In Re The Marriage Of: Todd E. Schneiderman v. Julie T. Rogers ( 2015 )

FILED
COURT 01* APPEALS
IN THE COURT OF APPEALS OF THE STATE OF WADS ikGTON
7915 AUG 18 APS 9: 03
DIVISION II
STATE OF WASHINGTGN
In re the Marriage of: 4o. 458 - 8- II
B,
bEP TY
TODD EVAN SCHNEIDERMAN,
Appellant.
and
JULIE TERESA RODGERS, UNPUBLISHED OPINION
MAxA, P. J. — Todd Schneiderman appeals the trial court' s order vacating provisions of
Schneiderman and Julie Rogers' dissolution decree under CR 60( b)( 3) and ( 4), as well as the trial .
court' s award of attorney fees to Rogers.
We hold that the trial court abused its discretion under CR 60( b)( 4) by vacating the
dissolution decree because ( 1) Rogers did not rely on Schneiderman' s misrepresentations
regarding the reliability of quarterly bonuses from his business, ( 2) the record does not support a
that Schneiderman regarding his anticipated 2011 income, ( 3)
finding made misrepresentations
Schneiderman cannot be held responsible for his attorney' s misconduct regarding the attorney' s
trust account, ( 4) any misconduct Schneiderman committed regarding his attorney' s trust account
did not prevent Rogers from fully and fairly presenting her case, and ( 5) Schneiderman' s pretrial
discovery violations did not prevent Rogers, from fully and fairly presenting her case. We also
hold that the trial court erred in vacating the dissolution decree under CR 60( b)( 3) because
Rogers failed to file her amended motion to vacate based on that subsection within a year after
entry of the dissolution decree. However, we affirm the trial court' s award of attorney fees to
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Rogers does not challenge the trial court' s authority to award attorney fees or its express finding
that Schneiderman engaged in intransigent conduct.
We reverse and vacate the trial court' s order vacating the spousal maintenance provisions
and asset/ liability division of the parties' dissolution decree of dissolution under CR 60( b)( 3) and
4). But we affirm the trial court' s order awarding Rogers attorney fees. We remand to the trial
court for proceedings consistent with this opinion.
FACTS
Schneiderman and Rogers married in April 1990. The couple had two daughters. They
separated in October 2009, and Schneiderman filed for dissolution of the marriage in December
2009. The case was assigned to Judge Karlynn Haberly, who handled all pre-trial matters.
The case ultimately was tried in July 2011 before an agreed referee.
Schneiderman Income
Schneiderman is an eye surgeon. He owns a surgical ophthalmology practice along with
a partner who became a 50 percent owner in September 2008. Another doctor joined the practice
as an associate in 2010. Schneiderman also holds minority interests in two other entities that
apparently do not generate significant income.
Since 2008, Schneiderman' s income from his ophthalmology practice has had two main
components: ( 1) a $ 35, 000 monthly draw, which included a $ 5, 000 management fee and ( 2)
which to bonuses." Clerk' s Papers ( CP)
quarterly distributions the
of profits, parties referred as "
at 8. Each partner' s quarterly bonuses were calculated by subtracting the practice' s overhead
and expenses from gross revenue, splitting 30 percent of that amount between the two partners,
and dividing the remaining 70 percent based on production. Schneiderman also received an
income shift consisting of 10 percent of his partner' s income as a buy in to the practice.
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Throughout the dissolution proceedings, Schneiderman consistently stated that his
monthly salary was $ 35, 000 and argued that this was his only reliable source of income.
However, Schneiderman also disclosed to Judge Haberly and to Rogers that he received
quarterly bonuses. For instance, a week after Schneiderman filed the dissolution petition, Judge
Haberly entered a temporary order providing for the payment of various expenses from
Schneiderman' s" monthly income" of $35, 000 per month. CP at 933. But the order further
stated that division or use of Schneiderman' s future quarterly bonus income would be based on
future court orders or agreements between the parties. And a subsequent order also addressed
allocation of Schneiderman' s quarterly bonuses.
Rogers was informed of the amounts of Schneiderman' s bonuses for 2010 and the first
quarter of 2011 before trial. On January 7, 2011, Schneiderman filed a motion regarding
distribution of his 2010 bonuses, disclosing that the first quarter bonus totaled $70, 000 and the
unpaid bonuses for the other three quarters totaled $ 215, 000. 1 On April 8, 2011, Schneiderman
filed a motion regarding the distribution of his first quarter 2011 bonus, which he disclosed
totaled $ 61, 506.
Rogers also was aware that Schneiderman' s annual income far exceeded the $420, 000 he
received in monthly draws from his practice. The parties' joint tax returns showed that
Schneiderman earned total income of $1, 024, 295 for 2008 and $ 1, 024, 356 for 2009.
Schneiderman' s draft 2010 tax return showed total income of $769, 147. This amount was
consistent with Schneiderman' s April 2011 motion regarding his first quarter 2011 bonus, in
which his business consultant stated that his income for 2010 ended up being around $730, 000.
1 Schneiderman claimed that an accounting software problem had delayed the calculation and
payment of the last three bonuses in 2010.
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Attorney Trust Fund
In December 2009, Judge Haberly ordered that the parties' current checking account be
held in the trust account of Schneiderman' s attorney, James Province, after certain disbursements
were made. The remaining funds were to be used only by agreement or court order. In March
2010, Judge Haberly ordered Schneiderman to pay $6, 000 from each quarterly bonus to Rogers
and to place the remainder into trust to be divided by agreement or further court order.
In July 2010, Schneiderman acknowledged that he had not placed any amounts in trust
because both parties were paying necessary expenses from those funds. Rogers learned after
trial that Schneiderman did not transfer any funds into Province' s trust account until October.
