Terry Lynn Mcdermott v. Scott William Mcdermott ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Marriage of ) No. 78140-5-I
TERRY LYNN MCDERMOTT, )
DIVISION ONE
Respondent,
and ) UNPUBLISHED OPINION
SCOTT WILLIAM MCDERMOTT, )
Appellant. ) FILED: June 24, 2019
SCHINDLER, J. — Scott William McDermott appeals the decision to deny his
motion to revise the findings and order of the superior court commissioner granting the
petition of Terry Lynn McDermott to modify maintenance. We conclude the undisputed
record does not support finding a substantial change in circumstances. We lift the April
24, 2018 stay of the maintenance order, reverse and remand to vacate the order and
dismiss the petition to modify maintenance.
2010 Dissolution
Scott and Terry McDermott married in 1 981 and are the parents of two adult
daughters and an adult son. Scott worked for Global Marine Transportation and Terry
worked part-time as a hair stylist.1
1 We refer to the parties by their first names for purposes of clarity.
No. 78140-5-1/2
Beginning in 2005, Terry suffered a series of strokes. In 2009, she experienced
“massive neurological damage due to mercury poisoning.” Scott and Terry separated
that same year.
On August 10, 2010, Scott and Terry entered into a settlement agreement. In
2010, Scott was earning $10,000 a month as a tugboat captain for Global Marine
Transportation. Scott agreed to pay Terry monthly maintenance of $3,000 per month
until November 2023 and $2,500 per month until October 2025 when she was eligible to
obtain her share of his Social Security benefits.
On August 19, 2010, the court entered the decree of dissolution. The decree
awards Terry the family home and maintenance in accord with the terms of the
settlement agreement.
At some point after 2010, Scott and Anna married. In February 2013, Scott and
Anna borrowed money from Scott’s mother Diane to purchase property and build a
house in Ellensburg. Scott and Anna executed promissory notes and made monthly
payments to Diane. A deed of trust on the property secured the promissory notes.
Anna also “lent the community money” from her separate funds to purchase the
property.
2014 Petition To Modify Maintenance
In March 2013, Scott lost his job as a tugboat captain at Global Marine
Transportation. Scott was unemployed for approximately a year. From August until
December 2013, Scott made only partial maintenance payments to Terry and beginning
in January 2014, he made no maintenance payments.
2
No. 78140-5-1/3
In March 2014, Terry filed a motion to show cause why Scott should not be held
in contempt of the order to pay her $3,000 a month in maintenance. In March, Scott
obtained employment as a truck driver for Amerigas.
A superior court commissioner entered an “Order on Show Cause Re:
Contempt/Judgment.” The commissioner found that between August and December
2013, Scott paid “a reduced amount of $1 ,800[.00]” in maintenance and “paid no
maintenance for January, February, and March, 2014.” The March 26, 2014 order
states Scott is not in contempt of court because he “did diligently pursue employment”
and “does not have the present ability to comply” with the order to pay $3,000.00 a
month in maintenance. The commissioner found his “new employment will be for
$14[.00] per hour.” The order also states Scott “is receiving an income tax refund of
$13,421[.00] for 2013 of which 1/2 is his share of community property.” The order states
Scott failed to pay Terry “the sum of $1 5,000[.00j for maintenance for the period from
August, 2013 through March, 2014.” The court entered a judgment against Scott “in the
amount of $15,000[.00j for unpaid maintenance arrearages” and ordered Scott to pay
Terry “$6,710.50 (V2 of tax refund)” and $1,500.00 in attorney fees. In April 2014, Scott
started working for trucking company Amerigas earning $1 5 an hour.
On July 14, 2014, Scott filed a “Petition for Modification of Spousal Maintenance.”
Scott asserted there had been a substantial change in circumstances since entry of the
decree in 2010. Scott states he “lost his high-paying job with Global Marine
Transportation,” he was unemployed for nearly a year, and he had been working full
time for Amerigas since April 2014 earning $15 an hour. Scott requested the court
enter an order modifying the monthly maintenance payment.
