In re the Marriage of James E. Parsons and Bobette C. Parsons ( 2014 )

FILED
JULY 3, 2014
In the Office of the Clerk of Court
W A State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
In re the Marriage of: )
) No. 32159-2-III
JAMES E. PARSONS, )
)
Respondent, )
)
and ) UNPUBLISHED OPINION
)
BOBETTE C. PARSONS, )
)
Appellant. )
FEARING, 1. In this marriage dissolution action, the trial court distributed the
parties' community property equally; awarded the wife, Bobette Parsons, $3,500.00
maintenance per month until Bobette dies, remarries, or reaches the age of 66 years old;
and ordered the husband, James Parsons, to pay Bobette $1,154.34 in monthly child
support. Bobette appeals, asking for a raise of maintenance to $8,500.00 per month or a
remand to the trial court for an increase in the maintenance amount. Bobette also argues
the trial court erred when it failed to factor bonus income of James and contributions to
James' tax sheltered investments by his employer when calculating James' income for
purposes of calculating child support. We affirm the maintenance award. We vacate the
child support award, and remand for recalculation, on the ground that the trial court did
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not include in its estimation of James' income every source of that income.
FACTS
Bobette and James Parsons met in college, and soon married on January l3, 1979.
The couple separated on October 1,2009. Bobette and James have three children
together, two grown and a teenage daughter who lives with Bobette. The daughter was
16 and a sophomore in high school when the court granted the Parsons' divorce on June
5,2012.
Bobette Parsons earned a bachelor's degree in natural resource planning and a
master's degree in soil science. James Parsons earned a bachelor's degree in fisheries
and a master's degree in genetic and cell biology.
Bobette Parsons worked as a hydrologist with the Forest Service for seven years.
She then worked as a soil conservationist with the United States Department of
Agriculture (USDA). Upon the birth of the first child, Bobette took time from work and
then returned. Upon the birth of the second child, Bobette and James Parsons agreed
Bobette would remain at home to care for the children. Bobette did not work from 1992
through 2007. She now works full-time for the USDA in Hilo, Hawaii, earning $54,000
a year.
After graduate school, James Parsons worked for a trout farm in southern Idaho
where he assisted in spawning fish. During his eight years at the farm, he created a trout
genetic research program. James then oversaw research for a different trout farm. In
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1998, with encouragement from Bobette, James accepted employment from a third
company, Troutlodge, Inc., first earning $75,000 a year.
James Parsons' annual income has increased since 1998. He received $85,000 in
2000; $98,000 in 2003; $161,000 in 2006; and $182,000 in 2009. James now serves as
Troutlodge's Senior Vice President for Technical Services and President of the Marine
Division.
In 2005, James Parsons purchased an 8.97 percent interest in Troutlodge Real
Estate, LLC, an affiliated entity, for $210,000. In order to purchase this interest, James
borrowed $105,000 from the marital couple's shared retirement accounts, and borrowed
the remaining $105,000 from Troutlodge officers. Bobette believes that the Troutlodge
entities have grown, and will continue to grow, rapidly.
In 2011, James Parson earned a salary of$134,000 and earned bonuses of around
$88,000. That year Troutlodge also contributed $22,000 to James' Putnam 401 (k)
retirement plan. Finally, Troutlodge contributed a distribution of $5,900, dividend of
$11,218, and interest payment of$7,290 to James' Individual Retirement Account (IRA).
At trial, both Bobette and James Parsons admitted to living beyond their means.
Bobette declared monthly income of$3,921 after taxes and monthly expenses of$8,402.
James declared monthly income of$14,183 after taxes and monthly expenses of$16,675.
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PROCEDURE
James Parsons petitioned for divorce on January 14, 2010. After a trial, the court
entered a decree of dissolution on June 5, 2012.
In the divorce decree, the trial court awarded James the couple's entire interest in
the two Troutlodge companies, valued at $521,593 in the aggregate. In order to distribute
the community property equally, the trial court ordered James to assume $172,858 in
community liabilities and pay Bobette a transfer payment of$185,797 within five years,
interest accruing at four percent. The monthly cost of servicing the community liabilities
is unknown. As for the transfer payment, the court ordered:
[James] may make as transfer payment to [Bobette] funds from his
Troutlodge 401KJIRA accounts. Payment by transfer of IRA or by lien on
residence will be at her option, not his. The Court reserves jurisdiction to
enter any orders to facilitate transfer if necessary.
Clerk's Papers (CP) at 481. Ifpaid over the course of five years at four percent interest,
the amortized monthly cost ofthe transfer payment to Bobette is about $3,400.