2010. However, by the time of trial there was $ 125, 296 in the trust account.
Rogers' Discovery Requests
The parties jointly retained certified public accountant ( CPA) Steve Kessler to value
Schneiderman' s business interests. In March 2010, Judge Haberly entered an order requiring
Schneiderman to provide to Rogers' counsel all documents necessary to value Schneiderman' s
practice, surgery, center, and other business interests. Counsel then could provide those
documents to Kessler.
In May 2010, Rogers submitted to Schneiderman a set of 42 interrogatories and 76
requests for production. Schneiderman provided responses in July 2010. His response included
producing over 3, 0.00 pages of materials, primarily bank statements, general ledgers, and checks.
In September 2010, Rogers filed a motion to compel answers to the interrogatories and
requests for production, claiming that Schneiderman' s responses were evasive or incomplete.
Rogers' attorney prepared a chart showing a detailed list of Schneiderman' s failure to answer
interrogatories and to provide requested documents relating to his actual income. Rogers
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claimed that many of Schneiderman' s responses were deficient because the responses simply
stated that the requested information had been provided to Kessler. In addition, Rogers argued
that Schneiderman failed to comply with an agreement to show specifically what documents in
Kessler' s possession corresponded to relevant requests for production.
Judge Haberly denied Rogers' motion to compel. The trial court stated that
Schneiderman had answered and responded to the discovery requests. Rogers did not file any
additional discovery motions before trial.
Trial bReferee
In July 2011, the parties stipulated to resolve all remaining dissolution issues in a trial
before a referee, pursuant to RCW 4.48. 130. Attorney Robert Beattie was selected as the referee.
Trial was held in July 2011.
One issue at trial was the amount of Schneiderman' s past and future income, which
related to Rogers' claim for spousal maintenance. In her trial brief, Rogers requested spousal
maintenance of $ 25, 000 based on Schneiderman' s " enormous income." CP at 2770. Rogers
argued, " The court is reminded that [ Rogers'] temporary order of maintenance was based only
on [ Schneiderman' s] base salary of roughly $40, 000 per month and did not fully recognize his
annual income which includes significant bonuses that generate a monthly income of $83, 300 a
month when averaged over the year." CP at 2783- 84. Rogers based the $ 83, 300 figure on
Schneiderman' s income in 2008 ($ 1, 024, 295) and 2009 ($ 1, 024, 356). She also argued that
s] imilar earnings are anticipated for 2011." CP at 2784.
Schneiderman' s 2008 and 2009 tax returns and his draft 2010 tax return were submitted
as joint trial exhibits. These tax returns showed that Schneiderman' s 2010 income had decreased
to $ 769, 147. Schneiderman testified regarding his
significantly from the two
previous years also
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anticipated 2011 income. He estimated that in addition to his base draw of $420, 000 annually,
he expected to receive quarterly bonuses totaling $ 150, 000 to $ 200, 000 for the year. In total,
Schneiderman estimated that his total 2011 income would be $ 550, 000 to $ 600, 000.
It appears that Province submitted a self -drafted ledger of his trust account to the referee,
which held the parties' marital funds. Neither Schneiderman nor Province submitted
authenticated bank statements for the trust account.
Following trial, the referee issued an oral decision. With regard to Schneiderman' s
income, the referee found that Schneiderman' s 2010 income was most reflective of his future
income because it was the most recent income information and because it was consistent with
future income forecasts. The referee stated, " The dilemma always is to figure out what is future
income. And the only way to resolve that realistically is to look at the most recent years and
listen to the testimony." IV Report of Proceedings at 715. The referee calculated that
Schneiderman earned approximately $55, 000 in monthly income.
The referee awarded Rogers monthly maintenance of $11, 000 from August 2011 through
July 2018 and $ 7, 000 from August 2018 to July 2021. The referee also awarded Rogers a
significant amount of community assets and all funds still held in Province' s trust account.
Rogers ended up receiving 53 percent of the community assets. On October 14, 2011, Judge
Haberly entered a decree of dissolution and findings of fact and conclusions of law based on the
referee' s decision.2
2 Rogers appealed the order, but the appeal was dismissed by this court in October 2012 after
Rogers failed to file an opening brief.
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CR 60( b) Motion to Vacate the Dissolution Decree
On October 12, 2012, just less than a year after entry of the dissolution decree, Rogers
filed a motion to show cause why the dissolution decree should not be vacated under CR 60(b).
This motion was based on her claim that Schneiderman made false statements regarding his 2011
income that could not have been discovered before trial because of his false testimony and
failure to respond to discovery.' Rogers produced a spreadsheet created by Joseph Forde,
Schneiderman' s CPA, purportedly demonstrating that Schneiderman earned $ 108, 686 per month
in the first six months of 2011.
Schneiderman opposed the motion to show cause and made a motion requesting that
Judge Haberly hear the CR 60( b) motion before her retirement, or in the alternative, that the
motion be dismissed. A court commissioner referred the motion to show cause to Judge Haberly
for consideration. In December 2012, Judge Haberly ruled that that she did not need to be the
judge to hear the motion. Rogers' motion was dormant for the next eight months.
Attorney Misconduct
In December 2012, Rogers filed a grievance with the Washington State Bar Association
WSBA) alleging that Schneiderman' s lawyer, Province, had mishandled the trust funds
belonging to the marital community. Province did not cooperate with the WSBA' s investigation,
and Schneiderman also chose not to participate in the investigation.
In March 2013, the WSBA mailed a report to Rogers and Province stating the WBSA' s
analysis and conclusion. The WSBA uncovered evidence that Province had mishandled funds
belonging the parties' marital community by transferring at least $ 14, 000 from his trust account
Rogers also argued that the dissolution decree did not distribute a major asset and that she had
discovered an undisclosed trust and bank account. These claims were not pursued in the trial
court and have not been addressed in this appeal.
