In the Matter of the Marriage of: Beverly Sevigny & Michael G. Sevigny ( 2020 )

FILED
JUNE 16, 2020
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
In the Matter of the Marriage of )
) No. 36393-7-III
BEVERLY SEVIGNY, )
)
Respondent/Cross Appellant, ) ORDER GRANTING MOTION
) FOR RECONSIDERATION,
and ) WITHDRAWING OPINION,
) AND SUBSTITUTING
MICHAEL G. SEVIGNY, ) OPINION
)
Appellant/Cross Respondent. )
Respondent, Beverly Sevigny, filed a motion for reconsideration on May 11, 2020
of the opinion filed in the above matter on April 21, 2020. Appellant, Michael Sevigny,
has filed a response to respondent’s motion. The court has determined that respondent’s
motion for reconsideration should be granted, the opinion should be withdrawn and a
substitute opinion be filed. Now, therefore, it is hereby
ORDERED that respondent’s motion for reconsideration is granted. It is further
ORDERED that the opinion filed on April 21, 2020, is withdrawn and a substitute
opinion be filed.
PANEL: Andrus, Lawrence-Berrey, Pennell
FOR THE COURT:
___________________________________
REBECCA PENNELL
Chief Judge
FILED
JUNE 16, 2020
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
In the Matter of the Marriage of )
)
BEVERLY SEVIGNY, ) No. 36393-7-III
)
Respondent/Cross Appellant, )
)
and )
) UNPUBLISHED OPINION
MICHAEL G. SEVIGNY, )
)
Appellant/Cross Respondent. )
ANDRUS, J. — After 33 years of marriage, Beverly and Michael Sevigny
separated, and two years later, Beverly1 filed for divorce. The trial court awarded
Michael the marital community’s interest in two ongoing businesses, a construction
company and a real estate investment limited liability company (the “LLC”), that
Michael and his oldest son started during the marriage and continued to manage
after the parties’ separation. Michael challenges the trial court’s valuation of the
LLC, arguing it was inappropriate to include real estate investments the LLC
acquired after separation. Michael contends this error led to an excessive transfer
1
Because the parties share the same last name, we use their first names for
clarity. No disrespect is intended.
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payment of $707,485 to Beverly, an amount he argues is an unfair and inequitable
distribution of community and separate property. Finally, Michael maintains that,
in light of the large property award Beverly received, the trial court abused its
discretion in ordering him to pay her maintenance of $6,500 a month for 10 years.
Beverly cross appeals the trial court’s determination that her judgment against
Michael will accrue interest at 4 percent.
We affirm the trial court’s characterization of the couple’s property, the
property distribution, and the post-judgment interest rate. We reverse the award of
maintenance and remand for reconsideration of the amount awarded.
FACTS
Michael and Beverly married in 1979. Beverly briefly worked in retail
before becoming a full-time, stay-at-home mother after their first child was born.
In 1995, when their youngest child was in first grade, Beverly became a part-time
substitute teacher, and five years later, she began working as a full-time
paraprofessional, helping in the classroom with students. She also worked as a
secretary for the school district.
Michael worked construction in his father’s business until 2007, when he and
his oldest son, Matthew, started their own construction company, M. Sevigny
Construction Inc. In mid-2012, Michael and Matthew formed 16th Avenue
Properties LLC (the “LLC”) as equal partners and began acquiring income-
producing real estate.
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Michael and Beverly separated in February 2013, and Beverly filed for
divorce in 2015. After a bench trial, the trial court divided $2.1 million in net assets
as follows: Beverly received the family home in Zillah, a Hawaii timeshare, a
vehicle, specific household goods, various bank accounts, deferred compensation
accounts, and the parties’ IRA accounts and life insurance policies. The trial court
valued these assets at $572,911.
Michael received the community’s 50 percent interest in M. Sevigny
Construction, valued at $775,000, and its 50 percent interest in the LLC, valued at
$341,332. Michael also received the family’s vacation cabin in Yakima, valued at
$200,000. Finally, the court deemed two distributions Michael had received from
the LLC in 2016 and 2017, totaling $240,000 after taxes, as predistributions of
community assets. The total value of these assets was $1,561,082.
