In re the Marriage of Dawn D. Neumiller & Steven R. Neumiller ( 2014 )

FILED
OCT 7,2014
In tbe Office of the Clerk of Cou rt
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
In re the Marriage of: )
) No. 31299-2-111
DA WN D. NEUMILLER, )
)
Appellant, )
)
and ) OPINION PUBLISHED IN PART
)
STEVEN R. NEUMILLER, )
)
Respondent. )
KORSMO, J. - In a marriage dissolution proceeding, does one party have to plead
the existence of a pre-marital committed intimate relationship in order to consider that
relationship when characterizing property as separate or community? Appellant Dawn
Neumiller appeals from the dissolution of her marriage to respondent Steven Neumiller,
alleging several errors at trial. We agree only with her contention that the trial court
should have considered evidence of the existence of a committed intimate relationship
before characterizing the two most significant assets before the court and remand for the
trial court to do so. In all other regards we affirm.
FACTS
The Neumillers met in 1996; both had previously been married and had children
from their previous relationships. Ms. Neumiller lived with her children in a home on
No. 31299-2-III
In re Neumiller
West 10th Avenue in Spokane that was owned by her parents. She had rented the home
from her parents since 1990 under what she described as a "rent to own" agreement.
Ms. Neumiller became pregnant in 1998 by Mr. Neumiller and he moved in to the
1Oth Avenue home at that time and took over making the monthly house payments. The
couple's son was born in November 1998. In 1999, Mr. Neumiller purchased the 10th
A venue house by taking out a mortgage to finance it after first selling his own home. I
The mortgage was solely in Mr. Neumiller's name.
The couple's second child, a daughter, was born in November 2000. The mother
cared for the children and did not have an occupation outside of the home except for
some occasional sewing work. The father worked from the house as a consultant and
grant writer. The couple married in January 2005. As before the marriage, the finances
were largely kept separate, with Mr. Neumiller managing his separate assets and also
paying any community costs and debts.
Ms. Neumiller initially filed for dissolution of the marriage in 2009, and moved
out of the 1Oth Avenue house with the children that October. The dissolution petition
I Although the trial court commented in its oral remarks that Mr. Neumiller had
used the proceeds from the sale of his house to help fund the purchase of the 10th Avenue
house, the testimony was to the contrary. Ms. Neumiller testified that Mr. Neumiller lost
money on the sale of his house, while Mr. Neumiller testified that the funds used to
purchase the 1Oth Avenue house came from the mortgage. It may be that one of the
exhibits addressed this issue, but none of them have been made part of the record on
appeal.
2
No. 31299-2-111
In re Neumiller
was dismissed the following year. Ms. Neumiller filed a new dissolution petition on May
26,201l. It asserted that the parties had married in Idaho on January 28, 2005, and had
separated October 20, 2009. Mr. Neumiller turned 62 in October 2011, and took early
retirement. He began receiving social security payments and wound down his business
affairs. Each of the children also began to receive a monthly social security check.
Ms. Neumiller's original counsel was disbarred. She proceeded pro se for a while,
but a new attorney took over shortly before the scheduled trial date. The parties filed a
joint trial management report in which the wife claimed the 1Oth Avenue house was
community property, while Mr. Neumiller alleged it was his personal property. Ms.
Neumiller contended that the American Funds retirement account, valued at nearly
$71,000, also was community property, while Mr. Neumiller contended that the account
was his separate property.
The matter proceeded to trial. On the day of trial, the husband filed his response
to the petition and the wife filed an amended petition. The amended petition listed the
separation date of the couple as May 26, 2011, the date that the original 2011 dissolution
petition was filed. The amended petition again stated that the couple had married in
Idaho on January 28, 2005, but included an additional sentence: "The parties cohabited
in a marriage like relationship since the fall of 1998." Clerk's Papers (CP) at 257.
