavez, 80 Wn. App. at 437 (citing In re Marriage of Bulicek, 59 Wn. App. 630, 638, 800 P.2d 394 (1990)).
Although Pilant, Chavez, and Bulicek all treated the two methods as distinct, here, the trial court did both. It calculated the present value of Frederick's pension, distributed 70 percent of that value to Frederick and 30 percent to Darlene, and offset that division by proportionately distributing less property to Frederick and more property to Darlene. It also divided an interest in the pension benefits as Frederick receives them, 70 percent to Frederick and 30 percent to Darlene.
The problem with awarding both the proceeds and the principal of the retirement is that the retirement account cannot serve both functions. If the division of principal is to be meaningful, the parties must have access to the lump sum awards of 30 percent and 70 percent. But the retirement fund principal cannot be distributed and still pay out the monthly income of 30 percent to Darlene and 70 percent to Frederick. Thus, the award of principal is largely illusory; neither party will receive the designated lump sum amounts. Yet the court awarded other assets to Darlene to offset the greater proportion of the pension's value going to Frederick. And this caused the value of assets going to Frederick to be artificially inflated as compared to the value of assets going to Darlene. We conclude that the trial court erred in awarding the same asset twice.
But, an error in distributing a pension, like an error in characterizing property, does not necessarily require remand. Kraft, 119 Wn.2d at 449. Rather, we will remand where the trial court's reasoning suggests that its improper manner of distributing the pension significantly influenced its overall division, and it is not clear whether the trial court would have distributed the property the way it did had it properly excluded the pension's present value from the assets to be distributed. Kraft, 119 Wn.2d at 449.
Here, the trial court clearly expressed its goal of dividing the parties' assets and income as nearly equal as possible. By dividing the pension payments as it did, the trial court did equalize their monthly incomes. But if the present value of Frederick's pension were removed from the trial court's distribution of assets, Darlene would receive $589,261 and Frederick would receive $504,179, a difference of $85,082.
We cannot say that the trial court would have made the same asset distribution had it excluded the pension's current value. Accordingly, we must reverse and remand for the trial court to reconsider its property distribution without counting Frederick's retirement benefits twice.
II. Classification of Pension
Frederick also contends that the trial court should have classified the distribution of pension payments to Darlene as maintenance, arguing that the nature of the pension is "unclear at best." Br. of Appellant at 14. Because the trial court may choose to distribute Frederick's retirement benefits on a monthly, as received, basis, we address the issue.
As stated above, pension benefits are an asset subject to division by the trial court. Chavez, 80 Wn. App. at 436. And a court may distribute an interest in the pension benefits as they are received. Chavez, 80 Wn. App. at 437. Frederick cites no case that requires a court to designate an award of monthly retirement benefits as maintenance. Rather, an award of maintenance lies within the trial court's discretion. In re Marriage of Estes, 84 Wn. App. 586, 593, 929 P.2d 500 (1997). Here, the trial court treated the pension benefit awards as a property distribution after carefully calculating the parties' post-separation incomes. It did not err in doing so.
III. Characterization of House
Finally, Frederick argues that the trial court erred by failing to characterize the house as separate or community property and by failing to consider the parties' stipulation as to their separate contributions to buying the house. Because the trial court may alter its order to sell the house and distribute the proceeds, we address the issue.
On the first day of trial, the parties stipulated that Darlene had contributed $9,000 of separate property to purchase their house and Frederick contributed $71,000 of separate property to the purchase. Both parties wanted the house. The court did not make a finding of fact regarding the character of the house or the parties' contributions but ordered the house be sold and the proceeds split equally.
The trial court did state in its oral ruling that it was characterizing all assets the parties labeled as "joint" or "mixed," which included the house, as community property. Report of Proceedings (RP) (Aug. 19, 2005) at 4-5. The trial court also discussed the house in the section of its findings of fact labeled "Community Property." Clerk's Papers (CP) at 7-8. Thus, the trial court treated the house as community property even if it made no explicit finding that it was community property.
A trial court's failure to properly characterize an asset is reversible error only if the trial court's reasoning suggests that its property mischaracterization significantly influenced its division and it is not clear that had the court properly characterized the property it would have divided it the same way. In re Marriage of Shannon, 55 Wn. App. 137, 142, 777 P.2d 8 (1989).
Here, the trial court stated that it was attempting to put Darlene and Frederick in as equal a position as possible with respect to both assets and income. And because the house was such a large portion of the couple's assets, the trial court found that it would be difficult to balance the division if it were to award the house to one spouse or the other.
The major factor influencing the court in ordering the sale of the house was equality between Darlene and Frederick. We are satisfied that the court would have ordered the house sold and the proceeds split equally no matter how it characterized the house. Accordingly, it did not err in disposing of the house, and the court is not required on remand to consider the parties' separate contributions to the house in dividing the property.
IV. Attorney Fees
Both parties ask for attorney fees on appeal.
Frederick includes his request in his conclusion and not in a separate section. By not arguing attorney fees in a separate section, he has failed to comply with RAP 18.1(b). Thus, we deny Frederick's request.
Darlene's request is in a separate section and complies with RAP 18.1(b). She argues that Frederick failed to assign error to any of the trial court's factual findings, that he failed to cite any precedent in support of his appeal, and that his appeal is meritless.
Frederick did properly assign error to the trial court's division of property, including its distribution of his pension, and its lack of findings of fact about the house. These assignments of error and his arguments supporting them were sufficient for this court to consider them. And while Frederick's arguments concerning the classification of the pension benefits and characterization of the house were without merit, his contention that the trial court erred in dividing his pension did have merit.
Moreover, because the trial court's goal was to ultimately leave the parties with equal assets and income, an award of attorney fees from one party to the other is not appropriate. The trial court did not award attorney fees or costs below. We deny Darlene's request for attorney fees on appeal.
Reversed and remanded.
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.
Quinn-Brintnall, J., concur.