Duane Smith v. Marie Smith ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Marriage of: ) No. 77802-1-1
)
MARIE SMITH, )
)
Respondent, )
) DIVISION ONE
and )
)
DUANE SMITH, ) UNPUBLISHED OPINION
)
Appellant. ) FILED: September 9, 2019
)
MANN,A.C.J. — Duane Smith appeals a trial court judgment for back spousal
support, interest, and attorney fees. Duane' argues that the trial court erred when it did
not find the existence of an oral agreement to modify his spousal support obligation, and
denied his equitable defenses of estoppel and laches. We affirm.
I.
Marie and Duane Smith married in December 14, 1978. In 2008, Marie filed a
petition for dissolution. At the time, Duane was living in Singapore, working for Boeing.
Duane accepted service of the petition and consented to personal jurisdiction. Duane
'We use the parties' first names in order to avoid confusion. No disrespect is intended.
No. 77802-1-1/2
did not object to any terms of the petition for dissolution, hire a lawyer, or appear
formally at the proceedings.
The trial court dissolved the Smith's marriage on March 10, 2009. The court
awarded Marie the family home, encumbered by a mortgage and home equity line of
credit, a timeshare, a 2001 Mercedes,60 percent of the Boeing pension, all bank and
investment accounts, Duane's 401(k), and all personal property in Seattle. The trial
court awarded Duane a debt-free vacation property on Henry Island, a 1968 Corvette
Stringray, a timeshare, a boat, 40 percent of the Boeing pension, and personal property
in Singapore. The trial court ordered the entire balance of the mortgage, home equity
line of credit, and obligations associated with the timeshare be paid by Marie. The trial
court ordered the entire balance of 15 credit cards be paid by Duane, except for any
amount incurred by Marie after separation, the Henry Island property taxes, and
obligations associated with the timeshare. The court ordered Duane to pay 40 percent
of his gross income as maintenance for seven years, which was $10,000 per month. At
the time, Duane's taxable income was about $300,000 a year.
Duane asserts that his gross income was never close to $300,000. He explains
while his 2009 tax return shows that he earned $296,425—after Boeing adjustments
were subtracted—his gross salary was actually $155,149. Duane contends that after
taxes his net monthly income was $10,084.75 per month in 2009. Marie responds that
Duane's net income does not include "deductions for employer-financed luxury housing,
transportation (car allowance), utilities, insurance (life, health, disability), health care
(FSA), his voluntary 401(k) contribution, his increasing pension benefits, payment of
taxes, and even preparation of his tax return."
2
No. 77802-1-1/3
Central to this appeal is an alleged oral agreement between Duane and Marie
purporting to modify the spousal support obligations. Duane alleges he was unable to
pay the $10,000 spousal support to Marie, and they agreed that Duane would only be
obligated to pay $5,000 in spousal support each month. Duane claims he deposited his
paycheck into their joint account and Marie would withdraw $2,500 each pay period.2
Even though Duane was paying Marie less money, he contends that under their
agreement, his obligation to make payments would still cease after seven years.
Marie responds that there was no oral agreement to modify the spousal support
obligation. Marie took the $2,500 each pay period from their joint bank account
because that was the amount that Duane instructed her to withdraw. Marie took the
money under the belief that Duane would continue paying her past the seven-year
requirement until he paid the total award under the decree. Marie contends she was
afraid Duane would "cut [her] off unless [she] agreed to his terms."
Duane claims that Marie admitted that there was an oral agreement, citing an
e-mail that he sent to Marie where he states "we agreed to split my paycheck which was
never 10K a month." But in the same e-mail chain Marie responded:
1 remember agreeing to a lesser payment since your paycheck was not
accommodating what the court had ordered. This however did not void
the total amount due. Paying the lower amount would increase the
amount of time it would take to pay off total due. Let's come to an
agreement between us. Before it's out of our hands.
Marie filed a motion to enforce the spousal support obligation, which was
granted, but then vacated when Duane filed a CR 60 motion to vacate on procedural
grounds. Marie brought her motion to enforce again. Duane argued that equitable
2 Boeing paid Duane every two weeks.
3
No. 77802-1-1/4
defenses of estoppel and !aches barred Marie's enforcement of the dissolution decree.
The superior court commissioner entered a judgment for $750,971.43, with $429,733.08
in back spousal support, $301,238.35 in interest, and $20,000 in attorney fees. The
commissioner also entered two Qualified Domestic Relations Orders (QDRO's), for the
remainder of Duane's 401(k) and remaining and future pension benefits. The trial court
denied Duane's motion to revise the commissioner's ruling. Duane appeals.