Mr. Neumiller's counsel moved in limine to prevent Ms. Neumiller from
presenting evidence relating to a committed intimate relationship since she had not
3
No. 31299-2-II1
In re Neumiller
pleaded the matter in her original petition. The trial court deferred ruling on the motion
and permitted the parties to testify as they wished. Ms. Neumiller testified concerning
the couple's pre-marriage relationship and asked to be awarded half of the equity in the
house and half of the American Fund account. After Ms. Neumiller rested her case, Mr.
Neumiller moved for a directed verdict on the committed intimate relationship matter.
The court reserved its ruling.
Trial concluded the following day. The parties returned to court five weeks later
to learn the judge's decision. The trial court declined to entertain the committed intimate
relationship issue, reasoning that it had been raised "way too late in the game for the
Court to consider it here." Report of Proceedings (RP) at 219-20. The court
characterized both the house and the American Fund account as Mr. Neumiller's separate
property. The court awarded each party its separate property. The community property,
valuing Jess than $13,000 and consisting primarily of vehicles, was awarded to the person
in possession of the item. 2 Mr. Neumiller also was assigned the bulk of the community
debt, including nearly $22,000 owed on a line of credit.
After entry of the decree of dissolution, Ms. Neumiller then appealed to this court.
2 Ms. Neumiller received approximately $8,200, less nearly $6,700 in community
debt, while Mr. Neumiller received approximately $4,600 in community property, but his
share of the community debt reduced his position to negative $15,38l.
4
No. 31299-2-III
In re Neumiller
ANALYSIS
Ms. Neumiller raises four contentions in this appeal. We initially address her
argument that the court erred in not considering the committed intimate relationship in its
characterization of the nature of the house and the American Fund account. She also
argues that the court erred in determining that the couple separated in 2009 rather than
2011, in not imputing additional income to Mr. Neumiller after his retirement, and in not
awarding her attorney fees at trial. Mr. Neumiller argues that he should receive attorney
fees for responding to a frivolous appeal. We address the remaining issues in the order
stated.
Evidence ofCommitted Intimate Relationship
Mr. Neumiller contends that Ms. Neumiller had to plead the committed intimate
relationship issue in a timely fashion and that the trial court acted within its case
management authority in declining to consider the late issue. Ms. Neumiller argues there
is no pleading requirement for evidentiary consideration of the existence of a committed
intimate relationship in a marriage dissolution proceeding. We agree with Ms. Neumiller
and remand for consideration of this evidence.
The husband properly notes that trial courts are accorded great discretion in family
law matters due to the need for finality and certainty. E.g., In re Marriage ofLandry,
103 Wash. 2d 807, 809, 699 P.2d 214 (1985). He correctly argues that this standard governs
all of Ms. Neumiller' s issues . Whether or not to allow an amendment to the pleadings
5
No. 31299-2-III
In re Neumiller
rests with the discretion of the trial court. E.g., Wilson v. Horsley, 137 Wash. 2d 500, 505, .
974 P .2d 316 (1999). The distribution of property and debt is reviewed for manifest
abuse of discretion. In re Marriage ofMuhammad, 153 Wash. 2d 795, 803, 108 P.3d 779
(2005); Baird v. Baird, 6 Wash. App. 587, 591,494 P.2d 1387 (1972). Whether or not to
award a party maintenance or attorney fees likewise is reviewed for abuse of discretion.
In re Marriage ofTerry, 79 Wash. App. 866, 869-71, 905 P.2d 935 (1995).
In turn, discretion is abused when it is exercised on untenable grounds or for
untenable reasons. State ex rei. Carroll v. Junker, 79 Wn.2d 12,26,482 P.2d 775 (1971).
Discretion also is abused when the court uses an incorrect legal standard. State v. Rundquist,
79 Wash. App. 786, 793, 905 P.2d 922 (1995).
RCW 26.09.080 requires consideration of four factors 3 in reaching a "just and
equitable" property division. In re Marriage ofRockwell, 141 Wn. App. 235,242-43,
170 PJd 572 (2007). A deferential standard of review is applied to the trial court's
consideration of these factors because it is "in the best position to assess the assets and
liabilities of the parties" in order to determine what constitutes an equitable outcome.
