Disappointing Parentage Case Out of Idaho

Queer Idahoans had their families narrowly defined, excluding a nonbiological parent from the definition in a recent case, Doe v. Doe, 44419; Supreme Court of Idaho; June 7, 2017.

The case involved a nonmarried couple. In the court’s recitation of facts, it alleged that they were not married because the biomom didn’t not want to formalize the relationship with the nonbiomom. The court concluded that because Idaho’s parentage statute (the statute that defines who is a parent and how you can affirm or rebut your parentage) was clear that the presumption of parentage only applied to married couples and since the couple was not married, the nonbiomom wasn’t a parent (despite the fact their appears to be little to no dispute nonbiomom was involved in ever part of the assisted reproduction decision, there at the birth, and involved in the child’s life as a parent up until the biomom excluded her from the child’s life.

Glaringly absent from the court’s analysis was the fact that the couple’s relationship ended in 2012, for those who have already forgotten our history, same-sex couples were prohibited from marrying in the vast majority of states in 2012. In fact, it was at the end of 2012 that several states, including Washington passed marriage equality (or in the case of Washington, we had a referendum affirming the law passed by our legislature in February 2012). Idaho was not one of those states.

It would take until the June 26, 2015 for the U.S. Supreme Court to uphold marriage equality in Obergefell v. Hodges, 576 U.S. ___ (2015) and outlaw all of the state laws discriminating against same-sex married couples.

The Idaho court refused to create a de facto parentage doctrine and limited an existing decision that perhaps opened the door for nonbiological parents who had acted as parents and formed strong parental bonds with the child from accessing legal rights to the care, custody, and control of  their children.

This means that same-sex couples in Idaho are particularly vulnerable if they have not adopted or confirmed parentage through a court proceeding.

It is worth noting, that the court did not address whether same-sex married couples would be prevented from being presumed to be the legal parents of their child. The court discussed Idaho’s parentage statute, which is gendered (i.e., references “mother’s husband”). The court seemed to indicate that its decision turned not on the gendered nature of the parentage act, but that the couple was not married, with the implication that had the couple been married, the nonbiomom may have been considered a legal parent in the eyes of the court. However, I wouldn’t hold on to this distinction as some sort of bright hope that married same-sex couples will be recognized as parents of their children. The fact that the court failed to address the fact that the parents could not legally marry in Idaho for the entirety of their relationship speaks loudly of a bias that they wanted to hide so as their decision would be less likely to be challenged as discriminatory.

As I have often comment in blogs or presentations – marriage equality does not equal parentage equality. Decisions like this make all too clear how precarious our legal rights to our children can be in the LGBTQI communities. Any parents who have children together who have not adopted or affirmed parentage should seek advice from an attorney in their state.

There are options available. Many states have parentage statutes that include a holding out provision, which means that if you have been living with the child since birth and taking on the role of a parent with the consent of the other party, you may be able to affirm parentage. If you are married, every state should have some law presuming that the child is a child of marriage, and even if the statute is gendered, you could pursue a parentage confirmation.

Second parent adoption (a/k/a stepparent adoption) is the option that many attorneys who practice primarily with LGBTQI clients recommend. While this option always sits badly with me, I do not think an intended parent should have to adopt their own child. However, adoptions have been tried, tested, and affirmed. If you have any concerns your spouse, or if your spouse were to predecease you, their parents, would fight to have you excluded from your child’s life, an adoption may well be the safest option.

Sadly, homophobia is alive and well and we know with the spate of laws passing trying to allow same-sex couples to be denied adoption and foster care placements that homophobia will defeat the best interest of the child for many people. As such, protecting your relationship to your child is crucial.

Family Law Unpublished Decisions from Division 2 -June 16, 2015

In follow-up to yesterday’s post about Division I unpublished family law cases, here are some updates from Division 2 that came down today.

 

In Re The Marriage Of Carrasco, Docket No. 45767-9; Opinion Author Worswick; Concurring: Johanson and Melnick; Attorney for Apellant/Cross-Respondent Josephine C Townsend; Attorneys for Respondent/Cross-Appellant Carolyn Marie Drew and Patricia S. Novotny

Basics of decision: Husband appealed the trial court’s decision regarding maintenance (a/k/a spousal support/alimony) and division of property. He argued that the trial court failed to impute income to his ex-wife for purposes of calculating spousal maintenacne and child support, the decision to award “supplemental” maintenance; securing payments via life insurance policy, ordering Husband to pay all expenses for his adult daughter’s eating disorder treatment, and using the trial date to calculate Wife’s share of the Husband’s retirement account. The court rejected Husband’s claims, affirmed the trial court’s decision, and granted Wife Attorney’s fees.