The trial court adopted Michael’s recommended asset split of 60/40, favoring
Beverly. The result was a final distribution to Michael of $853,597 and to Beverly
of $1,280,396. To effectuate this division of assets, the court required Michael to
make a transfer payment of $707,485 to Beverly. The trial court entered a judgment
against Michael for this amount, plus an additional $10,000 in fees awarded to
Beverly, and set the interest rate on the judgment at 4 percent per annum. In
addition, the court awarded Beverly spousal maintenance of $6,500 a month until
her 70th birthday.
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Michael appeals, raising three main challenges to the trial court’s division of
assets. First, he argues the trial court erred in characterizing the LLC and the
income-producing real estate the LLC purchased after the parties’ separation as
community property. He further argues the trial court erred in awarding Beverly
any portion of the LLC’s post-separation acquisitions. Second, he maintains the
trial court erred in valuing the LLC as of the date of trial, rather than the date of
separation. Finally, he contends the maintenance award is unjust and inequitable in
light of the large transfer payment and the fact that Beverly received all the liquid
assets in the divorce. He asserts that he is unable to pay Beverly $6,500 each month,
fulfill his own obligations, and satisfy the money judgment.
ANALYSIS
Characterization of the LLC as Community Property
Michael assigns error to the trial court’s characterization of the LLC as
community property. Because Michael formed and capitalized the LLC before the
couple separated, the trial court did not err in concluding Michael’s interest in the
LLC was community property.
Under RCW 26.09.080, in any dissolution proceeding, the court must dispose
of the parties’ property and liabilities, whether community or separate, as is just and
equitable. In performing its obligation to make a just and equitable distribution of
property, the trial court must characterize the property as either community or
separate. In re Marriage of Kile, 186 Wash. App. 864, 875, 347 P.3d 894 (2015).
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“Property is characterized as of the date of its acquisition.” In re Marriage
of Sedlock, 69 Wash. App. 484, 506, 849 P.2d 1243 (1993). “The test of character is
‘whether it was acquired by community funds and community credit, or separate
funds and the issues and profits thereof.’” Id. (internal quotation marks omitted)
(quoting Katterhagen v. Meister, 75 Wash. 112, 115, 134 P. 673 (1913)). “A trial
court’s characterization of property as separate or community presents a mixed
question of law and fact.” Kile, 186 Wash. App. at 876. The time and method of
acquisition are questions for the trier of fact. Id. We review the factual findings
supporting a trial court’s characterization for substantial evidence. Id. “‘Substantial
evidence exists if the record contains evidence of sufficient quantity to persuade a
fair-minded, rational person of the truth of the declared premise.’” In re Marriage
of Griswold, 112 Wash. App. 333, 339, 48 P.3d 1018 (2002) (quoting Bering v.
SHARE, 106 Wash. 2d 212, 220, 721 P.2d 918 (1986)). The ultimate characterization
of the property as community or separate based on the trial court’s findings of fact
is a question of law that we review de novo. Kile, 186 Wash. App. at 876.
The LLC was formed and capitalized during the marriage. Michael testified
he and Matthew started the LLC sometime in 2012 and each owns a 50 percent share
of that entity. The 2012 tax return for the LLC identified the date of business
formation as June 26, 2012. The LLC’s assets on the date of formation were a
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commercial building located at 1212 N. 16th Avenue, in Yakima, Washington2 with
a cost basis of $544,250, and a separate parcel of land valued at $429,660. There is
no evidence in the record as to the source of funds Michael and Matthew used to
capitalize the LLC or to purchase these two initial assets.
The LLC then acquired a parcel in Yakima with three rental houses located
at 1607, 1611, and 1703 River Road on December 11, 2012.3 The LLC’s 2013 tax
return identified the cost basis of this parcel as $378,744. This acquisition also
occurred during the marriage. Again, Michael presented no evidence as to the
source of funds he and Matthew used to make this acquisition.
Finally, Michael admitted Beverly had a 25 percent ownership interest in the
LLC, stating, “I’ve never disputed that.” Beverly testified she and Michael planned
to use the purchase of these properties as their retirement plan to compensate them
over and above their wages. She also testified that she was asked to sign sale
documents every time the LLC purchased or changed properties because she was
part of that company. This evidence supports the trial court’s conclusion that the
marital community’s 50 percent interest in the LLC was community property.