3
No, 78140-5-114
In response, Terry argued Scott “has not pursued employment in good faith” and
owed “arrears of $29,000{.00]” in maintenance. However, Terry stated that if the court
granted the modification, the “unpaid, past due maintenance should be deferred to be
paid once Scott McDermott’s mother passes.” Terry requested the court order Scott “to
report to Terry McDermott when his mother dies and to report the status of her estate.”
In September 2014, Scott received a promotion atAmerigas, earing $17.50 an hour or
$2,240.00 net per month.
On November 13, 2014, a superior court commissioner entered an order
modifying maintenance and findings of fact and conclusions of law. The commissioner
found Scott acted in good faith in pursuing employment, there had been a “substantial
change in circumstance since” entry of the 2010 decree, and he did not have the means
to pay $3,000 a month in maintenance.
[Scott] acted in good faith obtaining his current employment. He does not
have the financial means to make the full monthly support obligations as
originally ordered and his obligation is decreased from $3,000/month to
$1,120/month.
The commissioner found Scott’s income is “$2,240/month net.” The order states Scott
“shall pay 50% of his income as maintenance,” or $1,120, beginning November 1,2014
and “shall pay 50% of his tax refund annually until there are no maintenance arrears.”
The court ordered Scott to submit a W-2, a Form 1099, and a tax return each year to
Terry. The court reserved ruling on the amount of maintenance arrearages. The order
states Scott “shall notify Terry McDermott w[ith]in 7 days of his mother’s passing.”
4
No. 78140-5-115
2015 Work Injury
On October 23, 2015, Scott injured his back at work. Scott was unable to return
to work at Amerigas. Scott filed a claim for disability benefits with the Department of
Labor and Industries (L&l). L&l awarded Scott $2,586.33 a month in disability benefits.
Trust and Annuity
Scott’s mother died in November 2015. On November 18, Scott notified Terry
that Diane had died.
Diane’s will established a spendthrift trust and directs “the entire residue of my
Estate” to the McDermott Family Trust. The will designated Scott as the initial
beneficiary of the McDermott Family Trust and her granddaughters Heather Daly and
Hannah Kuehl as the remainder beneficiaries. The will states:
If my son, SCOTT WILLIAM McDERMOTT survives me, he shall be the
sole initial beneficiary of the McDermott Family Trust. The purposes of
this trust are to provide for my son’s needs while protecting the trust
principal from any creditor of my son, ultimately preserving such principal
for my son’s daughters.
Diane appointed her granddaughter Heather as trustee of the McDermott Family
Trust and her granddaughter Hannah as successor trustee. The will states that the
trustee shall shave the “sole and absolute discretion” to “distribute as much of the
income and principal to, or for the benefit of the beneficiary, as my trustee may from
time to time deem proper for such beneficiary’s health, maintenance, and support in
reasonable comfort.”
Diane had purchased an insurance annuity policy with proceeds payable on
death. Diane designated Scott and her granddaughters Heather and Hannah as
beneficiaries of the annuity. When Scott received his share of the proceeds, he paid
Terry the amount he owed in past-due maintenance with interest. Scott also used the
5
No. 78140-5-1/6
annuity proceeds to pay the estate the amount owed on the loans from Diane of
$103,013.61 and paid Anna $86,545.32 for the loan she made with her separate funds.
At some point in 2016, Scott and Anna separated. In July, Scott filed a petition
for dissolution of the marriage. The court entered temporary orders giving Anna the
right to “live in the family home” in Ellensburg and “have possession of the family truck.”
Scott moved into a “caboose” on property “owned by the McDermott Family Trust” in
Liberty, Washington and the trust purchased a truck for Scott to use in exchange for
“reasonable payment.”
2016 Petition To Modify Maintenance
On May 17, 2016, Terry filed a petition to modify the November 13, 2014
maintenance order. Terry stated there was a substantial change in circumstances
because Scott’s mother died “leaving a substantial estate” and Scott is “the sole
beneficiary of a trust she established for his benefit.” Terry asserted Scott received an
annuity in January 2016 for $189,532.60. Terry stated Scott “paid off the mortgages he
and his current wife owed on the house they had built in Ellensburg.” Terry argued
Scott has “resources to pay the maintenance required and Terry McDermott has the
need for the same.” Terry requested the court order Scott to pay maintenance as
agreed to in the 2010 settlement agreement of “at least” $3,000.00 a month until
November 2023 and $2,500.00 a month through October 2025.