Basic Facts: 19 year marriage, married while Husband was in school, by the time of divorce, Husband was employed earning roughly $16,210 in gross monthly income. Shortly after marriage, Wife quit her job to raise the couple’s first of three children. From 1994 to 2012 the couple lived off of Husband’s student loans, grants, stipends, and financial aid. Couple acquired few assets. Owned one home in Vancouver, Washington.

Court provided for spousal maintenance of $5,500 per month for a total of nine years, a five year base, plus an additional four years to allow Wife the time to Wife to seek higher education. Husband ordered to have life insurance in Wife’s name equivalent to amounts owed for maintenance. Property divided as follows: Half of Husband’s retirement account to each spouse as separate property; house to Husband with half of the equity to Tarantino. (Parenting plan and child support also entered, but do not appear to be in dispute, except for the imputation of income issue).

Husband had also stipulated in trial that he was going to pay for their adult daughters treatments connected to her eating disorder and then sought not to pay it.

On interesting point of the appeal is that Husband sought to assign error to findings of fact, but did not argue the findings lacked substantial evidence so they are considered verities on appeal.

Division II rejected the claim that income needs to be imputed for maintenance, noting that the only limitation on the amount and duration of maintenance under RCW 26.09.090 is that, in light of the relevant factors, the award must be just. Husband failed to carry his burden of showing that the trial court abused its discretion by ordering an unjust maintenance award.

Division II rejected the argument that, for child support purposes, Wife should have been found to be voluntarily unemployed and her income should have been imputed to minimum wage. The trial court made findings that Wife had attempted to rejoin the workforce, that she was volunteering to gain experience, and that she was attempting to learn a new skill (medical billing). Division II said this provided tenable grounds for the trial court’s ruling that Wife was not intentionally unemployed. Thus, the trial court did not err by not imputing income to Wife for purposes of calculating child support.

The trial court awarded Wife maintenance for nine years, compensating wife for the unrealized benefits of Husband’s education. Husband argued that there was no proof that Wife supported him through medical school, so she should not be compensated and that maintenance should be limited to the number or years Wife needs to get an education. Division II rejected this argument noting that where there are unrealized education benefits a trial court must consider four factors (1) the amount of community funds expended for educational costs, the income the community would have earned had the student spouse worked rather than gone to school, (3) the nonstudent spouse’s lost educational or career opportunities given up due to the student spouse’s education, and (4) each spouse’s future earnings prospects. The court noted that the law does not require reimbursement for past separate expenditures but to reimburse the supporting spouse for expected future benefits from the educated spouse’s increased earning potential that had not yet come to fruition at dissolution. Division II also reiterated that there is no rigid formula for awarding maintenance.

Division II also rejected the argument that the trial court abused its discretion in requiring Husband to maintain a life insurance policy to cover maintenance payments to Wife. Husband’s arguments were (1) if he died and wife got a lump sum, she could invest it the money and the resulting interest would create a windfall, and (2) wife wouldn’t owe taxes on life insurance policy but she owes taxes on her monthly spousal maintenance payments, creating a windfall due related to the lack of taxation. The court rejected this stating that there is no requirement that a property division be mathematically precise – it must be just and equitable. Husband failed to show the trial court manifestly abused its discretion or created an unjust and inequitable result.

Division II rejected Husband’s argument that he intended a cap of approximately $20,000 on his daughter’s medical treatment. Division II noted the stipulation was made on the record in open court and that a stipulation made in open court is a binding contract. The trial court found that the parties agreed to Husband paying all expenses related to daughter’s eating disorder. The transcript clearly says “all treatment” without a cap. Division II also notes that Husband’s argument against the agreement is that Wife may some day seek to enforce the agreement in an absurd manner and the court says this claim is not ripe because there is no allegation that she is currently seeking to enforce it in an absurd manner. In the future, the context rule of contracts will permit a court to interpret the stipulation in a reasonable manner consistent with Husbands intent.