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into his general account between October and December 2010 and drawing $ 30,000 from the
parties' marital community to give to another client in December 2010. The report also
concluded that on June 15, 2011, Province had given a false accounting of this and other
transactions to Rogers and her lawyers. Finally, the report concluded that Province had
intentionally failed to disclose multiple transactions that he made with the marital community
funds in 2010 and 2011. However, the WSBA was unable to determine if Rogers ultimately
received all money owed to her.
Amended Motion to Vacate
In August 2013, Rogers filed an amended motion for an order to show cause to vacate the
decree of dissolution. Rogers asserted that ( 1) the dissolution decree should be vacated under
CR 60( b)( 3) because the WSBA report documenting Province' s misconduct regarding the trust
account and Forde' s spreadsheet constituted newly discovered evidence, and ( 2) the dissolution
decree should be vacated under CR 60( b)( 4) because Schneiderman engaged in fraud,
misrepresentation, and willful discovery violations regarding the amount of his income and the
trust account. Because Judge Haberly had retired, the case was assigned to a different judge.
The trial court heard argument on the motion for an order to show cause. Schneiderman
argued that the evidence was insufficient for the issuance of the show cause order. The trial
court granted Rogers' motion for an order to show cause. The parties then submitted additional
briefing and declarations, which included extensive documents and transcripts. Rogers also
submitted new evidence: a chart showing monthly Medicare revenues for Schneiderman' s
practice from 2009 through 2012, obtained through a Freedom of Information Act request. The
document showed that during the first seven months of 2011, the practice had received higher
Medicare revenues than any previous seven- month period.
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Vacation of Dissolution Decree
In December 2013, the trial court issued an order vacating the spousal maintenance
provisions and asset/ liability division of the parties' dissolution decree under CR 60( b)( 3) and
4). The trial court issued factual findings that ( 1) Schneiderman made deliberate, false
representations regarding his income; ( 2) Schneiderman was involved with Province' s trust
account misconduct and also engaged in his own misconduct regarding the trust account; ( 3)
Schneiderman engaged in discovery violations regarding the failure to provide records relating to
his income and the trust account; and ( 4) the WSBA report, the Forde spreadsheet, and the
Medicare reimbursement summary sheet were newly discovered evidence that could not have
been discovered in time to move for a new trial. The trial court entered conclusions of law that
clear and convincing evidence supported vacation of the dissolution decree under both CR
60( b)( 3) and ( 4).
The trial court awarded Rogers $ 58, 299 in attorney fees for the CR 60(b) proceedings.
after finding that Schneiderman had " engaged in a pattern of intransigent conduct." CP at 2273.
Schneiderman appeals.
ANALYSIS
A. VACATION UNDER CR 60( b)( 4)
The trial court vacated the dissolution decree under CR 60( b)( 4) based on
Schneiderman' s misrepresentation and/ or misconduct relating to his income, the Province trust
account, and pretrial discovery. Schneiderman challenges many of the trial court' s factual
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findings and argues that the trial court erred in vacating the dissolution decree under CR
60( b)( 4). 4 We agree.
l.' Legal Principles
CR 60( b)( 4) authorizes a trial court to vacate a judgment for "[ fJraud ( whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party."
However, vacation of a judgment is an extraordinary remedy. See Dalton v. State, 130 Wash. App.
653, 665, 124 P.3d 305 ( 2005). Therefore, there must clear and convincing evidence of fraud,
misrepresentation, .or misconduct in order to vacate a judgment. Id.
In order to base vacation of a judgment on fraud, the trial court must make findings of
fact and conclusions of law regarding each of the nine elements of common law fraud. In re
41 Wash. 248, 252, 703 P.2d 1062 ( 1985). But because
Marriage of Maddix, App.
misrepresentation or other misconduct also are grounds for vacation of a judgment, the moving
party may not be required to prove all the elements of fraud to obtain relief under CR 60(b)( 4).
Mitchell v. Wash. State Inst. of Pub. Policy, 153 Wn. App. 803, 825, 225 P.3d 280 ( 2009). For
instance, vacation may be appropriate even if the misrepresentation was innocent or negligent
rather than willful. Peoples State Bank v. Hickey, 55 Wash. App. 367, 371, 777 P.2d 1056 ( 1989).
Even if the, moving party demonstrates that the other party engaged in misrepresentation,
a trial court may grant relief under CR 60( b)( 4) only if the moving party presents clear and
convincing evidence of at least two additional elements. See id. at 371- 72. First, the moving
4 Schneiderman also argues that Rogers failed to file her motion to vacate within a reasonable
time asrequired by CR 60( b). However, the record clearly shows that Schneiderman never
argued before the trial court that either the original motion or the amended motion for relief
under CR 60( b)( 4) was not filed within a reasonable time. Under RAP 2. 5( a), Schneiderman
cannot make this argument for the first time on appeal. Therefore, we do not address this
argument. Schneiderman did argue in the trial court that Rogers did not meet the one- year
deadline for relief under CR 60( b)( 3), which we discuss below.
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party must have relied on or been misled by the misrepresentation. See id. Reasonable reliance
is an element of actionable misrepresentation. See Dewar v. Smith, 185 Wash. App. 544, 561- 62,
342 P.3d 328 ( 2015).
Second, there must be some connection between the misrepresentation and obtaining the
judgment. See Hickey, 55 Wash. App. at 372. The rule is aimed at judgments that were unfairly
obtained. Dalton, 130 Wn. App. at 668. Therefore, the wrongful conduct must have " prevented
a full and fair presentation" of the moving party' s case. Id. at 665, 668. Fraud or misconduct
that is harmless will not support a motion to vacate. 5 4 KARL B. TEGLAND, WASHINGTON
PRACTICE: RULES PRACTICE § 8, at 613 ( 6th.ed. 2013).
The decision to grant or deny a motion to vacate a judgment under CR 60( b) is, within the
trial court' s discretion. Jones v. City ofSeattle, 179 Wash. 2d 322, 360, 314 P.3d 380 ( 2013).
