Opinion
No. 34651-6-II.
May 15, 2007.
Appeal from a judgment of the Superior Court for Cowlitz County, No. 04-3-00441-6, James J. Stonier, J., entered March 10, 2006.
Affirmed in part, reversed in part, and remanded by unpublished opinion per Houghton, C.J., concurred in by Quinn-Brintnall and Van Deren, JJ.
Patricia McVay-Tackett appeals the trial court's distribution of property after dissolving her marriage to Kenneth Tackett, arguing that the distribution was inequitable and that the trial court mischaracterized community property as Tackett's separate property. She also appeals the trial court's denial of attorney fees below and further requests attorney fees on appeal. We reverse in part, affirm in part, and remand.
FACTS Marital History
McVay-Tackett and Tackett became engaged in December 1991, and lived together beginning in May or June 1992, when McVay-Tackett moved into Tackett's house. They married in Michigan on April 29, 1994. At that time, McVay-Tackett was 48 years old and Tackett was 52 years old. They did not execute either a prenuptial or a community property agreement. Although their incomes were comparable, Tackett had considerably more assets at that time than McVay-Tackett.
In 1996, they sold Tackett's home for about $72,000. Together with funds from his personal brokerage account, they used the proceeds to purchase a new home. The deed named both McVay-Tackett and Tackett. They refinanced the home twice, gaining about $70,000 cash. Also, they used about $65,000 of community funds to improve the property. They sold the property in 2004 for $218,000 and deposited the proceeds into Tackett's Standard Federal account.
The same year, they moved to Longview, Washington, where they purchased a condominium. In August 2004, McVay-Tackett petitioned for dissolution. Tackett moved out of the condominium in September 2004.
Employment History
Tackett worked at Daimler-Chrysler from age 22 until he retired at age 59. Beginning as an apprentice in 1963, he was promoted to an executive position in 1966, and reached his highest level as a senior manager in 1991. He earned a pension of $8,446 per month based on the length of his employment and on contributions to the retirement plan.
Tackett's pension has three components. The basic pension of $1,581.87 is based on 462 months of employment. He also receives $553.53 from the Executive Supplemental Retirement Plan, which provided benefits to employees who reach incentive pay status. The largest portion of his pension is the Executive Salaried Employees Retirement Plan (ESERP), which is worth $6,311.02 monthly.
The ESERP component comprises three separate benefits. First, Tackett receives $1,664.75 from the contributory portion of the plan. During his employment, Tackett contributed $35,047 to the plan and his monthly benefit is 6 percent of that contribution. He paid about half of the contribution after his marriage to McVay-Tackett. Second, he receives $2,595.81 as his final average salary benefit. The benefit is calculated as 62 percent of the average monthly salary over the five year period during which his salary was the highest. Last, he receives an incentive compensation benefit of $2,050.46 per month based on incentive pay awarded during his employment. He concedes he received no incentive pay until after the marriage. McVay-Tackett owned a corporate travel business that she sold in 1986. She then worked in engineering consulting and was recruited by a private firm in 1989, where she stayed until she retired. Her work was lucrative, earning her over $100,000 in 2000. She held $10,585 in retirement accounts at the time of the marriage. In 1994, she also received approximately $33,000 as a divorce settlement from her first marriage.
McVay-Tackett's Medical History
In 1993, McVay-Tackett was involved in a serious car accident requiring physical rehabilitation. Afterward, she experienced memory problems and underwent cognitive therapy. She received a $43,278 settlement.
In December 2000, she required hospitalization and medication. After the hospitalization, she tried to return to work for about one and one-half months. Due to her difficulties, her employer placed her on short-term disability in February 2001. She ultimately received social security disability benefits beginning in 2003.
McVay-Tackett experienced a number of health problems before and after separating from Tackett. She was hospitalized a second time in July 2003. She was also diagnosed with a heart condition, hypertension, and a pancreatic disorder requiring surgery. Medicare and Tackett's Blue Cross medical insurance cover most of her expenses after a deductible.
Dissolution Proceedings
The dissolution action proceeded to trial in September 2005. Tackett presented numerous account statements and flow charts tracing his pre-marriage investments to establish them as his separate property. In particular, he sought to establish that proceeds from the sale of the second home in Michigan were his separate property.
Two accountants testified to the accuracy of Tackett's tracing. Tackett also testified that McVay-Tackett should be awarded $76,278 as her separate property, reflecting funds she received from her accident and divorce settlements.