Division II rejected the argument that Wife had no right to retirement benefits after the separation – noting again that the court may divide up all property, community or separate, as shall appear just and equitable. The court noted that the characterization of property as community or separate does not control its distribution and a court must consider all relevant factors and has the discretion to dispose of separate and community property so long as it is just and equitable. Husband failed to prove that the trial court manifestly abused its discretion by using the trial date instead of separation date and notes that Husband did not argue that the award was not just or equitable.

Wife filed an affidavit of financial need at least 10 days before oral argument and finding that Wife had a financial need, the court granted her attorney fees on appeal in amount to be determined by the court’s commissioner.

In the Marriage of Allen, Docket No. 31619-0; Opinion Author: Fearing; Concurrence: Brown and Siddoway; Attorney for Appellant: Jeffrey Ray Allen   (Appearing Pro Se); Attorney for Respondent: Catherine Marie Allen   (Appearing Pro Se) and Kacie L Maggard, Yakima County Prosecutor’s Office

Father appealed an order increasing his child support obligation based upon (1) Commissioner should have recused himself because the commissioner previously represented Jeffrey against his former wife; (2) Court erred in denying request for change of venue; and (3) Court denied Father due process when another commissioner changed his child support obligation because he never received information about Mother’s finances. All of the Father’s arguments were rejected and the order modifying Father’s child support order were affirmed.

The Mother was receiving public benefits and the State of Washington moved in Grant County Superior Court, where the order was originally entered for an increase to the Father’s obligation. After divorce, Mother moved to Everett, Snohomish County, and father moved to Tacoma, Pierce County. Father moved to change venue to Snohomish County. Wife requested it remain in Grant County alleging the father was seeking to avoid modification.

The Court ordered a change of venue unless the State objected and the state objected to a change of venue on the ground that transferring venue would delay the motion to increase child support. The Motion to change venue was denied and the hearing was rescheduled. Father sought reconsideration, but mislabeled his motion for reconsideration causing confusion. At this time Father aslo argued the Commissioner should have recused himself since he used to be Father’s attorney. Father’s request for reconsideration was rejected as untimely.

Division III noted that Father’s brief contained no citation to the record and egregiously violated RAP 10.3 and 10.4 and thus, Father’s assigned errors are treated without merit. Division III noted that since Father did not raise the issue of disqualification until after the commissioner denied Father’s motion to change venue and so the issue was waived for assignment of error.

Division III noted that RCW 26.09.280 allows for a child support modification to proceed in the court in which the final order, judgement, or decree was entered, and so it was proper to be filed in Grant County. The Commissioner’s reliance upon the objection of the state and to avoid further delay modifying child support order was a validly articulated reason for the decision not to change venue and thus did not abuse discretion.

Father also made the claim that the state had the responsibility to provide proof of personal service or certificate of mailing. Division III said the Civil Rules allow for proof to be provided by a declaration of service and so Due Process was not denied to Father.

Attorney Fees – a portion of an opening brief must be devoted to fees or expenses under RAP 18.1(b). Argument and citation to authority are required under the rule to advise the court of the appropriate grounds for an award of attorney fees as costs. Both parties failed to devote a section of their briefs to their requests for attorney’s fees, therefor both requests were denied, plus they were pro se so likely incurred no fees.

 

Family Law Unpublished Decisions from Division 1 -June 15, 2015

There have not been many published family law cases of late. I thought since there were a couple of unpublished decisions, I would mention them, even though they do not seem to offer much in terms of legal interpretations, but sometimes it’s interesting to see what’s happening in other family law cases.

In Re Marriage Of: Halligan,, App., Docket No. 71391-4; Opinion Author: Linda Lau; Concurring; Dwyer and Shindler; Counsel for Appellant John Halligan (Pro Se); Counsel for Respondent Micheal Schein

Brief Facts: Couple married 9/1995 and separated 6/2012. One child born in 2011. Husband gross income ~$13,000; W gross income ~$3,200. Total assets about $564k distributed 60% to Wife and 40% to Husband. For a seventeen year marriage, wife was awarded five years of maintenance at $3,500. There was also a child support award amount, but the amount was unclear (at one point it looked as if the $3,500 may have been maintenance and child support, but I think it was on top of the $3,500 in maintenance).