The trial court awarded maintenance for Bobette Parsons at $3,500 monthly as
follows: the court ordered James Parsons to pay monthly, from January through June of
each year, $2,500 per month, and, from July through December, $4,500 per month. The
difference is the result of Troutlodge paying James bonuses July through December of
each year. The maintenance award continues until Bobette dies, remarries, or reaches the
age of66 years old, which will occur in 2022. The court granted maintenance because of
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James' current income, his larger earning capacity, the length of the couple's marriage,
and Bobette' s being a homemaker and out of the work force for years.
The trial court also ordered James Parsons to pay Bobette $1,154.34 in child
support. On the Child Support Schedule Worksheet, the court listed James' "Wages and
Salaries" as $18,500 per month, but omitted an amount for "Interest and Dividend
Income," "Business Income," and "Other Income." CP at 466. On the worksheet, the
trial court declared, "Father's income is calculated using his 2011 income of $222,000
and actual taxes paid in 2011." CP at 469.
The trial court ordered James Parsons to pay child support until their teenage
daughter reaches the age of 18 or as long as the daughter remains enrolled in high school,
whichever occurs last. The court reserved the right of Bobette Parsons to petition for
postsecondary support.
LAW AND ANALYSIS
On appeal, Bobette Parsons contends (1) the trial court's maintenance award is
insufficient to place her and James in roughly equal financial positions for the rest of
their lives; and (2) the trial court failed to consider James' deferred compensation,
dividends, interest, and bonuses when it estimated his income for purposes of setting
child support.
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Maintenance
James Parsons initially asserts that Bobette Parsons' appellate briefs two-
paragraph argument for increased maintenance does not satisfy RAP 10.3(a)(6). The rule
requires parties to provide "argument in support of the issues presented for review,
together with citations to legal authority and references to relevant parts of the record."
James is correct that unsubstantiated assignments of error are deemed abandoned.
Kittitas County v. Kittitas County Conservation Coalition, 176 Wash. App. 38, 54, 308
P.3d 745 (2013). But, while Bobette's argument is terse, she cites authority and
enunciates her contention such that we may review her assignment of error. Bobette
contends the trial court, based upon the holding in In re Marriage ofRockwell, 141 Wn.
App. 235, 170 P.3d 572 (2007), should have awarded greater maintenance in order to
place James and her in roughly equal financial positions for the rest of their lives. We
agree to reach the merits ofBobette's assignment of error.
An award of maintenance is within the broad discretion of the trial court. In re
Marriage ofTerry, 79 Wash. App. 866, 869, 905 P.2d 935 (1995). RCW 26.09.090 guides
that discretion and reads:
(1) In a proceeding for dissolution of marriage ... , the court may grant a
maintenance order for either spouse or either domestic partner. The
maintenance order shall be in such amounts and for such periods of time as
the court deems just, without regard to misconduct, after considering all
relevant factors including but not limited to:
(a) The financial resources of the party seeking maintenance,
including separate or community property apportioned to him or her, and
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his or her ability to meet his or her needs independently, including the
extent to which a provision for support of a child living with the party
includes a sum for that party;
(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 or
domestic partnership;
(d) The duration of the marriage or domestic partnership;
(e) The age, physical and emotional condition, and financial
obligations of the spouse or domestic partner seeking maintenance; and
(f) The ability of the spouse or domestic partner from whom
maintenance is sought to meet his or her needs and financial obligations
while meeting those of the spouse or domestic partner seeking
maintenance.
Under this provision, the only limitation placed upon the trial court's ability to award
maintenance is that the amount and duration, considering all relevant factors, be just. In
re Marriage of Washburn, 101 Wn.2d 168,178,677 P.2d 152 (1984). This reviewing
court reviews an award of maintenance for an abuse of discretion. In re Marriage of
Zahm, l38 Wn.2d 2l3, 226, 978 P.2d498 (1999).
The Parsons were married for 33 years. Therefore, Bobette Parsons highlights the
following quotation from Rockwell, "In a long term marriage of 25 years or more, the
trial court's objective is to place the parties in roughly equal financial positions for the
rest of their lives." 141 Wash. App. at 243. In Rockwell, this court affirmed the trial
court's distribution of the community property, 60 percent to the wife and 40 to the
husband, "based on the difference in age, earning capacity, physical condition, and that
[the husband] has the ability to earn income and save for retirement in the future." 141
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Wn. App. at 255. In contrast, the wife in Rockwell retired early due to health concerns.
141 Wash. App. at 240. The court reasoned "[w]here one spouse is older, semiretired, and
dealing with ill health, and the other spouse is employable, the court does not abuse its
discretion in ordering an unequal division of community property." Rockwell, 141 Wn.
App. at 243.