The trial court entered a dissolution decree in January 2006. First, the trial court concluded that because Michigan law does not recognize meretricious relationships, the correct date for characterizing the parties' property as separate or community was the marriage date. Next, the trial court determined that $113,429 from the sale of the second home in Michigan was Tackett's separate property. Regarding his pension, the trial court considered each component separately to determine the community portion and awarded McVay-Tackett $1,318.48 per month while Tackett received $7,127.48 per month. It also found that McVayTackett's settlement funds could not be accurately traced and awarded her an additional $43,279 of the community property funds.
Based on its calculation of the present value of Tackett's pension, the trial court determined the value of all the community property was $1,537,589. After awarding McVay-Tackett her disparate portion, the trial court divided the community property equally. McVay-Tackett also received $244,407 as a separate property award, while Tackett received $459,101 in separate property, excluding the present value of his pension. The trial court did not award attorney fees to McVay-Tackett. She appeals.
ANALYSIS Distribution of Property
First, McVay-Tackett contends the trial court erred in distributing the property based solely on its character. She asserts that the trial court's distribution was inequitable because it awarded Tackett twice as much as it awarded her, without considering her needs and living expenses.
Trial courts have broad discretion to distribute property in a dissolution proceeding, and we will not disturb a distribution award on appeal absent a manifest abuse of discretion. In the Matter of Marriage of Brewer, 137 Wn.2d 756, 769, 976 P.2d 102 (1999). Accordingly, we affirm the distribution unless no reasonable judge would reach the same conclusion. In the Matter of Marriage of Landry, 103 Wn.2d 807, 809-10, 699 P.2d 214 (1985).
The trial court is required to distribute the marital property in a just and equitable manner considering, among other relevant factors, the nature and extent of the community property, the nature and extent of the separate property, the duration of the marriage, and the economic circumstances of each spouse when the division becomes effective. RCW 26.09.080; In the Matter of Marriage of Griswold, 112 Wn. App. 333, 339, 48 P.3d 1018 (2002). We rarely overturn such decisions on appeal because the trial court is in the best position to determine what is just and equitable under all the circumstances. Brewer, 137 Wn.2d at 769; Landry, 103 Wn.2d at 809. An award may be equitable even if it results in an unequal property division. In the Matter of Marriage of Ovens, 61 Wn.2d 6, 8-9, 376 P.2d 839 (1962).
To correctly apply the statutory factors, the trial court must first characterize the property as separate or community. Griswold, 112 Wn. App. at 339. The character of the property, while relevant, is not a controlling factor in the distribution.
Here, the trial court painstakingly analyzed all of the property to determine its character. Its decision to award each party their traceable separate property and one-half of the community property was reasonable, considering that the marriage occurred late in their working lives and that Tackett owned substantially more separate property than McVay-Tackett at the time of marriage.
Citing In the Matter of Marriage of Olivares, 69 Wn. App. 324, 848 P.2d 1281 (1993), McVay-Tackett argues that the distribution left her impoverished compared with Tackett because it leaves her insufficient income to pay for her expenses, while Tackett's income exceeds his needs. She asserts this demonstrates that the trial court failed to take her economic circumstances into account.
But a trial court need not enter formal findings as to economic circumstances as long as the record demonstrates it considered those circumstances. In the Matter of Marriage of Steadman, 63 Wn. App. 523, 526, 821 P.2d 59 (1991). Here, the trial court heard considerable testimony regarding McVay-Tackett's health conditions, insurance coverage, and anticipated needs. The trial court considered her disability income and Medicare payments and concluded that its distribution left her with "sufficient assets and income to reasonably support herself without reduction in value of her property award." Clerk's Papers at 47. Accordingly, the record clearly demonstrates that the trial court considered all the relevant economic circumstances brought to its attention at trial.
Moreover, the trial court's conclusion that McVay-Tackett's award was sufficient is well-founded. The distribution granted her income of $3,008.48 per month from Tackett's pension and her disability payments, in addition to $568,356 in assets. Her award consisted primarily of liquid assets such as bank and brokerage accounts that the trial court expected her to invest to her benefit. It was not unreasonable for the trial court to conclude that the award of assets would generate sufficient income to offset any budgetary shortfall.
For example, at a five percent annual rate of return, McVay-Tackett's assets would generate an additional $28,417.80 per year, or $2,368.15 per month, without any reduction in the principal.