Scott filed a declaration asserting there “are no grounds to modify the
maintenance.” Scott stated his ability to pay has “not increased,” he is “not the trustee
of the trust,” he “has no control over this trust or the distribution of the trust,” and he
“has not received any distributions from the trust.” Scott asserted he “is currently not
working at all due to a disability,” he has “to undergo surgery,” and he “is out of work
6
No. 78140-5-1/7
indefinitely.” Scott stated his only income is the “disability income he receives from L&l”
of $2,586.33. Scott also submitted the declaration of their daughter Heather, a copy of
his mother’s will, and financial documents. In her declaration, Heather states, “I am the
Trustee of the MCDERMOTT FAMILY TRUST. I would like to state to the court on my
father{’]s behalf that the MCDERMOTT FAMILY TRUST has made no distributions to
Scott W McDermott.” Heather states the McDermott Family Trust “did purchase a truck
and has made it available for Scott W McDermott to use for reasonable payment” but
“[t]here have been no monetary distributions made to Scott W McDermott.”
On September 15, 2016, a superior court commissioner entered a “Final Order
and Findings on Petition to Modify Spousal Maintenance.” The commissioner granted
the petition and ordered Scott to pay Terry maintenance of $2,586 each month. The
findings state:
The monthly spousal support amount should be changed because .
{t]here has been a substantial change in circumstances since the current
order was signed. .
The amount shall be $2,586/month, which is Husband’s current
income from L&l. Husband’s actions related to paying back the
money owed to his mother’s estate are troubling to the court.
Husband is sole beneficiary of a trust.
The order also includes the following “Other findings”:
(1) The 2010 Settlement Agreement set maintenance of $3,000 per
month through 11/2023 and then $2,500 per month through 10/2025.
This outlines the duty of support and is an acknowledgment by Scott
McDermott of the need of Terry McDermott.
(2) Scott McDermott’s mother was clear in her will of her intent that the
trust established by her will only support him.
(3) The parties’ daughter is the trustee with sole decision making power
as to disbursements from the trust. She has used some of the trust to
buy a $52,000 [plus] truck for his use.
(4) Scott McDermott received over $189,000 from an annuity after his
mother’s death. He chose to use over $100,000 of those funds to
transfer to his mother’s estate to pay back a debt. The estate was
7
No. 78140-5-1/8
then transferred to the trust for his benefit. These funds could have
been used to pay mainten[ance].
(5) The court sets maintenance of $2,586 because Scott McDermott
sought to take assets away from the court’s jurisdiction (the money
received in the annuity).
Scott filed a motion to revise the commissioner’s order. The superior court
adopted the findings of fact and conclusions of law of the commissioner. The court
denied Scott’s motion to revise and affirmed the order modifying maintenance. In the
first appeal, we vacated the order and remanded for proceedings before a new judge.
In re Marriage of McDermott, No. 76049-1-I (Wash. Ct. App. Oct. 16, 2017)
(unpublished), http://www.courts.wa.gov/opinions/pdf/760491.
On remand, the court entered a “Corrected Order on Revision” denying the
motion to revise. The court adopted the commissioner’s September 15, 2016 findings
and conclusions. The court also entered the following findings:
Additionally, this court finds after the death of his mother, Mr. McDermott
received $100,000[.00]: his 50% from an annuity. In his own words, Mr.
McDermott, “chose to use it to pay off an outstanding debt [he] had. .
[He] paid back [his] mother’s estate . Declaration of Scott McDermott
. . “
page 2. This court is troubled by Mr. McDermott’s decision. Similarly the
court notes Mr. McDermott’s stated expenses, e.g. rent and car payment,
are also payments to the trust for items the trust purchased for Mr.