Valuation of the LLC Including Post-Separation Acquisitions
Michael next argues the trial court erred in valuing the LLC as of the date of
trial, rather than the date of separation. He contends the LLC acquired several
2
The LLC held this property at the time of trial, where it was identified in
Steve Korn’s appraisal report, obtained by Beverly, as Parcel 1.
3
The appraisal identified the River Road property as Parcel 3.
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parcels of real estate after the couple’s separation, emphasizing the trial court’s
finding that “the parties stopped acquiring community property and incurring
community debt” when they separated in February 2013. He maintains the
appreciation in the LLC’s value should have been characterized as his separate
property under RCW 26.16.140. We reject this argument because Michael did not
prove he used separate property to enhance the value of the LLC.
All property acquired during marriage is presumptively community property.
RCW 26.16.030; Kile, 186 Wash. App. at 876. “The burden of rebutting this
presumption is on the party challenging the asset’s community property status, and
[the presumption] ‘can be overcome only by clear and convincing proof that the
transaction falls within the scope of a separate property exception.’” Dean v.
Lehman, 143 Wash. 2d 12, 19-20, 18 P.3d 523 (2001) (citation omitted) (quoting
Estate of Madsen v. Commissioner, 97 Wash. 2d 792, 796, 650 P.2d 196 (1982),
overruled in part on other grounds by Aetna Life Ins. v. Wadsworth, 102 Wash. 2d
652, 659-60, 689 P.2d 46 (1984)). RCW 26.16.140 provides one such exception:
when spouses are living separate and apart, their respective earnings and
accumulations shall be their separate property.
After Michael and Beverly separated in February 2013, the LLC bought and
sold several parcels of real estate. In July 2013, the LLC purchased property located
at 503 S. Elm Street in Toppenish, Washington for $337,000. According to Beverly,
the LLC later sold this parcel for $500,000.
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In September 2013, the LLC acquired commercial property located at 1928
Rudkin Road, in Union Gap, Washington, for $1.2 million.4 Then in November
2014, the LLC purchased commercial property located at 1177 W. Lincoln Avenue,
in Yakima, for $594,377.5 And at the time of trial, the LLC also owned a piece of
undeveloped land at 1725 River Road in Yakima, although the record does not
indicate when it was acquired or its purchase price.6
Michael had the burden of proving by clear and convincing evidence that the
LLC’s acquisitions involved an investment of his separate property. Sedlock, 69
Wash. App. at 509; see also In re Marriage of Schwarz, 192 Wash. App. 180, 189, 368
P.3d 173 (2016). While Michael is correct that RCW 26.16.140 characterizes
earnings and assets accumulated after separation as separate property, he produced
no evidence that he used his separate earnings to purchase any of real estate the LLC
holds.
The requirement of clear and satisfactory evidence is not met by the
mere self-serving declaration of the spouse claiming the property in
question that he acquired it from separate funds and a showing that
separate funds were available for that purpose. Separate funds used
for such a purpose should be traced with some degree of particularity.
4
The appraisal identified the Rudkin Road property as Parcel 5.
5
The appraisal identified the Lincoln Avenue property as Parcel 4.
6
The appraisal identified this undeveloped land as Parcel 2.
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Berol v. Berol, 37 Wash. 2d 380, 382, 223 P.2d 1055 (1950). Michael did no tracing
to establish that he used separate funds to acquire any of the properties the LLC
purchased after separation and, thus, failed to meet his burden of proof.
Moreover, throughout their separation, Michael and Beverly filed joint tax
returns declaring income from the LLC as community income. In the tax years 2013
through 2016, the marital community reported income from the LLC of $15,252,
$93,310, $81,960, and $140,760, respectively. Michael and Beverly both treated
the LLC as a community asset and the income generated from properties the LLC
purchased both before and after separation as community income.
We further conclude the trial court did not abuse its discretion in valuing the
LLC as of the date of trial, rather than the date of separation. The dissolution statutes
give courts broad discretion to pick a valuation date that is equitable. Lucker v.
Lucker, 71 Wash. 2d 165, 167, 426 P.2d 981 (1967). Choosing to value a community
asset on the date of trial, rather than the date of separation, is not an abuse of
discretion. Koher v. Morgan, 93 Wash. App. 398, 405, 968 P.2d 920 (1998).