McVay-Tackett's misplaces her reliance on Olivares. In Olivares, Division One affirmed an equal division of community property so that the wife would not be left destitute, even though the marriage was of short duration. 69 Wn. App. at 335. The Olivares court deferred to the trial court's judgment that the distribution was fair and equitable. Olivares, 69 Wn. App. at 335. Here, the trial court's distribution awarded McVay-Tackett more of the community assets than Tackett, and the total award leaves her far from destitute. The trial court did not abuse its discretion, and McVay-Tackett's argument fails.
Meretricious Relationship
Next, McVay-Tackett argues that the trial court erred when it refused to consider the property acquired during the two years of cohabitation before marriage as community property or quasi-community property.
"Washington has long accepted the principle that the character of property is determined under the law of the state in which the couple is domiciled at the time of its acquisition." Landry, 103 Wn.2d at 810. Here, the parties resided in Tackett's home in Michigan for nearly two years before marrying. Any property acquired during that period must therefore be characterized according to Michigan law.
Michigan does not recognize common law marriage and draws a distinction between separate and marital estates. Reeves v. Reeves, 226 Mich. App. 490, 493-94, 575 N.W.2d 1 (1997); Featherstone v. Steinhoff, 226 Mich. App. 584, 588, 575 N.W.2d 6 (1997). Furthermore, the state does not extend the property rights of married couples to those in meretricious relationships. Carnes v. Sheldon, 109 Mich. App. 204, 211, 311 N.W.2d 747 (1981); Featherstone, 226 Mich. App. at 588. Accordingly, the trial court did not err in characterizing any property acquired in Michigan during the two-year cohabitation as separate, and McVay-Tackett's argument fails.
Tracing Tackett's Separate Property
Relying on In the Matter of Marriage of Hurd, 69 Wn. App. 38, 848 P.2d 185 (1993), McVay-Tackett next argues that Tackett failed to overcome the presumption that his use of separate property to purchase a jointly owned home is a gift to the community. We agree.
The characterization of property as separate or community "is a question of law subject to de novo review." Griswold, 112 Wn. App. at 339. Although mischaracterization of property may be reversible error, the resulting distribution will be upheld as long as it is fair and equitable. Olivares, 69 Wn. App. at 330. We reverse only when the trial court's reasoning indicates that the property division was significantly influenced by the characterization, and it is unclear whether the trial court would have made the same division had the property been correctly characterized.
Olivares, 69 Wn. App. at 330.
Hurd, 69 Wn. App. at 50, aptly summarizes the law of community property:
Absent some change in the character of the property after it is acquired, the character of the property as either community or separate is determined at the date of its acquisition. Property retains its character as either separate or community, unless its character is changed. A spouse's separate property is that owned before marriage, or acquired during marriage by gift, bequest, devise, or inheritance, together with the 'rents, issues and profits thereof.' However, property acquired by purchase during marriage is presumed to be community property. The party asserting that an asset purchased during marriage is separate property can overcome this presumption only with clear and convincing proof. To effectively rebut the presumption that property acquired during marriage is community property, a party asserting that an item of property acquired during marriage is separate property must be able to trace 'with some degree of particularity' the separate source of the funds used for the acquisition.
(Citations omitted.)
Here, the trial court found that Tackett traced $113,429 from a current bank account to the proceeds of the parties' second home in Michigan. Tackett initially invested $113,429 of his separate property to purchase the home, which was deeded to both parties. The trial court characterized that amount as Tackett's separate property based on his ability to trace the investment.
But in Hurd, the court held that the use of separate funds to purchase property held in both spouses' names creates a presumption that the purchase was intended to be a gift to the community. 69 Wn. App. at 51. The presumption may only be overcome by clear and convincing proof of a contrary intent. Hurd, 69 Wn. App. at 51. The trial court's characterization failed to take into account that the funds were used to purchase a jointly owned home. Under Hurd, the trial court must presume Tackett intended to make a gift of the $113,429 investment to the community, and the burden shifts to Tackett to prove by clear and convincing evidence that the purchase was made without donative intent. 69 Wn. App. at 51.
We note that Michigan courts apply similar rules to determine whether assets are separate or part of the marital community. In Pickering v. Pickering, the court held that a separate property investment in the family home lost its character as separate property when the couple improved the home; paid the mortgage with community funds; and used the proceeds of the sale to purchase a new, jointly titled marital home. 268 Mich. App. 1, 12-13, 706 N.W.2d 835 (2005). Because the parties do not argue that the outcome would differ under Michigan law, we do not consider the issue further.