McDermott. Unlike Mr. McDermott, Ms. McDermott does not have access
to a trust or an inheritance to cover her outstanding expenses or to meet
her basic needs, e.g. housing and transportation. Mr. McDermott’s
income is $2,586.33 from his L&l month benefits. This court finds the
caselaw presented by counsel for respondent is distinguishable from the
case at bar because the court is not ordering an assignment or direct
payment of Mr. McDermott’s L&I benefits to Ms. McDermott. Instead, the
court finds Mr. McDermott’s income equates [to] the amount of his L&I
benefits and based upon his income amount Ms. McDermott is entitled to
monthly spousal maintenance.~2~
2 Most alterations in original.
8
No. 78140-5-1/9
Appeal of Order To Modify Maintenance
Scott appeals the March 6, 2018 Corrected Order on Revision.3 Scott contends
the court erred by denying the motion to revise the September 15, 2016 commissioner
order modifying maintenance. Scott asserts (1) the record does not support finding a
substantial change in circumstances since entry of the previous November 13, 2014
order modifying maintenance and substantial evidence does not support the findings,
and (2) the order to pay the entire amount he receives in L&l disability benefits for
maintenance violates RCW 51.32.040.
The decision of a court commissioner is subject to revision by the superior court.
RCW 2.24.050.~ RCW 2.24.050 states, in pertinent part:
All of the acts and proceedings of court commissioners hereunder shall be
subject to revision by the superior court. Any party in interest may have
such revision upon demand made by written motion, filed with the clerk of
the superior court, within ten days after the entry of any order or judgment
of the court commissioner. Such revision shall be upon the records of the
case, and the findings of fact and conclusions of law entered by the court
commissioner.
On revision, the superior court reviews de novo the findings of fact and
conclusions of law of the commissioner based upon the evidence and issues presented
to the commissioner. State v. Ramer, 151 Wash. 2d 106, 113, 86 P.3d 132 (2004). The
superior court can adopt the decision of the commissioner “either expressly or by clear
implication from the record.” In re Dependency of B.S.S., 56 Wash. App. 169, 170, 782
P.2d 1100 (1989).
~ Scott agreed to continue to pay Terry $1,120.00 per month in maintenance until resolution of
this appeal. On April 24, 2018, a commissioner of this court granted Scott’s motion to stay the order to
pay Terry monthly maintenance of $2,586.33 a month pending further order of this court. The stay order
requires Scott to continue to pay Terry $1,120.00 per month. The appeal was heard March 7, 2019. On
May 8, 2019, Scott filed a motion to amend the stay order to remove the condition to pay Terry one-half of
his disability income. On May 28, a commissioner granted the motion to amend the stay order until June
30, 2019.
See also WASH. CONST. art. IV, § 23.
9
No. 78140-5-1/10
On appeal, we review the superior court decision. Ramer, 151 Wash. 2d at 113.
We review the superior court decision to determine whether substantial evidence
supports the findings of fact and whether those findings support the conclusions of law.
In re Marriage of Wilson, 165Wn. App. 333, 340, 267 P.3d 485 (2011). “Substantial
evidence is evidence sufficient to persuade a fair-minded person of the truth of the
declared premise.” In re Marriage of Hall, 103 Wash. 2d 236, 246, 692 P.2d 175 (1984).
Scott contends the record does not support the court finding a substantial change
in circumstances since entry of the November 13, 2014 order. Terry claims modification
of maintenance does not require demonstrating a substantial change in circumstances.
Terry cites RCW 26.09.170(7) to argue she need show only the passage of time and a
change in income. The plain and unambiguous language of the statute does not
support her argument.
Statutory interpretation is a question of law that we review de novo. In re
Adoption of T.A.W., 186 Wash. 2d 828, 840, 383 P.3d 492 (2016). The primary purpose of
the inquiry is to determine and give effect to legislative intent. T.A.W., 186 Wash. 2d at
840. If the meaning of a statute is plain on its face, we give effect to that meaning and
the inquiry ends. Dept of Ecology v. Campbell & Gwinn, [[C, 146 Wash. 2d 1, 9-10,43
P.3d 4 (2002).
RCW 26.09.170(7) addresses only child support, not spousal maintenance.
RCW 26.09.170(7) states:
(a) If twenty-four months have passed from the date of the entry of the
order or the last adjustment or modification, whichever is later, the order
may be adjusted without a showing of substantially changed
circumstances based upon:
(i) Changes in the income of the parents; or
(ii) Changes in the economic table or standards in chapter 26.19
RCW[, Child Support Schedule].