Beverly presented expert testimony from real estate appraiser Steve Korn as
to the value of the LLC’s assets as of February 2017, some four years after
separation and one year before trial. The appraisal identified six parcels in which
the LLC held an ownership interest: Parcel 1 and Parcel 3, properties purchased
before separation, and Parcels 2 and 4 through 6, properties in which the LLC
obtained an interest after separation.
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Michael presented no expert testimony regarding the value of the LLC on the
date of separation. Instead, he testified he believed the community interest in the
LLC as of December 2012, and therefore at the time of separation, was $153,228.
It appears he pulled this number from the LLC’s 2012 tax return identifying the
value of each partner’s capital account. But Michael did not explain why his
valuation approach was preferable or a more reliable method of valuing the LLC
than Korn’s appraisal.
The trial court chose to adopt Korn’s valuation. It found the community
interest in the real estate held by the LLC had a value, as of the appraisal date, of
$2,355,250. After subtracting the outstanding debt of $2,013,918, the court found
the LLC business had a net value to the community of $341,332.
We cannot conclude the trial court abused its discretion in valuing the marital
community’s interest in the LLC as of February 2017 rather than December 2012.
There is no evidence showing Michael invested any post-separation earnings to
enable the LLC to acquire any of the three parcels it purchased after February 2013.
And it is also unclear whether the LLC used rental income from parcels it acquired
before the parties’ separation to buy parcels post-separation. Although Michael
testified he could produce paperwork to demonstrate he had used post-separation
earnings, he failed to present any such evidence.
Michael relies on In re Marriage of Elam, 97 Wash. 2d 811, 650 P.2d 213
(1982), for the proposition that the marital community cannot share in the increase
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in value of separate property unless community funds or “efforts” went into
increasing the value of that property. But the LLC was community property, not
Michael’s separate property, as Michael admitted at trial. And Michael presented
no evidence at trial to establish that the LLC increased in value because of his
investment of separate funds or his separate efforts after the parties separated. Thus,
Elam is of no assistance to him here.
Under these circumstances, the trial court did not err in concluding that
Michael’s 50 percent interest in the LLC was community property, as was any
appreciation in value to that interest based on the acquisition of properties after
separation.
Property Division
Next, Michael contends the trial court erred in awarding Beverly a
disproportionate share of the parties’ property.7 Trial courts have broad discretion
in dividing parties’ property in a dissolution, and we will disturb a distribution of
property only if the trial court manifestly abuses its discretion. In re Marriage of
Brewer, 137 Wash. 2d 756, 769, 976 P.2d 102 (1999); see also In re Marriage of
Rockwell, 141 Wash. App. 235, 242-43, 170 P.3d 572 (2007). A trial court’s decision
7
Michael also contends the property division should be reversed because it
was influenced in part by Beverly’s intimation that Michael was living with another
woman. There is absolutely nothing in the record or the trial court’s ruling to
support this argument. Michael’s living arrangements became relevant when he
contested Beverly’s request for spousal maintenance, claiming he could not afford
to pay it. The court correctly needed to assess Michael’s ability to pay maintenance,
and this analysis made his monthly living expenses relevant.
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is manifestly unreasonable if it is outside the range of acceptable choices
considering the facts and applicable legal standard, is unsupported factually by the
record, or is based on an incorrect legal standard. In re Parenting & Support of
L.H., 198 Wash. App. 190, 194, 391 P.3d 490 (2016).
All of the parties’ property, both community and separate, is before the trial
court for distribution. In re Marriage of Shannon, 55 Wash. App. 137, 141, 777 P.2d
8 (1989). And the trial court’s characterization of property as either community or
separate is not controlling. Id. Instead, the trial court must ensure the final division
is fair, just and equitable under all the circumstances. In re Marriage of Groves, 10
Wash. App. 2d 249, 254, 447 P.3d 643 (2019), review denied, 195 Wash. 2d 1005, 458
P.3d 781 (2020).