Therefore, we review CR 60( b) orders for abuse of discretion.6 Tamosaitis v. Bechtel Nat' l, Inc.,
182 Wn. App. 241, 254, 327 P.3d 1309, review denied, 181 Wash. 2d 1029 ( 2014). A trial court
abuses its discretion if its decision is based on untenable grounds or reasons. _Id.
When the trial court makes findings of fact and credibility determinations based on
affidavits alone, we must determine whether substantial evidence supports those findings and
whether the findings support the conclusions of law. In re Marriage ofRideout, 150 Wash. 2d 337,
350- 51, 77 P.3d 1174 ( 2003). However, because the standard of proof in CR 60( b)( 4) motion is
5 On the other hand, the moving party is not required to show that the misrepresentation
materially affected the outcome of the trial. Mitchell, 153 Wash. App. at 825.
6 Schneiderman argues that we should apply a de novo standard in reviewing the trial court' s CR
60( b) order because the trial court based its decision entirely on a review of affidavits and
documentary evidence. We disagree. Here, the trial court had to weigh the materials submitted
and resolve conflicts in the evidence. Under these circumstances, a de novo review is not
appropriate. See In Re Marriage of Rideout, 150 Wash. 2d 337, 350- 51, 77 P.3d 1174 ( 2003); In Re
Parentage ofdannot, 149 Wash. 2d 123, 128, 65 P.3d 664 ( 2003).
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clear and convincing evidence, the substantial evidence must be highly probable. Dalton, 130
Wash. App. at 666. Therefore, our review is limited to determining whether the evidence shows
that it was highly probable that Schneiderman engaged in misrepresentation or misconduct, that
Rogers relied on any misrepresentation, and that any misrepresentation or misconduct prevented
Rogers from fully and fairly presenting her case. Id. at 666, 668.
2. Misrepresentation Regarding Income
The trial court found " clear and convincing evidence of [Schneiderman' s]
misrepresentation and misconduct regarding his income" throughout the dissolution case. 7 CP at
870. The trial court primarily based this conclusion on two findings: ( 1) "[ Schneiderman]
regularly indicated to the court, [ Rogers], and the referee that his income was $ 35, 000 per month
and that any additional distributions were not predictable or reliable, even though the evidence
shows that [ Schneiderman] consistently received quarterly distributions," CP at 870; and ( 2)
Schneiderman] testified during the trial by referee that his income was declining for 2011 at a
time when he knew or should have known that his 2011 income would be as high or higher than
previous years." CP at 870.
l
We hold that the evidence supported the trial court' s finding that Schneiderman made
misrepresentations regarding the reliability of his quarterly distributions, but that these
misrepresentations do not support relief under CR 60( b)( 4) because there is no evidence that
Rogers or the referee reasonably relied on them or that they prevented a full and fair presentation
of Rogers' case. We also hold that the evidence did not support the trial court' s finding that
The trial court suggested that Schneiderman engaged in fraud regarding his expected income,
but also found misrepresentation "[ r] egardless of whether [ Schneiderman' s] statements regarding
his income rise to the level of common law fraud." CP at 871. On appeal, Rogers addressed
only misrepresentation. As a result, we do not address fraud.
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Schneiderman made misrepresentations of existing facts regarding his 2011 income.
Accordingly, we hold that the trial court abused its discretion by vacating the dissolution decree
on these grounds.
a. Statements Regarding Additional Distributions
We agree with the trial court that Schneiderman or his counsel repeatedly told Rogers,
Judge Haberly, and the referee that his monthly income was $ 35, 000, and that his quarterly
distributions should not be counted as monthly income because they were unreliable. However,
the issue is whether these representations to the court amounted to misrepresentation or
misconduct sufficient to vacate the dissolution decree under CR 60( b)( 4).
The threshold question is whether Schneiderman' s statements were misrepresentations;
i. e., false statements of an existing fact. Here, Schneiderman' s statements that his only
guaranteed income was $ 35, 000 per month were true. As Schneiderman points out, his
statements " reflected the undisputed fact that bonuses were not set in time or amount, because
they depended on a number of factors including hours worked, patients seen, and accounts
receivable." Br. of Appellant at 27. His practice' s quarterly distributions involved a division of
net profits for the quarter. Whether or not a bonus was paid would depend on whether the
practice had any net profits. There is nothing in record suggesting that quarterly bonuses were
guaranteed, and in fact, Schneiderman testified that there had been times that quarterly bonuses
were not paid.
Further, the implication of Schneiderman' s statements that his quarterly distributions
would not be a reliable source of his income in the future would not support a finding of
misrepresentation. Misrepresentation requires a false statement of an existing fact. Landstar
Inway, Inc. v. Samrow, 181 Wn. App. 109, 124, 325 P.3d 327 ( 2014). Whether or not quarterly
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distributions would be a reliable source of Schneiderman' s income in the future did not involve
an existing fact.
However, Schneiderman' s repeated claim that the quarterly bonuses did not constitute
reliable income appears to be false based on the income information in the record. In both 2008
and 2009, Schneiderman earned approximately $600, 000 more than his guaranteed monthly
income. Even in 2010 Schneiderman earned over $250, 000 more than his guaranteed monthly
income. Therefore, in the recent past the quarterly distributions clearly had been a reliable
source of Schneiderman' s income. Accordingly, we hold that sufficient evidence supported the
trial court' s finding that Schneiderman' s statements that his quarterly distributions were not a
reliable source of his income were false statements of an existing fact.
The next question is whether Rogers or the referee reasonably relied on the truth of
Schneiderman' s misrepresentation that his quarterly distributions were not a reliable source of
income or the misrepresentation prevented a full and fair presentation of Rogers' case. 8 Dalton,
130 Wash. App. at 668; Hickey, 55 Wash. App. at 372.
The record is clear that Rogers did not accept Schneiderman' s representations about the
unreliability of the quarterly distributions. Schneiderman' s 2008, 2009, and 2010 tax returns
were submitted as trial exhibits, so both Rogers and the referee knew that in recent years
Schneiderman had received substantial income above his guaranteed monthly payments.