Issue 1: Retirement Benefits: The parties used Steven Kessler, whom the court described as “an experienced certified public accountant” to calculate the value of their retirement plans. Husband did not challenge the valuation of one of the retirement pensions during the expert’s testimony, but did on his direct testimony. The admission of the report without objection and the lack of questioning the expert on this point were significant factors and the court felt his opinion was largely unchallenged factored heavily into the court’s decisions as there was nothing in the record to indicate that the trial court’s decision to rely on Kessler’s opinion was unreasonable or an abuse of discretion.

Issue 2: Attorney’s Fees: Husband also challenge the award of attorney’s fees to Wife at the trial level. When a party seeks to challenge the attorney’s fees, they must establish that “the court used its discretion in an untenable or manifestly unreasonable manner.” Wife had incurred attorneys fees of $60,621 and the court awarded $18,000 in attorney’s fees. Division 1 declined to overturn the court’s award of attorney’s fees.

Issue 3: Exclusion of Expert Witness: Husband attempted to provide the testimony and report of Neil Bennett, a vocation counselor. He did not disclose it in a timely manner and the court sanctioned Husband by excluding the witness. Here Division I notes that in Husband’s appeal he made factual assertions not supported by the record in violation of RAP 10.3(a)(6). Division I noted that when a trial court imposes a severe sanction, such as witness exclusion, the record must clearly demonstrate that the court considered (1) whether the violation was willful or deliberate; (2) whether the violation substantially prejudiced the opponent’s ability to prepare for trial; and (3) whether a lesser sanction would probably suffice. Division I noted that the trial court considered all three factors on the record and there is no evidence of abuse of discretion in the exclusion of the testimony.

An notes is that the trial court rejected the claim that a continuance automatically extended all discovery deadlines without entry of a new case scheduling order or the court’s approval.

Issue 4: Post-Separation Payments to Fidelity 401(k): The post-separation payments to the 401(k) were connected to a loan from the 401(k) to buy the property. The trial court noted this and found no need to provide credit for payment to a debt assigned under temporary orders. Division I found no abuse of discretion and also noted that mischaracterization of property is not grounds for setting aside the trial court’s property distribution if the division of the property is fair and equitable and that this post-separation payment was not crucial to the court’s decision.

Issue 5: Federal Tax Exemption: Husband made an argument that there was a scrivener’s error in allocating the tax exemption to the Wife instead of alternating, but the record indicates that the tax exemptions were awarded in connection with the amount of child support payments.

issue 6: Verification of Work-Related Daycare Expenses: Husband wanted some sort of proof for work-related daycare expenses, but he failed to provide any meaningful legal argument or citation to relevant authority and the court declined to consider his argument.

Attorney’s Fees on Appeal: Despite an overall tone of the opinion that sounded like there were at least some points the court thought were without merit, the court did not award attorney’s fees on appeal.

 

In Re The Marriage Of: Robin Maelee Hitz, Res. And Eric James Hitz, App.; Docket No. 71413-9; Opinion Author: Spearman, Concurring: Applewick & Dwyer; Counsel for Appellant: T Reinhard G ‘ron’ Wolff;  Counsel for Respondent: Robin Maelee Hitz   (Appearing Pro Se). 

Husband appeals, claiming that the trial court “lost jurisdiction” (Division I’s quote) ove the case. Division I notes Husband misrepresents relevant facts and that no authority supports is claim that the dissolution became a new proceeding for purposes of the statutory entitlement to a change of a judge when the bankruptcy court lifted a stay and allowed the dissolution to proceed.

Brief Facts: Husband and Wife owned a business together. The judge disclosed a relationship owned by his family and the bank and the parties waived any potential conflict. There was a nine-day trial. The decree assigned Wife the responsibility of liquidating the community assets as paying debts owed. Husband didn’t cooperate and his parents filed a lawsuit against the parties in 2012 claiming an unsecured promissory note (the judge disqualified itself from this case, but noted he thought it had been unnecessary). In April 2012, funds were ordered to be divided between the bank, the parents pursuant to their lawsuit and the parties. Husband filed motions for recusal without noting his motions for hearing. At some point Husband also filed for bankruptcy. After a stay lifted pursuant to the bankruptcy filing, the court denied the motion for recusal, awarded Wife $18,000 in attorney fees and entered a restraining order against Husband. The court also denied Husband’s motion for reconsideration an imposed sanctions against Husband of $5,000 under CR 11.