10
No. 78140-5-I/li
(b) Either party may initiate the adjustment by filing a motion and
child support worksheets.
(c) If the court adjusts or modifies a child support obligation
pursuant to this subsection by more than thirty percent and the change
would cause significant hardship, the court may implement the change in
two equal increments, one at the time of the entry of the order and the
second six months from the entry of the order. Twenty-four months must
pass following the second change before a motion for another adjustment
under this subsection may be filed.
RCW26.09.170(1), not RCW26.09.170(7), governs modification of a
maintenance award.5 The plain and unambiguous language of RCW 26.09.170(1)(b)
states, in pertinent part, “Except as otherwise provided in ROW 26.09.070(7), the
provisions of any decree respecting maintenance or support may be modified . . .
upon a showing of a substantial change of circumstances.”6
In accord with the statute, it is well established that a court “may modify a
maintenance award” only “when the moving party shows a substantial change in
circumstances that the parties did not contemplate at the time of the dissolution
decree.”7 In re Marriage of Spreen, 107 Wash. App. 341, 346,28 P.3d 769 (2001).
The statute does not define “change in circumstances.” In Spreen, the court
held, “‘The phrase “change in circumstances” refers to the financial ability of the obligor
spouse to pay vis-à-vis the necessities of the other spouse.’ “ Spreen, 107 Wash. App. at
346 (quoting In re Marriage of Ochsner, 47 Wash. App. 520, 524, 736 P.2d 292 (1987)).
The party filing the petition for modification has the burden of demonstrating that a
substantial change in circumstances was not within the contemplation of the parties at
~ We note the legislature recently amended RCW 26.09.170. LAWS OF 2019, ch. 275 (effective
July 28, 201 9). The amendments do not change the subsections addressed in this opinion, ROW
26.09.170(1) and (7). See LAWS OF 2019, ch. 275, § 2.
6 Emphasis added.
~ ROW 26.09.090 provides a nonexciusive list of factors the court shall consider in determining a
spousal maintenance award.
ii
No. 78140-5-1/12
the time of the entry of the previous order modifying maintenance. Spreen, 107 Wn.
App. at 346; Wagnerv. Wagner, 95 Wash. 2d 94, 98, 621 P.2d 1279 (1980). As to the
financial ability of the obligor spouse, a former spouse may not obtain additional
maintenance “on the theory that such is in keeping with [the] former [spouse]’s present
station in life.” Gordon v. Gordon, 44 Wash. 2d 222, 227-28, 266 P.2d 786 (1954).
We review the decision to modify spousal maintenance for an abuse of
discretion. In re Marriage of Drlik, 121 Wash. App. 269, 274, 87 P.3d 1192 (2004). A
court abuses its discretion when its decision is based on untenable grounds or reasons.
In re Marriage of Bowen, 168 Wash. App. 581, 586, 279 P.3d 885 (2012). We will affirm
the superior court decision if it is based on tenable grounds that are not manifestly
unreasonable. Ochsner, 47 Wash. App. at 524-25. A decision not supported by the
record is untenable. State v. Rohrich, 149 Wash. 2d 647, 654, 71 P.3d 638 (2003).
The court found a substantial change in the circumstances of the parties since
entry of the November 13, 2014 order granting Scott’s petition to modify maintenance
because Scott is the “sole beneficiary of a trust,” he received over $189,000 from an
annuity, and he used over $100,000 to pay the debt he owed the estate when he could
have used the annuity proceeds to pay maintenance. The order states that because
Scott did not use the proceeds from the annuity to pay maintenance, Scott must pay the
entire amount he receives in disability benefits to Terry.
The superior court adopted the commissioner’s findings and conclusions and
entered additional findings. The court found that unlike Scott, Terry “does not have
access to a trust or an inheritance to cover outstanding expenses or meet her basic
needs.” The court was also “troubled” that Scott chose to use the annuity he received
to pay debts owed to the estate.
12
No. 78140-5-1113
The record does not support finding a substantial change in circumstances based
on either the receipt and the use of the proceeds from the pay-on-death annuity or the
spendthrift trust.