Bobette Parsons' reliance on Rockwell is misplaced for two reasons. First,
Rockwell concerns the just and equitable division and distribution of property under
RCW 26.09.080, not maintenance under RCW 26.09.090. Second, the holding in
Rockwell was permissive in nature, not mandatory. Rockwell does not support Bobette's
contention that a trial court must use maintenance to roughly equalize her and James'
income in perpetuity.
Instead, "where, as here, the disparity in earning power and potential is great, this
court must closely examine the maintenance award to see whether it is equitable in light
of the postdissolution economic situations of the parties." In re Marriage ofSheffer, 60
Wash. App. 51, 56, 802 P.2d 817 (1990). Bobette Parsons claims that James will earn 2.3
times more than her over the next 10 years, even factoring in maintenance. This
prediction may prove accurate. Even so, the trial court's award of maintenance is
equitable in light of Bobette and James postdissolution economic situations.
After dissolution, factoring in the maintenance award of$3,500, Bobette's
monthly income is about $6,600 and James' $11,100. These numbers do not, however,
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account for the court's allocation of most community debts to James, the transfer
payment to Bobette, and child support. The amortized monthly cost of the transfer
payment is about $3,400. And the court ordered child support ofjust over $1,100.
Taking the transfer payment and child support into consideration, Bobette Parsons
will receive a higher monthly income than James for the five years following dissolution.
With the transfer payment and child support, Bobette's monthly income will approximate
$11,100, with James retaining about $6,600 of his monthly income. When child support
ceases, ostensibly after two years, Bobette's monthly income will be about $10,000 and
James' $7,700. After five years, James will likely have greater monthly income than
Bobette.
The trial court understood Bobette and James Parsons' predissolution economic
situation. Presented with largely illiquid wealth, the court admirably utilized child
support, maintenance, and a transfer payment to equally distribute the community
property and income over time so that each party might meet his and her immediate
needs and obligations. The maintenance award even reflects the seasonal nature of
James' bonuses-awarding $2,500 a month January through June, and $4,500 July
through December. In light of Bobette and James' postdissolution economic situations,
the court's award of maintenance was equitable.
Last, Bobette Parsons points to the likelihood that James' income will increase as
Troutlodge continues to grow. Neither the trial court nor this court can predict the future.
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If and when there is a substantial change in circumstances, including increases or
decreases in either party's income, Bobette may move to modifY maintenance under
RCW 26.09.170. See, e.g., In re Marriage ofMyers, 54 Wash. App. 233, 773 P.2d 118
(1989).
We conclude the trial court did not abuse it's discretion when awarding the
amount of spousal maintenance.
Child Support
James Parsons again contends that Bobette failed to satisfY RAP 10.3(a)(6).
Again, despite the brevity of her briefing, we comprehend Bobette's contentions.
Bobette argues the trial court failed to include deferred compensation, dividends, interest,
and bonuses as part of James' monthly gross income, as RCW 26.19.071 requires, when
it set child support at $1,554.34. We agree.
Trial court decisions in dissolution proceedings will seldom be changed on appeal.
In re Marriage ofStenshoel, 72 Wash. App. 800, 803, 866 P.2d 635 (1993). This court
reviews a trial court's order of child support for abuse of discretion, or misapplication of
the law. In re Marriage ofGriffin, 114 Wn.2d 772,776,791 P.2d 519 (1990); Markoffv.
Markoff, 27 Wn.2d 826,828, 180 P.2d 555 (1947).
"All income and resources of each parent's household shall be disclosed and
considered by the court when the court determines the child support obligation of each
parent." RCW 26.19.071(1). "[M]onthly gross income shall include income from any
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source," including: salaries, wages, deferred compensation, dividends, interest, bonuses,
income from a business. RCW 26.19.071(3) (emphasis added). To calculate net monthly
income, RCW 26.19.071(5) instructs courts to deduct:
(a) Federal and state income taxes;
(b) Federal insurance contributions act deductions;
(c) Mandatory pension plan payments;
(d) Mandatory union or professional dues;
(e) State industrial insurance premiums;
(f) Court-ordered maintenance to the extent actually paid;
(g) Up to five thousand dollars per year in voluntary retirement
contributions actually made if the contributions show a pattern of
contributions during the one-year period preceding the action establishing
the child support order unless there is a determination that the contributions
were made for the purpose of reducing child support; and
(h) Normal business expenses and self-employment taxes for self­
employed persons. Justification shall be required for any business expense
deduction about which there is disagreement.
"Tax returns for the preceding two years and current paystubs shall be provided to verify
income and deductions. Other sufficient verification shall be required for income and
deductions which do not appear on tax returns or paystubs." RCW 26.19.071(2).