Further, Rogers expressly argued that Schneiderman' s 2008 and 2009 income should be used to
determine spousal maintenance: In her trial brief, Rogers argued, " The court is reminded that the
temporary order of maintenance was based only on his base salary of roughly $40, 000 per month
8 Because we conclude that Schneiderman' s testimony regarding his monthly income was not
false, we do not address whether Rogers reasonably relied on these statements.
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and did not fully recognize his annual income which includes significant bonuses that generate a
monthly income of $83, 300 a month when averaged over the year." CP at 2783- 84. Rogers
based the $ 83, 300 figure on Schneiderman' s income in 2008 ($ 1, 024, 295) and 2009
1, 024, 356). She also argued that "[ s] imilar earnings are anticipated for 2011." CP at 2784.
The referee also did not rely on Schneiderman' s statements that his only reliable income
was $ 35, 000 a month. Instead, the referee based his decision on a finding that Schneiderman' s
monthly income in the future would be approximately $55, 000. This necessarily included a
finding that in the future Schneiderman would receive quarterly distributions totaling $220, 000
per year.
Finally, the ultimate question is whether Schneiderman' s misrepresentation regarding the
reliability of quarterly distributions in the past prevented a full and fair presentation of Rogers'
case. See Dalton, 130 Wn. App. at 668. Here, Schneiderman' s misrepresentation did not
prevent Rogers from arguing that Schneiderman' s future income should be based on the
significant quarterly distributions he received in 2008 and 2009. Instead, it appears that Rogers
and the referee simply ignored them.
Accordingly, we hold that although Schneiderman' s statements that his quarterly
distributions were not reliable constituted a misrepresentation, neither Rogers nor the referee
relied on them and they did not prevent Rogers from fully and fairly presenting her case.
Therefore, these misrepresentations do not support relief under CR 60( b)( 4).
b. 2011 Income
Schneiderman testified at trial that in 2011 he only anticipated receiving quarterly
distributions amounting to $ 150, 000 to $ 200, 000, and therefore his total 2011 income likely
would amount to $ 550, 000 to $600, 000, including his base draw of $420, 000. The trial court
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found that this testimony constituted a misrepresentation because the Forde spreadsheet showed
that Schneiderman' s 2011 income was $ 108, 686 per month for the first part of 2011 and that
another document showed that his practice' s Medicare revenues were higher in the first part of
2011 than in previous years. The trial court found that Schneiderman had not provided any
documentation to contradict his actual 2011 income through the trial by referee.
The record shows that the trial court misinterpreted the Forde spreadsheet, overlooked
Schneiderman' s evidence regarding his actual income for the first half of 2011, and improperly
relied on a Medicare document that had dubious relevance. As a result, the evidence does not
support a finding that it was highly probable that Schneiderman misrepresented his 2011 income.
First, Forde' s spreadsheet showed that Schneiderman' s 2011 income was $ 1, 304, 233,
which derived from the ophthalmology practice' s K- 1 form, less certain expenses. The
spreadsheet does not state that Schneiderman actually received $ 108, 686 in each month, nor does
Rogers provide any evidence that Schneiderman received those amounts each month. In fact, it
was undisputed throughout the dissolution proceedings that Schneiderman received $35, 000 per
month and quarterly bonuses. Given this evidence, the only reasonable interpretation of the
spreadsheet is that Forde divided Schneiderman' s 2011 annual income by 12, and allocated
108, 686 to each month during 2011. As a result, there is insufficient evidence to support the
trial court' s finding that Schneiderman had earned more in the first half of 2011 than the
550, 000 to $ 600, 000 Schneiderman testified that he expected to receive for the entirety of 2011.
Second, despite the trial court' s contrary finding, Schneiderman did produce evidence of
his actual income during the first half of 2011. Schneiderman submitted an exhibit showing his
actual distributions through the end of July 2011, which totaled $ 356, 506. The distributions
included his $ 35, 000 monthly income, a first quarter bonus of $61, 506, and an undated $ 50, 000
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payment described only as " distribution." CP at 355. Significantly, these distributions show that
Schneiderman' s monthly income through July 2011 was approximately $50, 930 per month or
approximately $611, 160 per year. This evidence is consistent with Schneiderman' s testimony
that he expected his total 2011 income to be $ 550, 000 to $ 600, 000. And Rogers never produced
any direct evidence that Schneiderman actually received more than $356, 506 during the first
seven months of 2011 or that he should have known that he would earn substantially more than
he estimated in the last five months of.the year.
Third, the Medicare document that Rogers obtained pursuant to a Freedom of
Information Act request does show that the total Medicare payments that Schneiderman' s
practice received during the first seven months of 2011 were higher than the amounts received in
the last seven months of 2010 and significantly higher than the amounts received in 2009.
However, the relevance of this document with regard to potential misrepresentation is suspect.
Because the document contains 2012 numbers, it was prepared sometime in 2013. Rogers has
provided no evidence that this information was available to Schneiderman at the time of trial. In
addition, Schneiderman explained that the document showed Medicare payments for all three
doctors working at the practice, and Rogers provided no evidence regarding the impact of
Medicare payments to the entire practice on Schneiderman' s income. Finally, Rogers provided
no evidence regarding the practice' s non -Medicare income during the first half of 2011.
Presumably, increased Medicare payments during the first part of 2011 would not result in
increased income if non -Medicare payments had decreased.9
9 In addition, the practice' s Medicare payments for 2010 were significantly higher than Medicare
payments for 2009 even though Schneiderman' s 2010 income was significantly lower than his
2009 income. This calls into question the relationship between Medicare payments and
Schneiderman' s income.