In dividing property, the trial court must consider: (1) the nature and extent
of the community property, (2) the nature and extent of the separate property, (3) the
duration of the marriage, and (4) the economic circumstances of each spouse at the
time the division of property is to become effective. RCW 26.09.080; Groves, 10
Wash. App. 2d at 254. No factor is afforded greater weight than any other. In re
Marriage of Konzen, 103 Wash. 2d 470, 478, 693 P.2d 97 (1985). Other relevant
factors include “the health and ages of the parties, their prospects for future earnings,
their education and employment histories, their necessities and financial abilities,
their foreseeable future acquisitions and obligations, and whether ownership of the
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property is attributable to the inheritance or efforts of one or both spouses.” In re
Marriage of Gillespie, 89 Wash. App. 390, 399, 948 P.2d 1338 (1997).
A trial court is not required to divide community property equally. Rockwell,
141 Wash. App. at 243. In a long-term marriage, “the trial court’s objective is to place
the parties in roughly equal financial positions for the rest of their lives.” Id. “‘[T]he
trial court must ensure that the final division of property is fair, just and equitable
under all the circumstances.’” Groves, 10 Wash. App. 2d at 254 (internal quotation
marks omitted) (quoting In re Marriage of Olivares, 69 Wash. App. 324, 329, 848
P.2d 1281 (1993)). Furthermore, this is a highly deferential standard, and Michael,
as the spouse challenging the decision, “‘bears the heavy burden of showing a
manifest abuse of discretion.’” Id. at 255 (quoting In re Marriage of Landry, 103
Wash. 2d 807, 809, 699 P.2d 214 (1985)).
Michael argues that under In re Marriage of Doneen, 197 Wash. App. 941, 391
P.3d 594 (2017), and In re Marriage of Kaplan, 4 Wash. App. 2d 466, 421 P.3d 1046
(2018), there is no mandate of lifetime equal financial circumstances for ex-spouses
of long-term marriages. He contends the trial court, in an attempt to provide this
financial security for Beverly, settled on a property division that was unfair to him.
But neither case supports the proposition that it is an abuse of discretion to award
60 percent of a couple’s assets to the more economically disadvantaged spouse in a
long-term marriage. Rather, the courts reaffirmed the proposition that trial courts
must exercise their discretion in considering the statutory factors of RCW 26.09.080
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in reaching a “fair, just and equitable division of property.” Kaplan, 4 Wash. App. 2d
at 475-76; Doneen, 197 Wash. App. at 948-51.
Substantial evidence supports the trial court’s property distribution. Michael
and Beverly had been married more than 33 years. Beverly did not finish college
because she married Michael and remained out of the workforce to raise their five
children. Both parties were 60 at the time of trial and in good health. The parties
had very disparate earnings histories. Beverly, working as a paraprofessional and
secretary for the local school district, earned between $15 per hour and $17 per hour
in the two positions. The trial court found that her gross wages in 2017 were
$26,530. Given Beverly’s lack of a college degree, it was reasonable for the trial
court to assume her prospects for any substantial wage increases before she reaches
retirement age are low.
Michael did not produce any income documentation for 2017, but the 2016
corporate tax return indicated Michael received a salary of $86,320 from his
construction company that year, and he testified his salary in 2017 was about the
same as in 2016. In addition, the LLC’s Schedule K-1 reflected a $150,000
distribution to Michael, and he testified he expected a similar distribution in 2017.
Thus, by awarding Michael the LLC, it was reasonable for the trial court to conclude
that Michael’s annual income would likely exceed $200,000 compared to Beverly’s
$26,530. And the financial documents showed a strong history of profitability both
for the construction company and the LLC, making it likely that Michael would
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continue to receive the same level of earnings into the foreseeable future. Finally,
Michael proposed a 60/40 split with Beverly obtaining the larger share of the marital
estate.
The court awarded the family home to Beverly and the vacation cabin to
Michael. It awarded the IRAs, bank accounts, and life insurance policies to Beverly.
It awarded the marital community’s interest in the two businesses to Michael.
Because Michael received the two assets with the highest values—the construction
company and the LLC—the only way to achieve an equal property division was to
require a transfer payment from Michael to Beverly. Given the significant disparity
in the parties’ ability to generate income in the future, the award of income-
producing property to Michael, and Michael’s request for a 60/40 split in favor of
Beverly, we cannot conclude that a 60 percent award to Beverly was an abuse of
discretion.
Maintenance
Michael next assigns error to the trial court’s award of spousal maintenance.