Duane first argues that the trial court erred in entering its judgment for back
support and interest because the parties entered into and performed an oral agreement
modifying the husband's spousal support maintenance obligation. We disagree.
A.
The existence of an oral agreement is a question of fact. Duckworth v. Langland,
95 Wash. App. 1, 7, 988 P.2d 967(1998). Findings of fact are reviewed for substantial
evidence. In re Marriage of Hunter, 52 Wash. App. 265, 268, 758 P.2d 1019 (1988). An
exception to this rule exists where the court's findings are not based on oral testimony.
Hunter, 52 Wash. App. at 268. When the trial court's findings of fact are based entirely on
affidavits, the court will conduct an independent review of the record. Hunter, 52 Wn.
App. at 268. Here, the trial court reviewed affidavits and supporting exhibits. On
appeal, we will conduct an independent review of the record.
To show the existence of an oral agreement, there must be mutual intention or
"meeting of the minds" on the essential terms of the agreement. McEachern v.
Sherwood & Roberts, Inc., 36 Wash. App. 576, 579,675 P.2d 1266 (1984). "The burden
of proving a contract, whether express or implied, is on the party asserting it, and he
4
No. 77802-1-1/5
must prove each essential fact, including the existence of a mutual intention." Saluteen-
Maschersky v. Countrywide Funding Corp., 105 Wash. App. 846, 851, 22 P.3d 804
(2001). The courts have enforced oral separate property agreements when supported
by clear and convincing evidence showing both the existence of the agreement and
mutual observance of the agreement. DewBerry v. George, 115 Wash. App. 351, 359, 62
P.3d 525 (2003). Since this oral agreement purports to modify property rights defined in
the dissolution decree, Duane must demonstrate the existence of the agreement and
mutual observance of the agreement by clear and convincing evidence. See also
Poston v. Western Dairy Products Co., 179 Wash. 73, 84, 36 P.2d 65(1934)(holding
oral modification of a written contract must be shown by clear and convincing evidence).
B.
Duane relies on DewBerry in support of his argument that he presented sufficient
evidence establishing an oral agreement to modify his spousal obligation. In DewBerrv,
this court affirmed the trial court's finding that there was an oral separate property
agreement prior to the parties' marriage and was supported by substantial "highly
probable" evidence. DewBerry, 115 Wash. App. at 362. Several witnesses testified that
the parties created an oral prenuptial agreement and that the couple acted in
accordance with the agreement. DewBerrv, 115 Wash. App. at 362. The parties took
steps to avoid commingling their assets, which was strong evidence of a separate
property agreement. DewBerry, 115 Wash. App. at 362. Both parties "meticulously
accounted for and handled their individual incomes as separate property and created
minimal joint accounts to handle certain family-related expenses and requirements."
5
No. 77802-1-1/6
DewBerry, 115 Wash. App. at 362. This evidence, the court concluded, made it highly
probable that there was an oral agreement. DewBerry, 115 Wash. App. at 362.
This case is not like DewBerry. Here, Duane relies on self-serving e-mails where
he mentions discussions about the agreement. These e-mails, however, post-date from
when Duane alleges the agreement was formed, and therefore do not evidence a
mutual intention. Further, in January 2016, Marie e-mailed Duane stating:
I'm hoping that we will be able to work this out between the two of us. As
dealing with the lawyer and court is costly and a headache. The court
order was for you to pay me $10,000 per month for 84 months equaling
840,000 dollars. Over the last 96 months you have paid approximately
$480,000. There is an additional $360,000 owing. I am willing to work
with you outside of court.
Duane responded, "I'm not sure why you think I even make 10K a month—you have
seen the deposit to account for the last 8 years and if you add up the deposit net pay I
never made 10K a month . . . You also told me that you and the court agree to 7K and I
told you I would split my paycheck with you." Marie responded:
I remember agreeing to a lesser payment since your paycheck was not
accommodating what the court had ordered. This however did not void
the total amount due. Paying the lower amount would increase the
amount of time it would take to pay off total due. Let's come to an
agreement between us. Before it's out of our hands.
The evidence does not support a mutual intention to modify the spousal support
obligation by clear and convincing evidence. DewBerry, 115 Wash. App. at 359. The trial
court did not err when it found Duane failed to prove the existence of an oral agreement
to modify the spousal support obligation.
In the alternative, Duane contends that even if the parties had not entered into an
oral agreement, the trial court erred in entering the judgment when Duane's detrimental
6
No. 77802-1-1/7
reliance on Marie's conduct estopped Marie from enforcing the maintenance obligation.
We disagree.