In re Marriage ofBrewer, 137 Wash. 2d 756, 769, 976 P.2d 102 (1999). Although all
property is before the court for distribution, characterization of the property as
3 Those factors include the nature and extent of (1) the community property and
(2) the separate property of the parties, (3) the duration of the man'iage, and (4) the
economic circumstances of the parties at the time of the property division. RCW 26.09.080.
6
No. 31299-2-II1
In re Neumiller
community or separate is a necessary step to take before making a distribution. Id. at
766; Baker v. Baker, 80 Wash. 2d 736, 745, 498 P.2d 315 (1972). Appellate courts review
property characterization rulings de novo. In re Marriage o/Chumbley, 150 Wash. 2d 1, 5,
74 PJd 129 (2003).
Somewhat analogous standards apply to characterizing and distributing property
following the end of a committed intimate relationship. This division of property must be
just and equitable. In re Marriage o/Lindsey, 101 Wn.2d 299,304,678 P.2d 328 (1984).
Once the trial court makes a determination that a committed intimate relationship exists,
it then (1) evaluates the interest each party has in the property acquired during the
relationship, and (2) distributes the property in a just and equitable manner. Id. The
distribution does not have to be equal. In re Marriage 0/ Washburn, 101 Wash. 2d 168,
179,677 P.2d 152 (1984).
Various presumptions aid courts in determining whether property is community
or separate. In re Estate o/Borghi, 167 Wash. 2d 480, 483-84, 219 P.3d 932 (2009). The
date of acquisition is the primary determinant. Id. at 484 [citing Harry M. Cross,
The Community Property Law in Washington, 61 Wash. L. Rev. 13,39 (1986)]. Once
the characterization is made, the property is presumed to retain that character until such
time as it has been overcome with evidence of an intent to change that characterization.
Borghi, 167 Wash. 2d at 484-85, 491-92. The presumption can only be overcome by clear
and convincing evidence. Id. at 485 nA. There is a "weak presumption" in favor of
7
No. 31299-2-III
In re Neumiller
community property that exists until a presumption in favor of community or separate
property arises. State ex rei. Marshall v. Superior Ct., 119 Wash. 631, 637, 206 P. 362
(1922). This weak presumption gives way upon a preponderance of the evidence. Id.
If property is acquired when a party is involved in a committed intimate
relationship, it is presumed to be jointly owned. In re Estate ofLangeland,
177 Wn. App. 315,324-25,312 P.3d 657 (2013). This presumption can be overcome by
clear and convincing evidence that shows the separate nature of the funds used to acquire
the property. Id. at 325.
We have stated these standards at some length because the committed intimate
relationship argument was critical to the characterization of the house and the American
Fund account as either community-like or separate property. The house was acquired
during the period of time after Ms. Neumiller alleged the committed relationship began;
she also alleged that Mr. Neumiller made deposits to the account during that time period.
The trial judge accepted Mr. Neumiller's argument that the committed intimate
relationship claim was raised too late by the amended pleading. This argument implicitly
assumed that the existence of a committed intimate relationship needed to be pleaded
before the trial court could consider its existence. While that certainly must be the case
when a proceeding is instituted to distribute property acquired during a committed
intimate relationship, we do not believe that it needs to be pleaded when it is merely an
evidentiary fact in a marriage dissolution proceeding. Like any evidence, or theory of a
8
No. 31299-2-111
In re Neumiller
case, it typically would be disclosed in pre-trial discovery, but evidence does not need to
be included in the pleadings before it is admissible at trial.
A trial court has authority to exclude from trial any evidence that was willfully
not disclosed during discovery if there was substantial prejudice from the violation.
In re Estate a/Foster, 55 Wash. App. 545, 548,779 P.2d 272 (1989). If this had been such
a situation, we would review for abuse of the trial court's discretion. Id. However, that
is not what happened here. Mr. Neumiller did not claim a discovery violation. Rather, he
sought exclusion on the basis that the amended petition arrived too late in the process. In
other words, the committed intimate relationship needed to be pleaded in order to be
considered. By agreeing with that proposition, the trial court erred as a matter of law and
necessarily abused its decision. Rundquist, 79 Wash. App. at 793.