Michael argues the trial court failed to consider the property awarded to Beverly in
assessing her need for maintenance and failed to take into account Michael’s
obligation to pay Beverly $707,000 when evaluating his ability to pay.
RCW 26.09.090 outlines a nonexclusive list of factors the court should
consider in determining whether to order maintenance and in what amount:
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(a) The financial resources of the party seeking maintenance,
including separate or community property apportioned to him or her,
and his or her ability to meet his or her needs independently . . . ;
(b) The time necessary to acquire sufficient education or training to
enable the party seeking maintenance to find employment appropriate
to his or her skill, interests, style of life, and other attendant
circumstances;
(c) The standard of living established during the marriage . . . ;
(d) The duration of the marriage . . . ;
(e) The age, physical and emotional condition, and financial
obligations of the spouse . . . seeking maintenance; and
(f) The ability of the spouse . . . from whom maintenance is sought to
meet his or her needs and financial obligations while meeting those of
the spouse . . . seeking maintenance.
In a long term marriage, maintenance can help equalize the post-dissolution
standard of living of the parties, particularly where the superior earning capacity of
one spouse is one of the few assets of the community. In re Marriage of Sheffer, 60
Wash. App. 51, 57, 802 P.2d 817 (1990).
At trial, Beverly sought maintenance of 50 percent of their combined
incomes for the remainder of her life. Michael paid Beverly $3,000 a month in
support after they separated in February 2013 until the date of trial. He asked the
trial court to reduce that amount to $2,500 and to require him to pay maintenance
for no more than five years. The trial court found that Beverly was in need of
maintenance and that Michael had the ability to pay it. It then determined the
couple’s net combined income was $16,534. It appears the court divided the
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couple’s total net income in two and awarded Beverly a sufficient amount of
maintenance to ensure she received 50 percent of the couple’s total net earnings.8
This court reviews an award of spousal maintenance for an abuse of
discretion. In re Marriage of Zahm, 138 Wash. 2d 213, 226, 978 P.2d 498 (1999). An
abuse of discretion exists only if the trial court bases its award of maintenance on
untenable grounds or for untenable reasons. In re Marriage of Wright, 78 Wash. App.
230, 237, 896 P.2d 735 (1995). A paramount concern is the economic position in
which a dissolution decree leaves the parties. In re Marriage of Washburn, 101
Wash. 2d 168, 181, 677 P.2d 152 (1984).
The record supports the trial court’s finding that Beverly has a need for
maintenance. She testified to monthly expenses of approximately $3,000 and only
$1,701 in earnings to cover those expenses. And the record supports Michael’s
ability to pay $6,500 in maintenance to Beverly if the court considered only
Michael’s personal living expenses. He has monthly expenses of $5,000. After
paying maintenance and his monthly expenses, Michael would have approximately
$3,300 in disposable income.
But the record does not support a finding that he has the ability to pay both
the $707,000 judgment entered against him and this level of maintenance at the
same time. RCW 26.09.090(1)(f) requires the court to consider not only the
8
Total net income of $16,534, divided by two is $8,267. Subtracting
Beverly’s net income of $1,701 results in $6,566.
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spouse’s ability to meet his own needs but also his ability to meet his other “financial
obligations” while paying spousal maintenance. As Michael indicated, he was
awarded interests in two income-generating companies but none of the parties’
liquid assets. In order to pay the $707,000 judgment, Michael would have to either
use a substantial portion of his earnings, sell his interests in his businesses, or
convince his son to sell real estate held by the LLC. But Michael’s interest in the
LLC was valued at under $350,000, and even if the LLC sold all of the properties it
held, it would not cover the judgment Michael owes to Beverly. And Michael’s
main source of income would disappear. He would no longer have an adequate
monthly income to pay the $6,500 in maintenance.
Even if the LLC sold one or more properties to assist Michael in paying off
some, but not all, of Beverly’s judgment, it would still negatively affect his total
income, making the court’s 50/50 split of total net income unfair. It is unclear from
this record whether the trial court fairly assessed this issue. Its failure to give fair
consideration to RCW 26.09.090(1)(f), or to make findings to support a
determination that Michael can both service his debt to Beverly without a significant
loss of income and afford to pay $6,500 a month in maintenance is an abuse of
discretion. See In re Marriage of Mathews, 70 Wash. App. 116, 123-25, 853 P.2d 462
(1993) (reversing maintenance award and remanding for trial court to reconsider
factors to ensure obligor had ability to meet own expenses in addition to financial
obligations imposed by court).