As a general rule, "[d]elinquent support payments become vested judgments as
they fall due." Hunter, 52 Wash. App. at 268. Accumulated judgments are generally not
subject to retrospective modification. Hunter, 52 Wash. App. at 268. Equitable principles,
however, may be applied to mitigate the harshness of some claims for past due marital
support when their application does not work an injustice on the supporting spouse. In
re Marriage of Sanborn, 55 Wash. App. 124, 127, 77 P.2d 4 (1989). We review a trial
court's denial of equitable defenses for abuse of discretion. In re Marriage of Watkins,
42 Wash. App. 371, 375, 710 P.2d 819 (1985).
A.
Duane first asserts that Marie should have been equitably estopped from
enforcing the maintenance obligation. The party asserting equitable estoppel must
establish: "(1) an admission, statement, or act inconsistent with the claim afterward
asserted;(2) action by the other party on the faith of such admission, statement, or act;
and (3) injury resulting from allowing the first party to contradict or repudiate [such
admission, statement, or act.]" Hunter, 52 Wash. App. at 271. "The doctrine of equitable
estoppel is applicable when a person, by her acts or representations, causes another to
change his position to his detriment." Hunter, 52 Wash. App. at 271. Providing relief
through equitable estoppel is not favored, "and the party who asserts it must prove
every element with clear, cogent, and convincing evidence." Sanborn, 55 Wash. App. at
129.
7
No. 77802-1-1/8
Duane contends that it is indisputable that Marie's actions of "withdrawing only
half[Duane's] paycheck from their joint account" was an act inconsistent with her claim
that they never modified Duane's spousal support obligation. Duane argues he relied
on their oral agreement, he was injured because he now owes back maintenance and
interest, and he would have filed a motion to vacate the default decree under CR 60, but
for Marie's assurances.
Marie responds that Duane "cherry-picked snippets of financial information
covering the maintenance period" and therefore fails to establish that a CR 60 motion to
vacate the judgment would have been successful. Additionally, Marie argues that
Duane cannot show that she will not suffer a substantial hardship because Marie would
have paid off her mortgage and accumulated retirement funds earning interest, that she
could live off of if Duane had been paying $10,000. Marie has the better argument.
A party moving to vacate under CR 60(b)(1) must show that "(1) there is
substantial evidence supporting a prima facie defense;(2) the failure to timely appear
and answer was due to mistake, inadvertence, surprise, or excusable neglect;(3) the
defendant acted with due diligence after notice of the default judgment; and (4) the
plaintiff will not suffer a substantial hardship if the default judgment is vacated." Ha v.
Signal Elec., Inc., 182 Wash. App. 436, 448-49, 332 P.3d 991 (2014).
Even if Duane can show that his failure to appear was because Marie agreed to
modify the agreement, the record lacks evidence supporting his defense that the
spousal maintenance obligation should have been lower. Duane provided limited
financial information for only 2012 and 2015. Duane argues that his net income is much
lower than his gross income, but concedes that Boeing pays for his housing,
8
No. 77802-1-1/9
transportation, and taxes in Singapore. While his net income may be lower, that is after
many living expenses have been paid. Duane has not provided his bank account
information, paystubs, or evidence of his expenses. Therefore, Duane cannot show
that, if he moved to vacate the default judgment under CR 60(b)(1), a lower spousal
obligation would have resulted than the one ordered in the default judgment.
Duane also contends that even if he did not succeed in vacating the default
degree, he would have sought modification of the spousal support under RCW
26.09.170. Duane claims that he "could have shown that the fact that his net income
could not satisfy the ordered $10,000 spousal maintenance obligation was a 'substantial
change in circumstances' warranting modification."
A decree for spousal support may be modified "only upon a showing of a
substantial change of circumstances." RCW 26.09.170(1)(b). Duane, however, cites
only his own statement in an e-mail to Marie as support for his argument that he could
not satisfy the $10,000 spousal maintenance. In an e-mail to Marie from January 2016,
Duane states:
I'm not sure why you think I even make 10K month—you have seen the
deposit to account for the last 8 years and if you add up the deposit net
pay I never made 10K a month. How do you expect to receive 10K a
month. You also told me that you and the court agree [sic] to 7K and I told
you I would split my paycheck to you.
Duane did not provide paystubs or records of his bank accounts and therefore cannot
show that there was a substantial change of circumstances.
Duane fails to establish that the trial court abused its discretion by declining to
excuse his spousal support obligations under the decree on the basis of equitable
defense of estoppel.
9
No. 77802-1-1/10
B.