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At best, the evidence on which the trial court relied in finding misrepresentation gave rise
to an inference that Schneiderman knew or should have known at the time of trial that his 2011
income would be significantly greater than 2010. However, the legal standard is clear and
convincing evidence — whether the evidence in the record showed that it was highly probable
that Schneiderman misrepresented his 2011 income. Dalton, 130 Wn. App. at 666. We hold that
the evidence does not support a finding that it was highly probable that Schneiderman knew or
should have known at the time of trial that his 2011 income would be significantly higher than
the estimated amounts in his trial testimony.
3. Misconduct Regarding Trust Account
The trial court found " significant misconduct, misrepresentation, and mismanagement of
the funds" that were held in Province' s trust account and that the referee ultimately awarded .to
Rogers. CP at 871. Schneiderman argues that the trial court erred in vacating the dissolution
decree on this basis because the finding was based only on Province' s misconduct, not on his
own misconduct. We hold that the trial court erred by vacating the dissolution decree on the
basis of Province' s misconduct, and also hold that the trial court' s findings were not supported
by evidence that it was highly probable that Schneiderman himself engaged in misconduct
regarding Province' s trust account.
a. Province Misconduct
As the trial court noted, the WSBA investigation concluded that Province had engaged in
serious criminal conduct involving fraud, theft, and dishonesty regarding the trust fund. The
WSBA investigation also concluded that Province provided a false accounting and ledger to
Rogers and to the referee when Province knew the information was false. However, the trial
court made no finding that Schneiderman was involved in this misconduct. In fact, the trial court
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expressly found that "[ i] t is unknown the extent to which [ Schneiderman] was involved in the
misconduct regarding the trust account." CP at 873 ( emphasis added). As a result, the issue here
is whether Schneiderman can be held responsible for Province' s misconduct under CR 60( b)( 4).
In general, the actions of an attorney authorized to appear for a client are binding on the
client. Rivers v. Wash. State Conference ofMason Contractors, 145 Wash. 2d 674, 679, 41 P.3d
1175 ( 2002). However, the cases holding that the actions of an attorney are binding on the client
generally involve the attorney' s conduct in the course of litigation. See id. at 679- 80. Here,
Province' s role with regard to the trust account was different. In a sense, he was operating as an
officer of the court in holding funds in trust for the benefit of both parties and in providing an
accounting of those funds to Rogers and the referee. He technically was not acting as
Schneiderman' s attorney in this context. Rogers has cited no authority for the proposition that
the misconduct of an attorney regarding the misuse of trust account funds should be binding on
his client.
Further, there are cases holding that a client will not be held responsible for certain
attorney misconduct committed without the client' s authorization. Demopolis v. Peoples Nat' l
Bank of Wash., 59 Wn. App. 105, 117- 18, 796 P.2d 426 ( 1990) ( client not liable for attorney' s
unauthorized defamatory communications); Fite v. Lee, 11 Wash. App. 21, 29, 521 P.2d 964
1974) ( client not liable for attorney' s abuse of process outside the scope of agency). In Fite, we
stated, "[ b] y its very nature, an abuse of legal process by an attorney ... violates an attorney' s
oath, his canons of ethics, and his duty to the public as an officer of the court.... Accordingly,
the scope of the attorney' s implied authority as an agent should not, as a matter of law, extend to
acts which constitute an abuse of legal process." 11 Wash. App. at 28- 29.
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Here, Province' s misconduct was similar to that discussed in Fite in that Province
violated the canons of professional ethics and his duties to the public as an officer of the court.
And Rogers submitted no evidence that Schneiderman knew of or consented to Province' s
misconduct. Based on our discussion of agency principles in Fite, it necessarily follows that
Province' s misconduct was undertaken outside the scope of his agency to bind his client,
Schneiderman.
We hold that for purposes of CR 60( b)( 4), Schneiderman is not responsible for
Province' s misconduct regarding his trust account. Therefore, we hold that the trial court abused
its discretion to the extent that it vacated the dissolution decree based on Province' s misconduct.
b. Schneiderman Misconduct
Apart from Province' s misconduct, the trial court found that Schneiderman engaged in
misconduct because he failed to deposit funds into a trust account as ordered in Judge Haberly' s
temporary order in December 2009. The trial court noted that Schneiderman did not deposit any
funds into the trust account until October 2010. Even then, the trial court noted that
Schneiderman did not comply with the court' s order requiring him to place all distributions
received from his business into the trust account. The trial court cited as an example the fact that
Schneiderman used $ 119, 000 of his 2010 distributions to pay taxes before Judge Haberly ruled
on the matter.
However, the record shows that to the extent Schneiderman engaged in misconduct by
not depositing funds in the trust account before October 2010 and by not depositing certain funds
in the trust account as required, Rogers was aware of this misconduct long before trial. The
temporary order required that the parties' bank account be placed in a trust account. On July 8,
2010, Schneiderman filed a declaration.with the court acknowledging that funds had not yet been
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transferred to a trust account. Schneiderman explained that he had not transferred the funds
because both parties needed to access those funds to pay taxes and other expenses.
With regard to the $ 119, 000 tax payment, Schneiderman filed a motion asking that he be
allowed to pay $ 119, 000 toward taxes from his $ 215, 000 bonus distribution for the last three
quarters of 2010. The trial court may have been referring to the fact that Schneiderman paid the
taxes before Judge Haberly ruled on the motion. However, in her order on the motion, Judge
Haberly did not question the payment of the taxes and instead entered an order regarding the
allocation of the remaining funds.
As with misrepresentation, a party' s misconduct will support relief under CR 60(b)( 4)
only if that misconduct prevented the moving party from fully and fairly presenting his or her
case. See Dalton, 130 Wash. App. at 668. Here, because Rogers knew about Schneiderman' s
alleged misconduct, it could not have affected her ability to present her case at trial. The deposit
of funds into the trust account was an ongoing issue during the course of the litigation.
Therefore, Rogers had an opportunity before trial and at trial to explore whether Schneiderman
had deposited all the funds into the trust account that he was required to deposit.