Division I Discussion: Division I notes that appellant’s brief must contain an argument with legal authority and references to the relevant part of the orders and that Husband’s legal arguments are based on assertions of fact largely unsupported by any reference to the records and that some citations are inaccurate or contradicted by the record.

Recusal – Division I notes that Husband’s argument is factually incorrect as the judge recused himself in a different case and expressly declined to recuse himself in this case. The affidavit of prejudice was also untimely and Husband’s argument that the bankruptcy court granting relief from the automatic stay did not somehow create a new action. It was not a modification, but a continuation of the original issue.

Attorney’s Fees – Husband’s request for attorney’s fees was denied. The court did find that appeal was frivolous, but did not impose additional sanctions. The court did award attorney’s fees for wife.

 

Nathan Brown, Iii, Appellant V. Mi K. Brown, Respondent, Docket No. 71398-1, Opinion Author: Dwyer; Concurring: Spearmand and Appelwick; Attorney for Appellant: Nathan Brown III   (Appearing Pro Se); Attorney for Respondent: Joseph Orry-leroy Baker  

Father’s petition for a parenting plan modification was dismissed and sanctions were imposed for his failure to comply with the court’s scheduling order. Court affirmed and found his appeal frivolous and awarded fees to Mother.

Basic Facts: Original parenting plan provided three sons reside a majority of time with Mother. Father sought to modify. A superior court commissioner entered orders finding adequate cause for a trial and appointed a GAL. After the GAL filed her report Father filed a motion for a temporary order adopting his proposed parenting plan and “several provisions of the GAL report” and terminating child support based on the age of the oldest child and requesting a change of residence for the other two children. The commissioner denied the request for change in the residential schedule pending trial and stated that no child support adjustment was properly before the court. Over the next couple of months Father did not file pleadings required by the case schedule or the pretrial conference order, including no witness or exhibit list, no financial declaration, and no trial brief. Mother filed a motion to dismiss the petition with prejudice and terms based on Father’s file to comply with the case schedule. The court found there was “absolute noncompliance” with court orders and nothing would suggest mitigating circumstances and awarded terms in the amount of 75% of Mother’s attorney fees.

Division I Discussion: While dismissal is disfavored it is justified when a party willfully and deliberately disregards reasonable court orders, resulting in prejudice to the other party, and impairing the efficient administration of justice under CR 41(b). Disregard of a court order without reasonable excuse or justification is deemed willful.

Division I rejects the following claims by Father:

1 – Commissioner’s temporary order resolved issues making trial unnecessary (new issue on appeal). The temporary order was only temporary pending trial – argument rejected.

2 – The “or” was disjunctive and therefore terms and sanctions should not have been awarded. Plain language is clear that this is not what the statute intends- argument rejected.

3- The trial court erred in placing the sanctions on Father instead of Father’s attorney. Statute is clear sanctions can be on individual or attorney – argument rejected.

4- Mother was not prejudiced and that Mother failed to sufficiently mitigate her prejudice. Mother’s attorney had to prepare and also attempted to follow-up with Father’s attorney to make sure deadlines were met – argument rejected.

5- Father was not sufficiently warned about sanctions (new issues on appeal). Terms are clear under KCLCR 4(g)(4), plus Mother’s attorney had numerous calls, e-mails and letters to Father’s counsel regarding failure to comply with case schedule – argument rejected.

Division I granted Mother’s request for fees on appeal. The court stated that Father’s appeal presented no debatable issues and mother entitled to an award of fees and costs on appeal.

Lundy v. Lundy – ERISA and Divorce

 

When couples divorce, sometimes it can be challenging to figure out how to divide up assets, especially when valuing the assets is complicated or there are a variety of state or federal laws impacting the ability to divide the assets.

Assets can include stocks, real property (houses), bank accounts, and retirement. Some of these items are easier than others to divide up, like a bank account. In a bank account, money is money and there are no rules about accessing money.

Retirement and pensions are a different matter. For some couples, retirement or pension may be one of their only assets. There are often rules about how and when retirement funds can be transferred. It is not unusual for couples who have enough assets to try to divide their other property in a manner that allows the spouse with the retirement to keep the retirement account.