Duane next argues that the trial court erred when it declined to find that the
doctrine of !aches applied. To establish laches, the defendant has the burden of
proving: "(1) the plaintiff had knowledge of the facts constituting a cause of action or a
reasonable opportunity to discover such facts;(2) there was an unreasonable delay in
commencing the action; and (3) there is damage to the defendant resulting from the
delay." Sanborn, 55 Wash. App. at 127. If the parties are in the same condition, then the
doctrine of laches does not apply. Sanborn, 55 Wash. App. at 128. A trial court does not
have unfettered discretion to retrospectively relieve a spouse of past due support
payments. Hunter, 52 Wash. App. at 268.
Duane contends that Marie should be estopped by laches from seeking
enforcement of the back maintenance and interest because "(1) Marie had knowledge
of the facts constituting a cause of action or a reasonable opportunity to discover such
facts;(2) there was an unreasonable delay in commencing the action; and (3) Duane
suffered damage from the delay." Duane contends that seven years was an
unreasonable delay in commencing the action, and Marie's actions allowed interest to
accrue, resulting in financial damage to Duane because she "intentionally misled Duane
'to live more comfortable month to month' than he would have had he known she would
subsequently seek over $750,000 from him—$300,000 of which was interest alone."
Marie concedes that she knew she could seek enforcement, but explains that
since Duane was living in Singapore, "it would have been extremely difficult to
personally serve him with a motion for contempt." But Marie contends that she did not
seek enforcement because she was receiving partial payment and that she only sought
\
10
No. 77802-1-1/11
enforcement when Duane stopped making partial maintenance payments because
earlier enforcement would have been "expensive, adversarial, and risked Duane cutting
off support entirely." Marie also tried to reach a settlement with Duane before moving to
enforce the judgment. Marie's reasons for not enforcing her judgment were reasonable.
In addition, Marie's delay was not unreasonable. Marie brought her action within
7 years—within the 10-year statute of limitation for the enforcement of judgments. RCW
6.17.020; In re Marriage of Capetillo, 85 Wash. App. 311, 317, 932 P.2d 691 (1997).
"Absent unusual circumstances, the doctrine of laches should not be invoked to bar an
action short of the applicable statute of limitation." Hunter, 52 Wash. App. at 270. Marie
was receiving partial payments and commenced enforcement almost immediately after
Duane stopped paying maintenance.
Finally, Duane fails to demonstrate he was damaged by Marie's delay. While
Duane argues that the judgment includes over $300,000 in interest, he "cannot be said
to be 'damaged' simply by having to do now what he was legally obligated to do years
ago." Hunter, 52 Wash. App. at 271. "Each installment of spousal maintenance becomes
a separate judgment and bears interest from the due date. A court has no power to
provide for payment of overdue maintenance without interest." Sanborn, 55 Wash. App. at
129-30 (internal citation omitted). Duane's argument that he is damaged by the
requirement to pay interest necessarily fails.
Instead, Duane must demonstrate some change in position that would make it
inequitable to allow Marie to enforce her claim. Hunter, 52 Wash. App. at 271. Duane
does not argue a change in position, but instead asserts that he would have sought to
modify the maintenance or vacate the decree if Marie had sought enforcement earlier.
11
No. 77802-1-1/12
But Duane fails to demonstrate that if he had petitioned the court for modification of the
spousal support obligation, that a court would have modified the order. "[A]n intervening
change of position on the part of the defendant, making it inequitable to enforce the
claim" must be shown. Hunter, 52 Wash. App. at 270. Duane did not cite any change in
his income, or additional expenses he incurred that could justify a modification. Duane
provided only his 2012 and 2015 tax returns for the record, which fail to establish
grounds for modification or evidence a major financial obligation undertaken.
Duane fails to establish that the trial court abused its discretion by declining to
excuse his spousal support obligations under the decree on the basis of laches.3
IV.
RCW 26.18.060 allows the prevailing party to recover reasonable attorney fees
and costs on appeal in any action to enforce a support or maintenance order. Hunter,
52 Wash. App. at 273-74. Under RAP 18.1(a), the court may grant reasonable attorney
fees or expenses if an applicable law grants to a party the right to recover those fees.
Duane argues that the trial court erred in awarding Marie fees. We disagree.
Marie was the prevailing party below, therefore she was entitled to fees under RCW
26.18.060. Marie is also entitled to reasonable attorney fees on appeal as the
prevailing party in this action.
3 Duane also raises issues concerning part performance, an alleged CR 2A agreement, and
ERISA. Because these claims were not raised below, we decline to address them on appeal. RAP
2.5(a).
12
No. 77802-1-1/13
We affirm.
WE CONCUR: e.t,„ v,,,
13