In Re The Parenting And Support Of: Q.j.m., T.j.m., Sean C. Morris, App v. Tonya A. Morris, Resp ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In re the Parenting and Support of )
No. 77961-3-I
Q.J.M. and T.J.M. )
) DIVISION ONE
Minor Children, )
)
SEAN C. MORRIS, )
)
Appellant, ) UNPUBLISHED OPINION
and ) FILED: March 25, 2019
TONYAA. MORRIS,
Respondent. )
SMITH, J. — Sean Morris appeals an order directing him to pay Ostler
Smith spousal support1 under a 2010 California decree based on a payment he
received in 2015 for accrued vacation that his former employer should have paid
to him in 2012. Because the 2010 decree expressly states that Ostler Smith
support applies to deferred compensation and vacation time is a form of deferred
compensation under California law, we affirm.
1 In California, “Ostler Smith” support refers to support payments
calculated based on a percentage of future income. See In re Marriage of Ostler,
223 Cal. App. 3d 33, 272 Cal. Rptr. 560 (1990).
No. 77961-3-1/2
FACTS
Sean and Tonya Morris were divorced in California in July 201 Q~2 At the
time, Sean worked for Sun Life Financial (Sun Life). The parties had two sons
who later relocated with Tonya to Washington.
In its 2010 dissolution decree, the California court ordered Sean to pay
monthly spousal support of $2,700, plus Ostler Smith spousal support equal to
25 percent of any gross monthly income in excess of $16,666.67. Specifically,
the 2010 decree provides:
20. Commencing June 1,2010, [Sean] shall pay to [Tonya] base
spousal support of $2,700 per month, payable one-half on the
first and one-half on the fifteenth days of each month, and
continuing thereafter until the death of either party, remarriage
of [Tonya], further order of Court or until the May 15, 2013,
payment has been made by [Sean] to [Tonya], whichever first
occurs. Spousal support and the Court’s jurisdiction to order
spousal support shall absolutely terminate with the payment
on May 15, 2013, and may not be extended for any reason
whatsoever. Spousal support shall terminate following the
May 15, 2013, payment even if application is made by [Tonya]
to extend said date prior to the May 15, 2013, payment.
21. Except as provided for differently in this paragraph, as and for
additional spousal support, there shall be a[n] Ostler [Smith]
formula of twenty-five [percent] (25%) as additional spousal
support on any of [Sean]’s gross income from employment,
including, but not limited to, the combined amount of salary,
bonus, deferred compensation and RSU’s, in excess of
$16,666.67 gross per month. Within forty-eight (48) hours of
receiving any gross monthly income in excess of $16,666.67
the following events shall occur: [Sean] shall provide [Tonya]
with written confirmation of the amount of any such monthly
income in excess of $16,666.67; [Sean] shall pay the required
sum to [Tonya].
2 Because Sean and Tonya share a common last name, we refer to them
by their first names.
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No. 77961-3-1/3
The California court also ordered Sean to pay monthly child support of
$2,780.00, plus Ostler Smith child support equal to 11 percent of any gross
monthly income in excess of $16,666.67. Like the 2010 decree’s spousal
support provision, the child support provision requires Sean to give Tonya notice
within 48 hours of receiving any gross monthly income in excess of $16,666.67.
Sean was laid off by Sun Life in December 2011. He received a
severance package in which Sun Life agreed to pay him for his “Sun Days,” i.e.,
vacation days that he had accrued as of his last employment day of record. Sun
Life agreed to pay Sean for his Sun Days no later than the pay period following
March 9, 2012, and in March 2012, Sean received a $24,554.24 Sun Days
payment.