We hold that the trial court abused its discretion to the extent that it vacated the
dissolution decree based on Schneiderman' s misconduct regarding depositing funds into the trust
account because there is no evidence that Schneiderman' s misconduct prevented Rogers from
fully and fairly presenting her case.
4. Discovery Violations
The trial court found that Schneiderman " willfully violated the discovery rules by failing
to supply complete and accurate information regarding his business income," CP at 874, which
constituted misconduct under CR 60( b)( 4) and was grounds for a new trial as a discovery
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sanction under CR 37( b)( 2). Specifically, the trial court found that many of Schneiderman' s
responses to interrogatories and requests for production regarding his income and businesses
stated, " provided to Kessler" when in fact Kessler' s file showed that Schneiderman did not
actually provide him with the vast majority of the information labeled " provided to Kessler." 10
CP at 874- 75.
A willful discovery violation can constitute " misconduct" under CR 60( b)( 4). See
Roberson v. Perez, 123 Wash. App. 320, 332- 33, 96 P.3d 420 ( 2004). 11 One example of a
discovery violation is the failure to produce documents requested by the opposing party. Id. at
331- 33.
Here, Rogers sent Schneiderman a lengthy set of interrogatories and requests for
production. Several of Schneiderman' s responses simply referred to information provided to
Kessler, the CPA jointly retained to value Schneiderman' s business interests. Rogers filed a
motion to compel discovery, arguing in part that the responses were deficient because
Schneiderman failed to show specifically what documents provided to Kessler corresponded to
10 The trial court also suggested that Schneiderman' s failure to provide records of the trust
account was a willful discovery violation. However, there is no evidence in the record that
Rogers made a discovery request for records regarding Province' s trust account. Rogers fails to
address this finding in her brief. As a result, we hold that Schneiderman' s failure to provide the
trust account records cannot be the grounds for CR 60( b)( 4) relief.
11 In Roberson, the trial court vacated two jury verdicts and ordered a new trial as a sanction for
discovery violations. 123 Wn. App. at 333. It appears that the basis for this ruling was CR
60( b)( 4). Id. at 331, 332- 33. However, the court' s analysis focused on a trial court' s authority to
provide sanctions for discovery violations under CR 37( b)( 2) rather than on a more traditional
CR 60( b)( 4) analysis. For instance, the court addressed the requirements for imposition of
discovery sanctions set forth in Burnet v. Spokane Ambulance, 131 Wash. 2d 484, 933 P.2d 1036
1997), including willful or deliberate conduct, substance prejudice, and the consideration of
lesser sanctions. Roberson, 123 Wash. App. at 333- 38.
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relevant requests for production. However, the trial court denied Rogers' s motion to compel,
stating that Schneiderman had answered the discovery requests.
In conjunction with her CR 60( b) motion, Rogers prepared a chart analyzing the
discovery requests for which Schneiderman referred to materials provided to Kessler.. This,
analysis showed that Schneiderman had not actually provided to Kessler all the documents that
Rogers had requested. Schneiderman presents no evidence that he actually did produce all the
documents Rogers requested in discovery either directly to Rogers or to Kessler. Therefore, we
hold that the evidence is sufficient to show that it is highly probable that Schneiderman
committed discovery violations when he responded to discovery requests for documents by
stating that he was providing those documents to Kessler, when in fact he did not provide some
of those documents to Kessler.
However, once again Rogers failed to show that.Schneiderman' s discovery violations
prevented her from fully and fairly presenting her case. First, Rogers knew that Schneiderman' s
discovery responses were deficient from her perspective because they did not identify what
documents had been provided to Kessler. That was one of the primary grounds for her motion to
compel. Nothing prevented her from doing what she did three years later —finding out from
Kessler what documents Schneiderman had provided to him and comparing those documents
with Rogers' s discovery requests.
In Roberson, Division Three of this court stated that "[ d] iligence is not a consideration in
trial is remedy for a discovery violation." 123 Wn.
determining whether a new an appropriate
App. at 334. The court suggested that the use of discovery procedures constitutes the exercise of
appropriate diligence, and a party is justified in believing that the opposing party had fully and
completely responded to those requests. Id.
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However, the court in Roberson did not consider the requirement under CR 60( b)( 4) that
there be sufficient evidence to show that it was highly probable that the misconduct prevented
the moving party from fully and fairly presenting his or her case. Dalton, 130 Wash. App. at 668.
Here, Rogers was aware of a potential discrepancy between the documents requested and the
documents provided to Kessler. She had an opportunity to resolve that discrepancy by
investigating further, possibly propounding more discovery, and possibly bringing another
motion to compel discovery. The fact that she failed to take any of those steps eliminates the
necessary connection between Schneiderman' s discovery violations and the referee' s ruling.
Second, even if we disregard Rogers' s failure to investigate further regarding
Schneiderman' s discovery responses, neither Rogers nor the trial court addressed whether any of
the documents Schneiderman failed to provide to Kessler were relevant to the dissolution trial.
A moving party under CR 60( b)( 4) must show some connection between the alleged misconduct
and entry -of the judgment. See Hickey, 55 Wash. App. at 372.
Here, at the time of trial Rogers had Schneiderman' s personal income tax returns
showing his income for 2008, 2009, and 2010. Based on these tax returns, Rogers had the ability
to argue —and did that Schneiderman' s future income likely would be similar to his
argue —
income in 2008 and 2009 and dissimilar to his income in 2010. There is no indication that any of
the other requested documents would have enabled Rogers to make a better argument.