Here, there should have been no surprise to Mr. Neumiller what Ms . Neumiller
was hoping to accomplish. The facts concerning the couple's pre-marriage relationship
were well known to both. He moved in to her home, bought the house from her parents,
and conceived and raised two children there for several years before marrying. She
claimed in the joint trial report that the house, and the American Fund account, were
community property rather than simply property to which the community might have
some interest. Since property is characterized at the time of acquisition, Mr. Neumiller
was on notice that the couple's relationship at that time was at issue because she did not
agree it was his separate property.
9
No. 31299-2-III
In re Neumiller
Ms. Neumiller presented sufficient interest of a marriage-like relationship for the
court to consider the matter in its characterization of the property at issue. With respect
to the house, Ms. Neumiller established that it was purchased while the couple lived in it
with one child. On the basis of the evidence, the trial court could find that the house was
community-like property since it was acquired during a marriage-like relationship. With
respect to the American Fund, the evidence established that it was created four years
before the committed intimate relationship might have arisen. There was testimony from
Mr. Neumiller that only $8,000 was added to the fund between 1998 and 2002, and
nothing after that point. Thus, Ms. Neumiller failed to show that this fund was
community-like property. At most, the evidence would justify a community lien on a
small portion of the fund contributed during the committed intimate relationship.
We remand for the court to consider the evidence of the existence of a committed
intimate relationship and, if existent at the time, its effect on the characterization of these
two pieces of property. See Lindsey, 101 Wash. 2d at 307. The court may re-open the
property distribution if it should find that either property is not solely Mr. Neumiller' s.
Id.
A maj ority of the panel having determined that only the forgoing portion of this
opinion will be printed in the Washington Appellate Reports and that the remainder shall be
filed for public record pursuant to RCW 2.06.040, it is so ordered.
10
No. 31299-2-III
In re Neumiller
Date ofSeparation
Ms. Neumiller next contends that the trial court erred in finding that the parties
separated in 2009, at the time of the initial dissolution petition rather than in 2011, when
the second petition was filed. The evidence supported the trial court's determination.
We review a court's factual findings for substantial evidence. Dorsey v. King
County, 51 Wash. App. 664, 668-69, 754 P.2d 1255 (1988). Substantial evidence is that
evidence which "would persuade a fair-minded person of the truth or correctness of the
matter." Smith v. Emp 't Sec. Dep't, 155 Wash. App. 24, 33, 226 P.3d 263 (2010).
Ms. Neumiller's own pleadings supported the court's determination-both the
2009 petition and the first 2011 petition stated October 2009, as the date of separation.
More importantly, Mr. Neumiller testified that the parties separated in 2009, when Ms.
Neumiller and the children left the house; the couple never lived together thereafter. The
trial court was free to credit that testimony against conflicting testimony from Ms.
Neumiller.
Substantial evidence supported the finding.
Imputation ofIncome to Mr. Neumiller
Ms. Neumiller next takes issue with the trial court's failure to impute additional
income to Mr. Neumiller once he took early retirement and in imputing income to her in
the same amount. The trial court did not abuse its discretion in declining to require that
11
No. 31299-2-III
In re Neumiller
he return to work or in determining that his social security payments were his sole
income, nor did it err by imputing that same income level to her.
We review these issues for abuse of discretion. In re Marriage of Wright,
78 Wash. App. 230, 234, 896 P.2d 735 (1995). Imputation of income is governed by
RCW 26.19.071 (6). It states in relevant part:
(6) Imputation of Income. The court shall impute income to a
parent when the parent is voluntarily unemployed or voluntarily
underemployed. The court shall determine whether the parent is
voluntarily underemployed or voluntarily unemployed based upon that
parent's work history, education, health, and age, or any other relevant
factors. A court shall not impute income to a parent who is gainfully
employed on a full-time basis.