"Child support worksheets are mandatory, but RCW 26.19.071(1) does not require
that the court make a precise determination of income. Instead, the court is required to
consider all income and resources of each parent's household." In re Marriage of
Marzetta, 129 Wn. App. 607,623, 120 P.3d 75 (2005), abrogated on another ground by
In re Marriage ofMcCausland, 159 Wash. 2d 607, 619, 152 P.3d 1013 (2007). We must
presume that the court considered all evidence before it in fashioning the order. In re
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Marriage o/Kelly, 85 Wn. App. 785,793,934 P.2d 1218 (1997) (affirming a
postsecondary support order).
Here, the trial court marked James Parsons' wages and salaries as $18,500 per
month, but left blank the child support worksheet's spaces for "Interest and Dividend
Income," "Business Income," and "Other Income." CP at 466. The court noted,
"[James'] income is calculated using his 2011 income of $222,000 and actual taxes paid
in 2011." CP at 469. In 2011, James earned a salary of $134,000 and bonuses of around
$88,000, totaling $222,000. Beyond this $222,000, Troutlodge contributed to James'
Putnam 401(k) retirement plan almost $22,000, and into his Individual Retirement
Account (IRA) Troutlodge contributed a distribution of $5,900, dividend of $11 ,218, and
interest payment of$7,290. These additional contributions total about $46,000.
On the record afforded this court, it appears the trial court calculated James
Parsons' income by adding his salary ($134,000) and bonuses ($88,000) to reach its total
estimation of $222,000. It follows that the trial court excluded Troutlodge's
contributions to James' retirement accounts. The trial court may have excluded part of
the retirement contributions under RCW 26.19.071(5)(g), requiring the court to deduct
from gross monthly income up to $5,000 in voluntary retirement contributions. In
addition, or alternatively, the court may have set aside James' retirement accounts to
satisfy the transfer payment, given its order that:
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[James] may make as transfer payment to [Bobette] funds from his
TroutIodge 40 1KJIRA accounts. Payment by transfer ofIRA or by lien on
residence will be at her option, not his. The Court reserves jurisdiction to
enter any orders to facilitate transfer if necessary.
CP at 481. Perhaps the trial court disregarded portions of James and Bobette's monthly
income. As noted in Stenshoel, "the portion of the [transfer] payments representing
interest paid on the obligation may constitute income" for purposes of RCW 26.19.071.
Stenshoel, 72 Wash. App. at 805. The interest paid here will average around $325 a month.
The trial court likely omitted this amount when it estimated Bobette's income.
Regardless, the trial court excluded entire sources of income. Although RCW
26.19.071 subsection (1) requires only that "[a]ll income and resources ... shall be
disclosed and considered," subsection (3) lists sources of income that "monthly gross
income shall include." RCW 26.19.071 (emphasis added). It is not enough to consider
all sources of income, courts must include the sources listed in RCW 26.19.071(3). Here,
the trial court excluded from its estimation of James' income: about $22,000 in
contributions to his 401(k) retirement plan almost; and a distribution of$5,900, dividend
of$11,218, and interest payment of $7,290 into his IRA. To some extent, the trial court
needed to include these sources of income as deferred compensation, contract-related
benefits, dividends, or interest. See RCW 26.l9.071(3)(a)-(u).
We note that neither RCW 26.19.071 nor case law require mathematical precision.
On remand, the trial court need not employ the above figures. But its calculation of
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James' monthly income and the attendant child support worksheet must include each
source of income listed in subsection (3) ofRCW 26.l9.071, for which the evidence
clearly shows that the source of income exists. To exclude an entire category of income
is a misapplication ofRCW 26.19.071(3).
We further note that a trial court's categorical exclusion of a source, or sources, of
income will rarely be harmless given RCW 26.19.080(1). That statute provides, "The
basic child support obligation derived from the economic table shall be allocated between
the parents based on each parent's share of the combined monthly net income." Thus,
even when the parents' combined monthly net income exceeds the economic table in
RCW 26.19.020, as is the case here, the relative increase in one party's income causes a
formulaic increase in the portion of the basic child support obligation for which that party
is responsible. For any error in calculating a party's gross monthly income, RCW
26.19.080( 1) defines the resulting prejudice. A court might find such prejudice
negligible, but never nonexistent. Had the trial court included the additional $46,000 in
James' gross annual income, he would be responsible for a larger portion of the basic
child support obligation. We estimate James would pay about $120 more per month in
child support. The error is not harmless.
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CONCLUSION
We affirm the trial court's award of spousal maintenance. We vacate the trial
court's award of child support and remand for a recalculation consistent with this
opinion.
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.
WE CONCUR:
Lawrence-Berrey, J.
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