Information regarding Schneiderman' s 2011 income is different. Apparently,
Schneiderman provided no 2011 financial information regarding his ophthalmology practice or
any information regarding his 2011 personal income. However, Rogers' interrogatories and
requests for production did not request this information. Rogers' discovery requests were
propounded in May 2010. All of the discovery requests regarding his ophthalmology practice' s
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financial information referred to the previous five years. Similarly, Rogers requested that
Schneiderman provide his share of the net profits of his businesses, but only over the previous
five years. And Rogers' discovery requested documentation regarding Schneiderman' s earned
income during the past six months and requested his personal income tax returns only through
2010. There were no specific discovery requests for 2011 income information.
We hold that there is insufficient evidence to show a high probability that
Schneiderman' s discovery violations prevented Rogers from fully and fairly presenting her case
or had any effect on the judgment. Accordingly, we hold that the trial court abused its discretion
in vacating the dissolution decree on this basis.
B. VACATION UNDER CR 60( b)( 3)
The trial court found that newly discovered evidence was grounds to vacate the
dissolution decree under CR 60( b)( 3). However, Schneiderman argues that the trial court should
not have considered the allegations in Rogers' amended motion to vacate because the allegations
were filed nearly two years after entry of the dissolution decree, and by rule CR 60( b)( 3) motions
must be filed within one year after judgment. We agree.
1. Failure to Make Argument at Trial Court
Rogers initially argues that Schneiderman failed to make his one- year deadline argument
at the trial court. But in response to Rogers' amended motion to vacate, Schneiderman filed a
declaration that asserted that the trial courtcould only consider Rogers' original motion and
declaration filed in October 2012 —and could not consider any other documents —because CR 60
expressly limits the filing date for a motion for an order to show cause to within [one] year of
of the order, along with a supporting affidavit." CP at 283. Schneiderman asserted that
entry
be disregarded." CP 283. The trial court
a] nything filed after the one year mark should at
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subsequently addressed CR 60( b)( 3)' s one- year deadline at oral argument of the show cause
motion. 12.
The record shows that Schneiderman did argue that the one- year deadline for filing
motions under CR 60( b)( 3) applied to the amended' motion and supporting materials. Therefore,
we hold that Schneiderman can raise that issue on. appeal.
2. One -Year Deadline for CR 60( b)( 3) Motions
CR 60( b) states that motions to vacate judgments under CR 60( b)( 1), ( 2) and ( 3) must be
filed not more than one year after the judgment. CR 6( b) prohibits enlargement of time under
CR 60( b). Therefore, this time limit must be strictly followed.
Here, Rogers' original motion was filed before the one- year deadline, but that motion did
not seek relief under CR 60( b)( 3) based on newly discovered evidence. Rogers did not move for
relief under CR 60( b)( 3) until she filed her amended motion to vacate in August 2013 — 22
months after the judgment was entered. And Rogers cites no authority for the proposition that
her CR 60( b)( 3) motion can " relate back" to her earlier CR 60( b)( 4) motion and thereby avoid
the one- year time limit. Therefore, we hold that Rogers' CR 60( b)( 3) motion was untimely.
The trial court expressly concluded that the dissolution decree should be vacated under
CR 60( b)( 3) based on newly discovered evidence: the WSBA report regarding Province' s
misconduct, the Forde spreadsheet regarding Schneiderman' s 2011 income, and the Medicare
reimbursement summary sheet for 2009- 2012. Because Rogers' CR 60( b)( 3) motion was .
untimely, we hold that the trial court erred in vacating the dissolution decree based on newly
discovered evidence.
12 At the hearing on the merits of Rogers' motion to vacate the dissolution decree in December,
neither party addressed the one- year deadline under CR 60( b)( 3), nor did the trial court.
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C. ATTORNEY FEES
1. Fees in Trial Court
Schneiderman argues that the trial court erred by awarding Rogers attorney fees incurred
regarding her CR 60( b) motion. His only claim is that because the trial court erred in vacating
the dissolution decree, it also erred in awarding attorney fees.
However, the trial court did not award attorney fees to Rogers as the prevailing party
under CR 60( b). Instead, the trial court awarded attorney fees under the authority of RCW
26. 09. 140, which allows courts to award attorney fees in dissolution cases regardless of which
party prevails. Further, the trial court based its attorney fee award on an express finding that
Schneiderman engaged in intransigent conduct. A trial court has authority to award attorney fees
based on a party' s intransigence. In re Marriage ofBobbitt, 135 Wash. App. 8, 30, 144 P.3d 306
2006).
Schneiderman does not challenge the trial court' s authority to award attorney fees and
does not assign error to or present any argument regarding the trial court' s finding of
intransigence. Therefore, without addressing the merits of the trial court' s attorney fee rulings,
we reject Schneiderman' s claim of error regarding the trial court' s award of attorney fees. See
Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d 801, 809, 828 P.2d 549 ( 1992) ( we need
not consider arguments not supported by meaningful analysis or citation to pertinent authority).
We affirm the trial court' s award of attorney fees to Rogers.
2. Fees on Appeal
Rogers also requests an award of attorney fees on appeal based on " CR 60( b), RAP
18. 1( a), intransigence, misconduct, and relative need and ability to pay." Br. of Resp' t at 50.
However, rather than arguing the basis for the recovery of fees she simply incorporates the
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argument made in her trial brief. We decline to award Rogers attorney fees based on this
argument. See Gardner v. First Heritage Bank, 175 Wash. App. 650, 676- 777, 303 P.3d 1065
2013) ( refraining from granting attorney fees when a party failed to provide argument in support
of its fee request).
CONCLUSION
Vacation of a judgment under CR 60( b) is an extraordinary remedy. See Dalton, 130
Wn. App. at 665. The record here simply does not support this remedy. We reverse and vacate
the trial court' s order vacating the spousal maintenance provisions and asset/liability division of
the parties' dissolution decree of dissolution under CR 60( b)( 3) and ( 4). However, we affirm the
trial court' s order granting Rogers her attorney fees. We remand to the trial court for
proceedings consistent with this opinion.
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 in accordance with RCW
2. 06. 040, it is so ordered.
MAXA, r J.
We concur:
L' r, J.
SUTTON, J.
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