Tackett failed to meet this burden. His testimony established that community funds, as well as some of McVay-Tackett's separate property, were used to purchase and improve the property. This commingling suggests Tackett intended to relinquish any separate claim to the property. Tackett also did not express any intention to reclaim his separate investment. Absent evidence that Tackett intended to keep separate his contribution to the family home, Hurd controls and we presume his investment was a gift to the community.
Relying on In the Matter of Marriage of Skarbek, 100 Wn. App. 444, 997 P.2d 447 (2000), Tackett argues that because his investment in the family home can be traced and identified, it retains its character as separate property. But Skarbek does not support his argument because that case involved tracing separate contributions to a joint bank account. 100 Wn. App. at 446. Because a joint bank account is not an asset, no presumption of a gift to the community arises. Skarbek, 100 Wn. App. at 450. Accordingly, the Skarbek court held that the ability to trace was sufficient to rebut the presumption that the husband's contributions to a commingled account were community property. 100 Wn. App. at 449-50.
Moreover, Skarbek, distinguished the situation found here, where separate funds are used to purchase a jointly held asset:
If Mr. Skarbek had spent his money on an unrelated asset and put that asset in Ms. Skarbek's name, the rebuttable presumption [of a gift] would have attached. Only then would he have the burden of rebutting this presumption by providing an explanation for the transfer sufficient to convince the court that the true intention of the parties was to keep the property separate.
We agree with Skarbek that although tracing may be sufficient to rebut the presumption that commingled funds are community property, it does not overcome the presumption that a separate contribution to a jointly owned asset is intended as a gift to the community. Because Tackett failed to rebut the presumption that he made a gift of $113,429 to the community when he purchased the home in his and McVay-Tackett's names, the trial court incorrectly characterized that amount as Tackett's separate property.
Moreover, the trial court's award of $113,429 to Tackett appears to be based entirely on its characterization of that amount as Tackett's separate property, and it is unclear whether it would have awarded Tackett the full amount had it correctly characterized the sum as community property. The trial court distributed the community property equally between both parties, except for a disparate award to McVay-Tackett to reflect an accident settlement she received but could not trace. It is therefore likely that the trial court would have awarded half of the sum to McVay-Tackett had it been correctly characterized as community property.
Accordingly, we reverse the trial court's award of $113,429 to Tackett as his separate property and remand the case to distribute that sum as community property.
ATTORNEY FEES
McVay-Tackett argues that because the trial court divided the property disparately, it should have awarded her attorney fees under RCW 26.09.140.
We review an order under RCW 26.09.140 for an abuse of discretion, and the burden is on the challenger to show that the trial court's decision was manifestly unreasonable. In the Matter of Marriage of Williams, 84 Wn. App. 263, 272, 927 P.2d 679 (1996); In the Matter of Marriage of Crosetto, 82 Wn. App. 545, 563, 918 P.2d 954 (1996). RCW 26.09.140 allows the trial court to award reasonable attorney fees in connection with the proceeding after considering both parties' financial resources. In making its decision, the trial court should balance the needs of the requesting spouse against the other's ability to pay. Crosetto, 82 Wn. App. at 563.
Here, the trial court's distribution left McVay-Tackett with more than one-half million dollars in cash and liquid assets, belying her argument that she is in need of an award. McVay-Tackett does not demonstrate that it was manifestly unreasonable for the trial court to conclude that her financial circumstances permit her to bear her own legal costs. Although Tackett's ability to bear her costs might be greater due to his larger award, the trial court did not abuse its discretion in finding that, on balance, McVay-Tackett's need for a cost award was minimal.
McVay-Tackett also asks us to award her attorney fees on appeal. But she has not demonstrated any change in her financial circumstances since the trial court ordered her to bear her own costs. Absent such a showing, she has not provided a basis for attorney fees on appeal. See In the Matter of Marriage of Combs, 105 Wn. App. 168, 177, 19 P.3d 469 (2001). We decline to award her fees on appeal.
Tackett also requests attorney fees on appeal in the last sentence in his brief. His request, made without argument or citation to the record, fails to comply with RAP 18.1 and we decline to award fees. Thweatt v. Hommel, 67 Wn. App. 135, 148, 834 P.2d 1058 (1992) ("RAP 18.1(b) requires more than a bald request for attorney fees on appeal. Where there is any issue whatsoever as to a party's entitlement to attorney fees, the failure to argue the issue requires us to deny the request.").
Even if properly argued, we cannot discern any reason to award Tackett fees on appeal.
We reverse the distribution of $113,429 to Tackett as separate property, rather than dividing it as community property. We affirm in all other aspects and remand for further proceedings.
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., VAN DEREN, J., concur.