First, the undisputed record shows the death of Scott’s mother and his
inheritance was within the contemplation of the parties when the court considered and
entered the November 13, 2014 order granting Scott’s motion to modify maintenance.
Scott lost his job as a tugboat captain in March 2013. Scott was unemployed until he
started working for Amerigas in April 2014 earning $15 an hour. Scott filed the petition
to modify maintenance in July 2014. In response, Terry asserted Scott had not paid
maintenance since 2013 and owed her $29,000. But Terry requested the court defer
ordering Scott to pay the past-due amount owed until “Scott McDermott’s mother
passes.” The court granted Scott’s motion to modify but deferred ruling on the past-due
maintenance and ordered Scott to notify Terry “w[ith]in 7 days of his mother’s passing.”
Scott notified Terry when his mother died in November 2015.
Scott used the proceeds he received from the annuity to pay the past-due
maintenance he owed Terry with interest. Scott also used the annuity proceeds to pay
the debts he owed to the estate. Contrary to the finding that Scott should not have used
the annuity proceeds to pay the debts owed to the estate and that he “sought to take
assets away from the court’s jurisdiction (the money received in the annuity),” the
uncontroverted record establishes Scott owed the debts to the estate and he used the
proceeds from the annuity to pay Terry for the past-due maintenance and pay the debts
owed to the estate before Terry filed the May 17, 2016 petition to modify the
maintenance order. See Gordon, 44 Wash. 2d at 227-28 (spouse is not entitled as a
matter of right to modification of maintenance based on the “good fortune” of the former
13
No. 78140-5-1/14
spouse); see also In re Marriage of White, 105 Wash. App. 545, 549,20 P.3d 481 (2001)
(court cannot distribute an asset that no longer exists).
Second, the record also does not support finding a substantial change in
circumstances because Scott is the “sole beneficiary” of the spendthrift trust. The trust
states:
My Trustee may, in my Trustee’s sole and absolute discretion, distribute
as much of the income and principal to, or for the benefit of the
beneficiary, as my trustee may from time to time deem proper for such
beneficiary’s health, maintenance, and support in reasonable comfort.
[]
The purposes of this [McDermott Family Trust] are to provide
for my son’s needs while protecting the trust principal from any creditor of
my son, ultimately preserving such principal for my son’s daughters.
As a general rule, a spendthrift trust prevents attempts by creditors to reach the
trust assets and income. ROW 6.32.250; ROW 11 .96A.1 90; Seattle First Nat’l Bank v.
Orosby, 42 Wash. 2d 234, 243, 254 P.2d 732 (1 953); RESTATEMENT (THIRD) OF THE LAW OF
TRUSTS § 58(1) (AM. LAW INST. 2003).8
Substantial evidence does not support the court’s finding that Scott has “access
to a trust or an inheritance” to cover expenses or meet his needs. Under the terms of
the trust, Scott has no authority to compel distribution of trust income or assets. The
uncontroverted record shows the trustee of the McDermott Family Trust, not Scott, has
the sole authority and discretion to make distributions. The uncontroverted testimony of
the trustee states she “has made no distributions to Scott W McDermott.” The
McDermott Family Trust purchased a truck and “has made it available for Scott W
McDermott to use for reasonable payment.” The record shows Scott pays the trust
8 RESTATEMENT § 58(1) states that “if the terms of a trust provide that a beneficial interest shall not
be transferable by the beneficiary or subject to claims of the beneficiary’s creditors, the restraint on
voluntary and involuntary alienation of the interest is valid.” Unlike maintenance, a court may consider
trust income in determining the ability to pay maintenance. See ROW 26.09.090.
14
No. 78140-5-1/15
‘$250/month in return for use of the truck.” Scott lived in a “caboose” on property
owned by the McDermott Family Trust and paid the trust $750 in monthly rent.
Because the record does not support finding a substantial change in
circumstances since entry of the November 13, 2014 order modifying the amount Scott
shall pay in maintenance, we reverse the order to pay maintenance, lift the stay entered
on April 24, 2018, and remand to dismiss the 2016 petition to modify maintenance.
A
WE CONCUR:
~
15