A recent Division 1 case discussed a case where the parties may have attempted to waive the Wife’s retirement interest in Husband’s account: Craig S. Lundy, Resp. vs. Kelly Lundy, App., Docket No. 71900-9 -I, File Date: June 1, 2015; Opinion Appelwick, Counsel for Appellant: J. Bruce Smith and Phillip James Buri; Counsel for Respondent: Perry William McConnell 

This case involved a couple that was married in 1984 and divorced in 2009. They both worked and had retirement accounts. Their divorce decree awarded “all retirement funds and 401Ks in [his/her] name.” The couple did not have children.

About four years later Husband died without a will and without any children. At the time of Husband’s death, his retirement account was valued at about half a million dollars. Husband worked at Boeing and his retirement account controlled by ERISA, a federal scheme for regulating employee benefit plans. Wife was listed as the beneficiary of the account.

Husband’s estate (managed by a sibling) petitioned to get the retirement funds from Wife, relying on RCW 11.07.010(2)(a), which provides that the designation of a spouse as beneficiary of a nonprobate asset is automatically revoked upon dissolution of marriage. Wife argued that the statute was preempted by ERISA, meaning the law didn’t not apply to his retirement because federal law supersedes state law.

The question here is whether Wife was able to retain funds, not whether the plan properly provided the funds to Wife.

Division 1 cited a 2001 U.S. Supreme Court case, Egelhoff v. Egelhoff, 532 U.S. 141, (2001) that the statute is preempted “to the extent it applies to ERISA plans.” The Court said that after Egelhoff, there is no doubt that RCW 11.07.010 is inapplicable to ERISA benefits. Division 1 also discussed a recent Supreme Court case which discussed ownership of similar benefits after distribution, Hillman v. Maretta, U.S. , 133 S. Ct. 1943, 1952, 186 L. Ed. 2d 43 (2013), noting that this case is not on point, but it suggests the same outcome would be appropriate in this situation.

Division 1 discussed other U.S. Supreme Court ERISA cases: Boggs v. Boggs, 520 U.S. 833, 835-36, 841, 117 S. Ct. 1754, 138 L. Ed. 2d 45 (1997) and Kennedy v. Plan Administrator for Dupont Savings and Investment, 555 U.S. 285, 129 S. Ct. 865, 172 L. Ed. 2d 662 (2009), both basically holding that what the ERISA type plan says regarding distribution applies to the plan administrator and post-distribution to whomever received the benefits.

Division 1 also discussed Ninth Circuit Cases, Carmona v. Carmona. 603 F.3d 1041,1062 (2008) and a pre-Egelhoff case, Emard v. Hughes Aircraft. Inc.. 153 F.3d 949 (9th Cir. 1998). abrogated by Egelhoff. 532 U.S. 141. See 603 F.3d at 1061- 62.  The Carmona court observed, Emard was abrogated by Egelhoff. 

In the Carmona, when Husband had already retired and the plan refused to change the beneficiary, noting that beneficiary was irrevocable upon his retirement. In the couple’s divorce a Nevada court attempted to award Husband both pension plans as his separate property. Husband tried to get new wife placed as his survivor beneficiary. The Nevada court said former-wife waived her right to the plan benefits and she would be unjustly enriched if she remained the beneficiary. The court ordered the plan administrators to change the survivor beneficiary to New Wife or for Former Wife to place funds in a constructive trust with the New Wife as the beneficiary. The Ninth Circuit overturned the court’s orders, finding constructive trusts are impermissible as it was clearly an attempt to avoid ERISA and it is preempted.

The state cannot revive a preempted statute simply by applying it in a post-distribution argument. The court also says that waiver is not apparent on the face of the dissolution decree. Wife did not expressly disavow any interest in the proceeds of the account as beneficiary. “Disclaiming an ownership interest is not the same as disclaiming future rights as a beneficiary.”  

In order to waive a future interest, the ex-spouse must explicitly waive the right to receive ERISA proceeds. The court provides the following examples: See, e.g.. Kennedy. 555 U.S. at 289 (exspouse divested of “‘all right, title, interest, and claim in'” ERISA accounts); Andochick v. Bvrd. 709 F.3d 296, 297 (2013) (ex-spouse waived “any interest, including but not limited to any survivor benefits” and “‘released and relinquished any future rights as a beneficiary under”‘ ERISA plans), cert, denied. 134 S. Ct. 235, 187 L. Ed. 2d 145 (2013); Estate of Kensinger v. URL Pharma. Inc.. 674 F.3d 131, 132-33 (2012) (ex-spouse agreed to “waive, release, and relinquish any and all right, title and interest” in ERISA accounts).