After being laid off by Sun Life, Sean moved the California court to modify
his support obligations under the 2010 decree. As part of that modification
action, the parties litigated whether Sun Days were income for purposes of Ostler
N
Smith support. For reasons that are unclear from the record, the California court
did not enter a final order on Sean’s motion to modify until April 29, 2014. In April
2014, the California court ordered that effective January 15, 2013, (1) Sean’s
fixed monthly spousal support obligation would increase from $2,700.00 to
$3,000.00, (2) no Ostler Smith spousal support would attach to this revised
spousal support amount, (3) Sean’s fixed monthly child support obligation would
be reduced from $2,780.00 to $2,584.00, and (4) Sean’s Ostler Smith child
support obligation would be revised to 11 .66 percent of any gross monthly
income in excess of $12,500.00. The court ordered that although a “Cole bonus”
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No. 77961-3-1/4
that Sean received in November 2012 would not be considered income, “[a]ll
other income,” including Sun Days, would be considered income. The court
ordered Sean to pay support arrearages by October 1, 2013, and Sean paid
Tonya Ostler Smith child support and spousal support based on the $24,554.24
Sun Days payment he received in March 2012. The amount of that Ostler Smith
payment was calculated using the formulae set forth in the 201 0 decree.
In 2015, Sean received a $94,372.43 check from Sun Life. According to
Sean, he attempted to find out what the check was for but was told by Sun Life
that “there was no one that could help [him] since the business unit [he] worked
for was closed.” Sean deposited the check in April 2015 and did not tell Tonya
about it.
In April 2016, Sean filed a petition in Washington to modify child support.
The petition went to arbitration, and Tonya learned about the 2015 Sun Life
check during discovery. Tonya also learned that Sun Life had miscalculated and
underpaid Sean’s Sun Days when it paid him $24,554.24 in March 2012 and that
the 2015 check was issued to correct the error. In April 2017, Sean made an
Ostler Smith child support payment to Tonya based on the 2015 Sun Days
check. The amount of the April 2017 payment was calculated based on the
Ostler Smith child support formula in the California court’s April 2014 order.
In November 2017, Tonya filed a motion for contempt, arguing that Sean
(1) owed interest on the April 2017 Ostler Smith child support payment, (2) failed
to timely notify Tonya of the 2015 Sun Days check as required under the 2014
order, and (3) should be required to pay Ostler Smith spousal support on the
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No. 77961-3-1/5
2015 Sun Days check under the 2010 decree. A commissioner concluded that
Sean was in contempt for failing to disclose the 2015 Sun Days check and failing
to timely pay Ostler Smith child support based on that check. The commissioner
ordered Sean to pay interest on the Ostler Smith child support payment. But the
commissioner also concluded that Sean was not in contempt with regard to
spousal support, stating: “Spousal maintenance terminated in 2013. There is no
evidence [Sean] colluded to hold back the Sun Life income.” Accordingly, the
commissioner did not order Ostler Smith spousal support.
Tonya moved for revision of the commissioner’s order, arguing that Sean
should be required to pay Ostler Smith spousal support based on the 2015 Sun
Days check. The trial court agreed with Tonya and ordered that the
commissioner’s order be revised to read as follows:
The Court finds Sun Life was contractually obligated to pay-out
[Sean]’s Sun Life accrued but unused vacation pay (“Sun Days”) in
March 2012. Had Sun Life paid out [Sean]’s “Sun Days” when it
was due per the contract in March 2012, [Sean] was obligated to
pay 25% on the gross amount received. The California court
intended that spousal maintenance be paid on [Sean]’s “Sun Days”
income. Sun Life made a delayed payment of [Sean]’s “Sun Days”
in the amount of $162,127.03[~] in March 2015, after the spousal
maintenance obligation terminated. The mere fact that this
payment was paid in March 2015 does not negate that the income
was due and owing in March 2012 and does not avoid the spousal
maintenance obligation on that sum. [Sean] owes [Tonya] spousal
support in the amount of $40,531.75 (25% of the gross amount). A
Judgment should enter for this amount, plus interest from 4/1/2015
— 12/31/2017 at 10%.
~ The gross amount of the underpayment was $162,127.03. The net
amount was $94,372.43, the amount of the check Sean received in 2015.
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No. 77961-3-1/6
The court stated that it viewed the Sun Days income as “involuntary deferred
compensation” and that “whether [Sean] was aware or not is not dispositive.”
The court reasoned that Sean’s right to the Sun Days income accrued in March
2012, while Tonya was entitled to Ostler Smith spousal support under the 201 0
decree.