"Voluntary underemployment" has not been defined in Washington, but we believe
that it should be treated similarly to voluntary unemployment that has been defined as
"unemployment that is brought about by one's own free choice and is intentional rather
than accidental." In re Marriage ofBrockopp, 78 Wash. App. 441, 446 n.5, 898 P.2d 849
(1995).
With respect to Mr. Neumiller, we believe the trial court had tenable grounds for
not imputing income to him. He had reached retirement age and we believe most courts
will not second-guess a determination that it is time to stop working. He also explained
to the court that his existing work contracts were ending and that with the worsening
economy there were no prospects in the offing, so it was a good time to close his
business. One additional effect of the retirement was that it brought support payments for
12
No. 31299-2-111
In re Neumiller
both children to the family unit. For all of these reasons, we believe the trial court had
very tenable grounds not to require more of him.
Ms. Neumiller also argues that the court erred in failing to include additional
income, primarily final payments being received for his consulting work, to Mr.
Neumiller's income. However, he testified that these were not recurring payments and
there was no expectation that they would continue. RCW 26.19.075(l)(b) permits a
deviation from income calculation for nonrecurring income. The trial court, accordingly,
did not abuse its discretion in accepting Mr. Neumiller's explanation that the payments
would not continue in the future.
Finally, Ms. Neumiller also takes issue with the trial court's decision to impute
income to her at minimum wage in the same amount as Mr. Neumiller was receiving
from social security. Again, the trial court had a tenable basis for acting. Ms. Neumiller
was capable of minimum wage work and calculating income on that basis resulted in
monthly income of$I,554. 4 Reducing that figure by $17 to match Mr. Neumiller's
income did not harm Ms. Neumiller. As trier of fact, the trial judge was free, as he did, to
disregard Ms. Neumiller's claim that she was too ill to find regular work.
4 The minimum wage in Washington in 2012 was $9.04 per hour. Changes in
Basic Minimum Wages in Non-Farm Employment Under State Law: Selected Years 1968
to 2013, UNITED STATES DEPARTMENT OF LABOR WAGE AND HOUR DIVISION, available
at http://www.dol.gov/whd/state/stateMinWageHis.htm. Forty hours a week and 4.3
weeks per month equals $1,554 per month.
13
No. 31299-2-III
In re Neumiller
The trial court did not abuse its discretion in establishing the income levels for
both Mr. Neumiller and Ms. Neumiller.
Attorney Fees
Ms. Neumiller argues that the court erred in not awarding her any attorney fees at ..
trial. Both parties seek attorney fees in this appeal.
In a dissolution action, the trial court has authority to award attorney fees under
RCW 26 .09.l40 after considering the needs and financial resources of both parties. We
review the court's ruling for abuse of discretion. In re Marriage alCoy, 160 Wash. App. 797,
807,248 P .3d 1101 (2011).
Here, the trial court found that Ms. Neumiller had sufficient financial need to
support a fee award, but concluded that Mr. Neumiller did not have the resources to pay
her fees given that he had paid the guardian ad litem fees and would have to pay his own
attorney. With retirement, the court determined that Mr. Neumiller was "barely keeping
his head above water financially ." RP at 237. The husband's inability to pay was a
tenable basis for declining to require him to pay attorney fees to Ms. Neumiller.
For similar reasons we decline to award fees in this appeal. We have little doubt
that Ms . Neumiller still has financial need, but there also is no reason to believe that Mr.
Neumiller's financial situation has changed sufficiently to require him to pay her fees.
We exercise our discretion and decline to award fees on appeal.
14
No. 31299-2-III
In re Neumiller
Mr. Neumiller also seeks fees for what he alleges is a frivolous or sanction able
appeal. We disagree. Ms. Neumiller has prevailed in part, and mayor may not prevail
on remand. Her appeal was not frivolous. We also believe that any deficiencies in
briefing did not rise to the level of requiring a sanction. Both this court and respondent
were able to address the issues presented.
We affirm the trial court in most respects, but remand this issue for the court to
consider whether a committed intimate relationship existed and, if so, to take appropriate
action.
WE CONCUR:
Brown, 1.
~~(~&
Siddoway, C.1.
15