In the absence of an express agreement, waiver requires “unequivocal acts or conduct evincing an intent to waive.” Wagner v. Wagner. 95 Wn.2d 94, 102, 621 P.2d 1279 (1980).

Bottom Line for Divorcing Parties: (1) Determine whether your plan is governed under ERISA, if it is, make sure to include explicit language regarding any waiver of ERISA proceeds (see language court referenced above). (2) Whenever you divorce, update your beneficiary designations, make sure that prior to divorce you investigate what it would take to update your beneficiary designations from your plan administrator and consider including a provision in the divorce decree that the other party comply with all requirements.

Side note for attorneys regarding Motions to Strike and Impose Sanctions: Motions to Strike sentences or sections out of briefs waste everyone’s time and it is a practice the court discourages.  See Footnote 6: We also deny the parties’ various motions to strike and impose sanctions. Both parties engaged in practices that we discourage. Motions to strike sentences or sections out of briefs waste everyone’s time. O’Neill v. City of Shoreline, 183 Wn. App. 15, 24, 332 P.3d 1099 (2014). The citations to unpublished cases in the briefing was in violation of our rules. GR 14.1(a): Johnson v. Allstate Ins. Co.. 126 Wn. App. 510, 519, 108 P.3d 1273 (2005). However, we do not welcome motions from the parties seeking sanctions for doing so. This court is aware of its authority to award sanctions and can determine on its own when to do so. See RAP 18.9(a) (“The appellate court on its own initiative . . . may order a party or counsel [who] fails to comply with these rules to pay terms or compensatory damages to any other party who has been harmed by the delay or the failure to comply or to pay sanctions to the court.”

 

Characterizing Family Operated Businesses in a Dissolution

Family operated business can make the dissolution of a marriage more complicated. A recent published Division III case discusses characterizing the farm ground and equipment of a family farm where Husband worked the farm that the Father-in-Law tried to create as separate property for wife. Division III of Court of Appeals determined that the trial court erred in failing to recognize the community interest in the farming operations and assets and sent the case back to the trial court for a determination of whether the distribution would have been the same if the property was properly characterized.

The court’s ruling affirms a piece of advice from a KCBA Family Law Meeting presentation by Shelby Lemmel on April 3, 2015. Whenever possible, have a trial court clarify if it would have distributed property in the same manner regardless of the character of the property. It’s also good advice for judges who don’t want any part of their decisions remanded. If the court would have distributed the property in the same manner whether it was characterized as separate or community, and the court order stated this, the parties would not have to go back to trial.

In re the Marriage of: Jeannie Kile & Gordon B. Kendall, Docket No. 31523-1-III, File Date: 04/09/2015; Opinion: Siddoway; Counsel for Appellant Craig Mason; Counsel for Respondent Martin Louis Salina

The oversimplified facts of this case are Husband and Wife were together for approximate 28 years and had two adult children together. Wife’s father had a messy divorce and he was trying to keep the farm as his daughter’s separate property.  Husband learned farming business from Wife’s father and eventually quit his day job to farm the land full-time. He was paid for his work, the testimony was that he was paid fairly, but there was no evidence in of market wages or benefits in the record. Interestingly, Husband was in charge of determining how much he was paid.

It seems that from the appellate court’s perspective, one of the places where Father may have gone wrong to actualize this intent was charging fair market value for the lease, especially since Wife did not have separate property assets to pay the lease. Instead, the community and Husband bore “burdens and risks in performing the lease obligations.” Another interesting point was that the couple hadn’t entered into any kind of agreement regarding farm lease to clarify that there intent was that it would be separate property. There was another parcel of land where Husband issued a quit claim deed and the court found that (among other things) kept it as separate property (possibly with a right of community reimbursement for payments).

After Wife filed for divorce in 2011, her father sent a notice terminating the farm lease based on dissatisfaction with Husband’s performance asking that Wife turn the farming operations over to her son. Wife’s father died in January 2012, leaving the farm ground in trust in which Wife and Son have beneficial interests.

Husband was awarded about 80% of the parties’ separate property.