In addition to ordering Sean to pay Ostler Smith spousal support under the
2010 decree based on the 2015 Sun Days check, the court also concluded that
Sean overpaid his Ostler Smith child support payment in April 2017. The court
explained that the Ostler Smith child support payment should have been based
on the 11 percent formula from the 2010 decree, rather than the 11 .66 percent
formula from the 2014 order. The court also ordered Sean to pay interest on the
Ostler Smith child support payment, calculated from April 1, 2015. Sean
appeals.
DISCUSSION
Order on Revision
Sean argues that the trial court erred by interpreting the California court’s
2010 decree as requiring him to pay Ostler Smith spousal support based on a
check he received in 2015. He also argues that Ostler Smith child support
should have been calculated under the 2014 order, not the 2010 decree. We
disagree.
Interpretation of a dissolution decree is a question of law that this court
reviews de novo. In re Marriage of Thompson, 97 Wn. App. 873, 877, 988 P.2d
499 (1999). We apply California law to interpret the 2010 decree. See Shibley v.
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No. 77961-3-1/7
Shibley, 181 Wash. 166, 168-70,42 P.2d 446 (1935) (looking to California law to
determine whether amounts claimed under California decree were accrued and
due).
The 2010 decree was based on Sean and Tonya’s written stipulation for
judgment. Accordingly, under California law, the decree “represents an
agreement, [and] thus must be analyzed and interpreted in light of the parties’
mutual intent and according to statutory requirements for the interpretation of
contracts.” In re Marriage of Gray, 155 Cal. App. 4th 504, 522, 66 Cal. Rptr. 3d
87 (2007). Those requirements are similar to Washington’s rules of contract
interpretation and provide, among other things, that “[t]he language of a contract
is to govern its interpretation, if the language is clear and explicit, and does not
involve an absurdity,” CAL. Civ. CODE § 1638, and “[t]he whole of a contract is to
be taken together, so as to give effect to every part, if reasonably practicable,
each clause helping to interpret the other.” CAL. Civ. CODE § 1641. Additionally,
“[w]hen possible, courts should ‘avoid an interpretation which will make a
contract extraordinary, harsh, unjust, or inequitable.” In re Marriage of Nassimi,
3 Cal. App. 5th 667, 688-89, 207 Cal. Rptr. 3d 764 (2016) (quoting ASP Props.
Grp., L.P v. Fard, Inc., 133 Cal. App. 4th 1257, 1269, 35 Cal. Rptr. 3d 343(2005)). These general rules for interpreting writings also apply to interpretation
of the California court’s 2014 order. Verdierv. Verdier, 121 Cal. App. 2d 190,
193, 263 P.2d 57 (1953) (Provisions of the constitution, statutes, contracts,
judicial orders, and decrees “are all ‘writings,’ to be construed in accordance with
substantially the same canons of interpretation.”).
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No. 77961-3-1/8
We conclude that under the plain language of the 2010 decree, Sean was
required to pay Ostler Smith child support and spousal support on the 2015 Sun
Days check. That decree plainly states that Ostler Smith support applies to “any
of [Sean]’s gross monthly income from employment, including, but not limited
to. . . deferred compensation.”4 And under California law, accrued vacation
benefits are a form of deferred compensation. In re Marriage of Moore, 226 Cal.
App. 4th 92, 102, 171 Cal. Rptr. 3d 762 (2014). Indeed, the California court
confirmed in its 2014 order that Sun Days are income for purposes of support.
Sean argues that this statement was intended only to apply to arrearages, but
the 2014 order contains no such limitation.
Furthermore, taking the 2010 decree as a whole, other provisions of the
decree reflect the parties’ intent that Ostler Smith support be paid based on
earned income, regardless of when it was received. For example, paragraph 23
of the decree provides that Sean’s commissions earned during May 2013
(through the end of the maintenance period) would be included in the Ostler
Smith calculation, even though those commissions would not be paid until after
the end of the maintenance period. It also provides that Sean’s commissions
earned through May 31, 2010 (before the beginning of the maintenance period)
would not be subject to Ostler Smith support, even though those commissions
would be received during the maintenance term. These provisions demonstrate
that the parties intended that Ostler Smith support apply to income earned during
the maintenance term, regardless of when it was received.
