Opinion
No. 21865-1-III.
Filed: April 29, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Spokane County. Docket No: 02-3-00673-4. Judgment or order under review. Date filed: 01/27/2003. Judge signing: Hon. Neal Q Rielly.
Counsel for Appellant(s), David Matthew Miller, Attorney at Law, 421 W Riverside Ave Ste 868, Spokane, WA 99201-0402.
Counsel for Respondent(s), Robert R Cossey, Robert R Cossey Associates PS, 628 1/2 N Monroe St, Spokane, WA 99201-2161.
Dorothy Jameson appeals the award of a lump sum disability payment from the Department of Labor and Industries to her former spouse, Jess Jameson. The trial court characterized the lump sum payment as Mr. Jameson's separate property, reasoning the payment was based upon total disability and payable for future lost earnings. Because the record shows that the disability payment benefit was paid to compensate Mr. Jameson for wages earned — but deferred — during the marriage, the trial court erred in characterizing the disability payment as Mr. Jameson's separate property. We reverse and remand
FACTS
Dorothy E. Jameson and Jess A. Jameson were married for 36 years. On March 29, 2002, a summons and a petition for legal separation were filed. The sole issue on appeal is the characterization and distribution of a lump sum disability payment from the Department of Labor and Industries remitted to Mr. Jameson on May 3, 2002.
Mr. Jameson's disability was the result of three collapsed disks and a herniated disk. His injury date was October 16, 1997. He receives a monthly disability pension.
The Department of Labor and Industries paid an initial lump sum payment of $69,523.04 to Mr. Jameson. The payment was received on April 8, 2002, by Mr. Jameson's attorney, Kent E. Mumma. In the letter accompanying the payment, the Department stated, `Enclosed is the first pension payment for April 17, 2000, through March 15, 2002, inclusive, in the amount of $69,523.04.' Ex. R-134.
After the attorney deducted his fees, the remaining amount of $48,666.13 was paid to Mr. Jameson and his attorney Edith Martinez.
A temporary order entered April 12, 2002, directed Mr. Jameson to apply this payment to community debts that the parties had incurred during the marriage. Also pursuant to the order, the remaining money was divided equally between the parties. The parties did not appeal this order.
On May 3, 2002, the Department sent a second payment to Mr. Jameson in the amount of $58,725.32. The letter states `By order dated April 29, 2002, pension benefits are being paid from the retroactive pension date of 06/15/98 through 04/16/00.' Ex. R-139.
After the attorney fees were deducted, the remaining $41,000 was deposited in Mr. Jameson's trust account. Mr. Jameson had an additional $4,000 in his trust account at that time. Thus, the total amount placed in trust was approximately $45,000.
Mr. Jameson testified that he received this second payment from the Department of Labor and Industries after he and Ms. Jameson separated and, thus, he believed that this payment was his separate property.
In its oral ruling, the trial court stated, `Mr. Jameson received two lump sum awards from the Department of Labor and Industries. The testimony was unrebutted that the awards were based on a total disability, were payable for future lost earnings. It's clear that the lump sum awards are Mr. Jameson's separate property.' Report of Proceedings (RP) at 157. Accordingly, the court awarded the entire lump sum payment to Mr. Jameson as his separate property. Ms. Jameson unsuccessfully moved for reconsideration.
Ms. Jameson appeals.
ANALYSIS
Did the trial court err in characterizing the disability payment as Mr. Jameson's separate property?
Ms. Jameson contends that the trial court erred by awarding Mr. Jameson the entire disability payment as his separate property. In a dissolution proceeding, the trial court has considerable discretion in making a property distribution, and will not be reversed on appeal absent a showing of manifest abuse of discretion. In re Marriage of Kraft, 119 Wn.2d 438, 450, 832 P.2d 871 (1992). A trial court abuses its discretion only if the decision is manifestly unreasonable or is based on untenable grounds or made for untenable reasons. In re Marriage of Tower, 55 Wn. App. 697, 700, 780 P.2d 863 (1989).
When disability benefits replace future compensation, for example postdissolution wages, the benefits are not distributable at a dissolution trial. This is because future compensation is not before the trial court at dissolution; thus, when disability benefits replace such compensation, these benefits are treated in the same fashion. In re Marriage of Perkins, 107 Wn. App. 313, 317, 26 P.3d 989 (2001) (citing In re Marriage of Brewer, 137 Wn.2d 756, 767-69, 976 P.2d 102 (1999)).
On the other hand, when disability benefits replace compensation earned but deferred during marriage, for example, retirement benefits, these benefits are distributable at a dissolution trial. Perkins, 107 Wn. App. at 317. `If . . . a party would be receiving retirement benefits but for a disability, so that disability benefits are effectively supplanting retirement benefits, the disability payments are a divisible asset to the extent they are replacing retirement benefits.' In re Marriage of Geigle, 83 Wn. App. 23, 31, 920 P.2d 251 (1996).
In this case, the parties dispute whether the May 2002 disability payment represents future lost income, or rather compensation for past wages. Mr. Jameson argues that his testimony was unrebutted, and this testimony was the sole evidence related to this issue. Thus, he concludes, the court's characterization of the payment as separate property was supported by the evidence.
Contrary to Mr. Jameson's assertions, evidence was introduced that contradicted his theory that the payment was made to compensate him for future lost wages. Moreover, Mr. Jameson's subjective belief about the character of the funds is not relevant, much less dispositive.
The May 3, 2002 letter from the Department explicitly stated that the payment represented pension benefits from the retroactive pension date of June 15, 1998, through April 16, 2000. During this time period, the parties had not yet separated and, thus, were a community. As a result, the payment represented compensation earned but deferred during the marriage and, therefore, the payment would have been properly characterized as community property. The trial court erred in its characterization that the second lump sum payment was Mr. Jameson's separate property.
It is for the trial court to make a distribution of property that is just and equitable under the circumstances. RCW 26.09.080; Brewer, 137 Wn.2d at 769. Thus, we remand the case for an equitable division of property, characterizing the second disability payment as community property.
Is Ms. Jameson entitled to attorney fees?
Ms. Jameson has requested fees on appeal under RCW 26.09.140. RCW 26.09.140 allows the court, `from time to time after considering the financial resources of both parties,' to order one spouse to pay the reasonable costs of the other spouse's defense or maintenance of the dissolution proceedings. `Generally, the needs of the requesting party must be balanced against the other party's ability to pay.' In re Marriage of Williams, 84 Wn. App. 263, 272, 927 P.2d 679 (1996). In other words, the court must consider the parties' relative need versus their ability to pay. In re Marriage of Shellenberger, 80 Wn. App. 71, 87, 906 P.2d 968 (1995).
However, the parties' financial situations depend upon the trial court's ultimate distribution of property and, therefore, any fee award, including fees incurred in this appeal, should be determined on remand
We reverse the judgment of the trial court because the court erred in characterizing the disability payment as Mr. Jameson's separate property.
The majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
KATO, C.J., and SCHULTHEIS, J., concur.