Regarding the Farm Lease as a gift “gift,” the court’s analysis focused on the concept of a gift as a voluntary transfer or property without consideration and that here, since there was an exchange of consideration because there was a lease/contract. Offering a contract on market terms is not a gift.

Turning next to the question of whether it qualified for separate property under RCW 26.16.010, rents, issues, and profits of separate property, the court noted that, where a spouse has separate property, the statute recognizes his or her authority to manage it “as fully, and to the same extent or in the same manner as though he or she were unmarried.” Here the court noted that it was not separate property in existence prior to marriage, Husband used part of his retirement to help fund the operations (even if they were restored at a later time) and Wife trusted Husband to pay himself a wage based on what was good for the farm. The court found that this was a spousal enterprise and did not qualify as separate property of a spouse, instead it fell squarely in the “fundamental premise of the community property system that both spouses contribute to property acquisitions in a joint effort to promote the welfare of the relationship.”

Wife failed to overcome the presumption of the community character of the farm lease. Wife admitted that the parties never executed any joint property agreement that would change the legal character of the farm lease and its profits from community to separate property.

In the case of the equipment lease, the father had forgiven a debt of approximately $50,000 and this evidence was determined to be sufficient to rebut any presumption of a gift to the community.

There was another property that was purchased during the marriage. Not only did the undisputed evidence support the trial court’s findings that the conveyancing deeds reflected Wife’s purchase in her name as separate property, but Husband also executed a quit claim dead. The court noted that since the farm made payments and the farm was determined to be community property there may be a right of community reimbursement but it does not result in a change (“transmutation”) of the property from separate to community.

The appellate court noted that remand was required where, “it appears the trial court’s division of property was dictated by a mischaracterization of the separate or community nature of the property.” The court said it is unclear whether the court would have divided the property the same way had the assets been properly characterized, which required remand to enable the trial court to make a just and equitable division of the property considering its correct characterization.

On the issue of spousal maintenance, the trial court found that Husband’s request was vague and there was no information regarding his willingness or ability to work. The spousal support statute is permissive (a court “may” grant). RCW 26.09.090. Trial court awarded Husband $650,000, including 80 percent of the parties’ community property and the court found that Husband failed to establish any abuse of discretion for failing to award maintenance on top of this. Though the court did note that with the re-characterization of property, the trial court has the authority to revisit its decision on maintenance on remand.

Another Committed Intimate Relationship Case

A couple weeks ago, Division II issued an opinion regarding a Committed Intimate Relationship Case (CIR), which was blawged about here. In that case, the court said the a CIR cannot begin prior to a couple living together. On October 7, Division III addressed, whether a CIR has to be plead in  In re Neumiller

When a dissolution (divorce) is filed, a petition is filed, in Washington State, the Petition simply asks for the marriage date. For years, Jill Mullins-Cannon, has done presentations for attorneys representing same-sex couples and has advised practitioners to include the date the petitioner believes is the start date of the marriage-like relationship and list it separately so that there is no confusion about that date.

The Neumiller case presents the first discussion on whether the CIR date must be plead. At the trial level, the trial court said that it had to be plead earlier (in this case the petition was amended on date of the trail). The Court of Appeals disagreed and reversed this decision.

The Court of Appeals said that a CIR does not need to be in the pleading when it is “merely an evidentiary fact in a marriage dissolution proceeding.” The court said it’s an evidence issue and like evidence, it doesn’t have to be in the pleadings. It also wouldn’t be a discovery violation (when you don’t provide evidence to the other side that you should have provided) because the husband had knowledge of when they lived together and that the wife disagreed with his characterization of property as separate as opposed to community.

This case is important, especially for same-sex relationships that may have been in existence long before the law recognized those relationships. The CIR doctrine helps protect the community property and ensures a just and equitable distribution at the end of the relationship. This means that one partner does not become economically advantaged at the expense of the other other party. For same-sex couples in particular, it means that they won’t be put at a significant disadvantage from opposite-sex couples simply because the law didn’t recognize their relationship earlier. If they don’t file a petition that includes the start date of their CIR, that time will still be included in determining community and separate property.

It will be interesting to see whether the husband tries to appeal this case to the State Supreme Court. Regardless, best practice is still to include the CIR start date in pleadings. It is important to know upfront if there is going to be any disagreement about the start date of the CIR. Putting it in the pleadings will flag the possibility of a dispute at the outset of the case.