~ (Emphasis added.)
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No. 77961-3-1/9
Finally, concluding that Sean is not required to pay Ostler Smith spousal
support based on the 2015 check would lead to an absurd and inequitable result:
Sean would be excused from paying spousal support on compensation he
undisputedly earned during the maintenance term but, due to Sun Life’s error, did
not receive until after the maintenance term.
Sean argues that to reach the same conclusion as the trial court, this court
would need to retroactively qualify the language in the 2010 decree providing that
spousal support “shall absolutely terminate with the payment on May 15, 2013,
and may not be extended for any reason whatsoever.” He characterizes the trial
court’s decision as an impermissible extension of his spousal support obligation
by arguing that the income subject to Ostler Smith support under the 2010
decree is limited to income received before May 15, 2013. Sean also points to
language in the 2010 decree stating that Sean is to pay Ostler Smith support
within 48 hours after receiving gross income in excess of $16,666.67. But Sean
cites no authority for the proposition that “income” is limited to income actually
received and excludes income earned but not yet received. ~ DeHeer v.
Seattle Post-Intelliqencer, 6OWn.2d 122, 126, 372 P.2d 193 (1962) (‘Where no
authorities are cited in support of a proposition, the court is not required to search
out authorities, but may assume that counsel, after diligent search, has found
none.”). And the language regarding receipt dictates only when Sean must pay
Tonya Ostler Smith spousal support. It does not dictate what income is subject
to Ostler Smith support. Sean’s arguments are unpersuasive.
Sean next argues that the 2014 order governs here and that it eliminated
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No. 77961-3-1/10
any obligation to pay Ostler Smith support as of January 15, 2013, its effective
date. We disagree. As discussed, the obligation to pay Ostler Smith support on
the 2015 Sun Days check arose under the 2010 decree, which clearly states that
Ostler Smith support applies to deferred compensation.
Sean next relies on In re Marriage of Iberti, 55 Cal. App. 4th 1434, 64 Cal.
Rptr. 2d 766 (1997), to argue that the trial court impermissibly qualified the 2010
decree to define “income” in terms of when it is “due and owing” to Sean. But
Iberti did not involve Ostler Smith support or inform the issue of what a court
should do if income subject to an Ostler Smith support provision goes unpaid due
to the error of a third party. Rather, Iberti merely confirms that if the parties
unambiguously agree that support cannot be extended, then the court may not
extend support absent circumstances that implicate the court’s inherent power to
do justice, such as mutual mistake of fact or an unforeseen change in the law.
Iberti, 55 Cal. App. 4th at 1441-42. But here, the trial court did not “extend”
Sean’s spousal support obligation. Instead, it ordered him to pay an obligation
that accrued under the 2010 decree based on income that he undisputedly
earned while that decree was in effect. Therefore, Sean’s reliance on Iberti is
misplaced.
Sean’s reliance on In re Marriage of Katz, 201 Cal. App. 3d 1029, 247 Cal.
Rptr. 562 (1988), is similarly misplaced. In Katz, the court declined to restore
support payments seven years after the payments ended, finding it had no
jurisdiction to award additional spousal support where the original order provided
that payments would terminate after a specific date. Katz, 247 Cal. Rptr. at
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No. 77961-3-I/Il
1 032, 1035. Here, unlike in Katz, Tonya did not ask the trial court to restore or,
as Sean puts it, “revive” a spousal support obligation that had already terminated.
Rather, Tonya seeks to enforce Sean’s obligation to pay spousal support based
on income that he undisputedly earned and that was payable to him during the
maintenance term. Katz does not require reversal.
Sean next asserts that the trial court’s interpretation of the 2010 decree is
inconsistent with the California court’s intent underlying the spousal support
award. He argues that the trial court’s order leaves his spousal support
obligation ‘open ended” and that nothing in the California court’s orders supports
a determination that the court intended for Tonya to receive a “windfall.” But the
trial court’s order does not leave Sean’s spousal support obligation “open ended.”