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For this reason, we reverse the maintenance award and remand to the trial
court with directions to consider maintenance in light of the monetary judgment
Michael owes to Beverly and his ability to simultaneously pay off that judgment
and pay reasonable maintenance.
Post-Judgment Interest
Beverly argues the trial court erred by imposing only a four percent interest
rate on the equalizing payment and attorney fee judgment. We reject this argument.
We review a trial court’s decision setting the interest rate on a judgment for
an abuse of discretion. In re Marriage of Knight, 75 Wash. App. 721, 731, 880 P.2d
71 (1994). Trial courts must enter judgments in compliance with RCW 4.56.110,
which requires interest on judgments to accrue at the maximum rate permitted under
RCW 19.52.020—12 percent. In re Marriage of Harrington, 85 Wash. App. 613,
630-31, 935 P.2d 1357 (1997). “Although the trial court has discretion to reduce
the rate of interest on deferred payments under a property distribution decree, the
court abuses its discretion if it fixes an interest rate below the statutory rate without
setting forth adequate reasons for the reduction.” Id. at 631 (citations omitted).
“‘Failure to do so constitutes error meriting remand for correction of the judgment’s
interest rate to the statutory rate.’” Id. (quoting Knight, 75 Wn. App. at 731).
Michael asked the court to set the interest on any monetary judgment at 3 or
3.5 percent given the size of the judgment and the monthly maintenance he had to
pay. Beverly requested the 12 percent statutory rate because Michael’s businesses
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In re Marriage of Sevigny
were so profitable. The trial court stated, “I’m going to set the interest rate at 4
percent. That’s reasonable under the circumstances given the uneven distribution
as well as the . . . maintenance.”
Beverly argues the trial court’s reference to the disproportionate property
division and maintenance is an insufficient justification for a reduced interest rate.
We disagree. The trial court found persuasive Michael’s argument that setting post-
judgment interest at 12 percent would impose too great of a financial burden on him
given the amount of judgment and maintenance. This is an adequate reason to
depart from the statutory post-judgment interest rate.
Beverly also argues the low interest rate creates a disincentive for Michael to
pay the judgment. But Beverly relies on evidence outside the trial court record to
make this argument. There is nothing in the record before the trial court to
substantiate this assertion.
Moreover, Beverly has methods under the law for collecting the judgment,
even if Michael refuses to pay. She has the right to initiate collection proceedings
through which she can garnish wages or proceeds he may hold in bank accounts, or
attach and sell other assets. See chapter 6.25 RCW (attachment); chapter 6.27 RCW
(garnishment); chapter 6.32 RCW (supplemental proceedings against judgment
debtor). She is not without a legal remedy here. Because the trial court provided
an adequate reason for reducing the interest rate, we conclude the trial court did not
abuse its discretion by reducing the interest rate to four percent.
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No. 36393-7-III
In re Marriage of Sevigny
AFFIRMED in part; REVERSED in part, and REMANDED for
reconsideration of maintenance in a manner consistent with this opinion.9
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to
RCW 2.06.040.
Andrus, J.
WE CONCUR:
_________________________________
Lawrence-Berrey, J.
_________________________________
Pennell, C.J.
9
Beverly has requested an award of attorney fees and costs as allowed by
RAP 18.1 and RCW 26.09.140. RCW 26.09.140 provides, “Upon any appeal, the
appellate court may, in its discretion, order a party to pay for the cost to the other
party of maintaining the appeal and attorney's fees in addition to statutory
costs.” “A party to a dissolution action is not entitled to attorney fees as a matter of
right.” In re Marriage of Harrington, 85 Wash. App. 613, 635, 935 P.2d 1357 (1997),
as amended on reconsideration (May 5, 1997). In addition, when deciding whether
to award attorney fees, we must balance Beverly’s needs against Michael’s ability
to pay. Id. Because we remand for reconsideration of the maintenance award based
on Michael’s ability to meet his financial obligations and otherwise affirm the trial
court, we exercise our discretion under RCW 26.09.140 and deny Beverly’s request
for attorney fees on appeal.
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