Indeed, Tonya does not claim Ostler Smith spousal support on any income Sean
earned after January 15, 2013. And if the 2015 Sun Days check were exempt
from Ostler Smith support simply because of Sun Life’s error, it would be Sean,
not Tonya, who would receive a “windfall.” These arguments are not persuasive.
Sean also argues that Tonya should be estopped from arguing that Sun
Days should be treated as 2012 income because during the arbitration on Sean’s
most recent motion to modify, Tonya took the position that Sun Days were 2015
income to support an award of child support above the standard calculation. This
argument is unpersuasive for two reasons. First, Sean relies on Urbick v.
Spencer Law Firm, LLC, 192 Wn. App 483, 367 P.3d 1103 (2016), but does not
address the three “fundamental factors” described in that case for analyzing
cases of judicial estoppel. See Urbick, 192 Wn. App. at 489 (citing Arkinson v.
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No. 77961-3-1112
Ethan Allen, Inc., 160 Wn.2d 535, 538-59, 160 P.3d 13 (2007)). Second, the
arbitrator’s decision to grant an upward deviation on child support was not based
on a position taken by Tonya, but rather on the parties’ stipulation as to the
amount of Sean’s monthly income and other relevant factors. These factors
included Sean’s financial resources, wealth, and high standard of living; the
geographical separation between Sean and Tonya; the children’s extracurricular
activities and expenses; and the children’s special needs. Although the arbitrator
did take note of Sean’s actual earnings, he did so in the portion of his decision
analyzing whether there had been a substantial change in circumstances to
support a modification, not in the portion of his decision in which he discussed
the upward deviation. Sean’s judicial estoppel argument is not persuasive.
As a final matter, Sean contends that the trial court erred because by
treating 2015 income as income received in 2012, it deprived Sean of his ability
to deduct the resulting spousal support payment for federal income tax purposes.
But Sean cites no authority requiring this court to consider deductibility as a
factor in interpreting the California court’s decree. See DeHeer, 60 Wn.2d at 126(where party cites no authority to support a proposition, the court may assume
that counsel, after diligent search, has found none). Moreover, ‘[djeductions are
matters of legislative grace;taxpayers have no inherent right to them.”
Montgomery v. Comm’r of Internal Revenue, 64 T.C. 175, 182 (1975), affirmed,
532 F.2d 1008 (6th Cir. 1976). Sean’s contention is not persuasive.
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No. 77961-3-1113
Tonya ‘.s Request for Fees on Appeal
Tonya requests fees on appeal. We grant her request.
In exercising our discretion to award fees, we “balance the needs of the
spouse requesting them with the ability of the other spouse to pay.” In re
Marriage of Stenshoel, 72 Wn. App. 800, 813, 866 P.2d 635 (1993).
Here, Tonya timely filed a financial affidavit in accordance with the Rules
of Appellate Procedure. In her affidavit, Tonya states that her actual income is
less than what the arbitrator imputed to her in 2017. But even using the imputed
amount and after child support transfer payments are taken into account, Tonya’s
income after expenses is only slightly more than $1,300 per month. Meanwhile,
Sean, who earned more than $45,000 net per month in 2017, does not dispute
that his income significantly exceeds Tonya’s. We conclude that Tonya has
demonstrated need and that Sean has the ability to pay. Therefore, we grant
Tonya’s request for fees subject to her compliance with RAP 18.1(d).
Sean argues that we should deny Tonya’s request because she failed to
cite applicable law to advise the court of the basis for an award. But that is not
the case: Tonya cited Stenshoel, which confirms that a court has discretion to
award attorney fees under RCW 26.09.140 after considering the parties’ financial
resources. Stenshoel, 72 Wn. App. at 813. Sean also argues that Tonya has
significant real estate holdings and suggests that she is required to sell them to
pay her attorney fees. But Washington law does not support this argument. ~
In re Marriage of Freedman, 35 Wn. App. 49, 54, 665 P.2d 902 (1983) (holding
that trial court did not abuse discretion in awarding wife attorney fees where
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No. 77961-3-1/14
wife’s affidavit stated she lacked liquid assets and there was considerable
evidence of husband’s net earnings). Sean’s arguments are unpersuasive.
Affirmed.
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WE CONCUR:
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