Victoria Ann Hostetter v. Michael Richard Hanson

FILED
COURT OF APIJEALS ON:
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
VICTORIA ANN HOSTETTER, )
) DIVISION ONE
Respondent, )
) No. 76054-8-1
V. )
) UNPUBLISHED OPINION
MICHAEL RICHARD HANSON, )
)
Appellant. ) FILED: November 20, 2017
)
DWYER, J. — Michael Hanson appeals from the trial court's order
concluding that he and Victoria Hostetter were in a committed intimate
relationship (CIR) and awarding him certain real property subject to a $22,500
judgment lien in favor of Hostetter. On appeal, Hanson contends that substantial
evidence does not support the trial court's factual findings. Hanson also
contends that the trial court erred by applying the wrong burden of proof to his
statute of limitation defense and by refusing to treat a written agreement between
the parties as an enforceable settlement agreement. Finding no error, we affirm.
I
Hanson and Hostetter began a relationship in 1999. The parties each own
real property located in Sumas, Washington. Hanson owns the "cabin" property,
Hostetter owns the "ranch" property, and together the parties purchased the
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"orchard" property. Hanson and Hostetter were never married and never had
children together. Hanson has a son from a previous relationship who often lived
with Hanson and Hostetter.
Hanson and Hostetter lived separately and together at various times
throughout their relationship. The parties continued to have an intimate
relationship even when spending time in separate residences. Hanson and
Hostetter relied nearly exclusively on cash for all purchases, including the
purchase of the orchard property. There is no evidence regarding the income
source of the parties—they produced no pay stubs, no W-2s, and no tax returns
that accurately captured income. However, cash flow was sufficient to allow the
parties to purchase multiple houses, animals, personal property, and to perform
maintenance and upkeep on more than one residence. The parties kept cash
buried in black plastic tubes around the properties. The circumstances of the
parties' arrangement made it impossible to establish any sort of segregation of
funds.
The parties offered conflicting testimony as to when their relationship
ended. Hanson testified that the relationship ended on July 27, 2010 after he
returned from Europe. Hostetter testified that she ended the relationship on
Valentine's Day 2011. Each party offered testimony from family members to
establish that their version of events was correct. The conflicting testimony of the
parties, biases of the family members, and lack of other evidence made it
impossible to establish a definite date for the end of the relationship.
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In September 2011, Hanson and Hostetter engaged in a series of
mediation sessions. Following mediation, Hanson and Hostetter handwrote and
signed a document that Hanson now characterizes as a "settlement agreement."
The writing purports to divide certain personal property between the parties and
lists certain tasks that each party will complete. The writing states that Hostetter
shall have no rights to the cabin or orchard properties.
Following trial, the trial court found that Hanson and Hostetter were in a
relationship that began in 1999 or 2000 and ended sometime within the three
years preceding the filing of the petition. The trial court found that the parties
were intimate and intended a common household as a couple. The trial court
found that the parties pooled their resources for joint projects and made joint
purchases of real and personal property. Accordingly, the trial court concluded
that the parties were in a CIR.
The trial court also found that the written document signed by both parties
was a preliminary agreement. The trial court noted that the writing did not
address credit card or other debt, did not address the parties' vehicles, and
omitted mention of a great amount of the personal property in dispute.
Accordingly, the trial court found that the writing was not an enforceable
settlement agreement.
The trial court ruled that Hanson and Hostetter would each retain all
personal property in their possession and that Hostetter would retain the vehicle
that was given to her as a birthday present. The trial court ruled that the cabin
property was Hanson's separate property. The trial court ruled that the parties
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purchased the ranch property during the CIR but that Hanson waived any interest
in the property. Finally, the trial court ruled that the parties purchased the
orchard property during the CIR, that title to the property was placed in
Hostetter's name, and that Hostetter contributed $22,000 to the purchase price of
the property. The trial court awarded the orchard property to Hanson, subject to
a $22,500 judgment lean in favor of Hostetter.1 Hanson appeals.
11
Hanson contends that the trial court erred by concluding that he and
Hostetter were in a CIR and by awarding Hostetter part of his separate property.
This is so, he asserts, because the trial court's factual findings are not supported
by substantial evidence. We disagree.
We review a trial court's factual findings for substantial evidence. In re
Parentage of G.W.-F., 170 Wash. App. 631, 637, 285 P.3d 208(2012). Evidence is
substantial where, viewed in the light most favorable to the prevailing party, a
rational finder of fact could find the fact in question by a preponderance of the
evidence. In re Dependency of M.P., 76 Wash. App. 87, 90-91, 882 P.2d 1180
(1994). We defer to the trier of fact to resolve conflicting testimony, evaluate the
persuasiveness of evidence, and assess the credibility of witnesses. G.W.-F.,
170 Wash. App. at 637. We review a trial court's conclusions of law de novo to
determine if they are supported by the findings of fact. G.W.-F., 170 Wash. App. at
637.
1 The trial court found that the value of the property had increased by $2,000, making the
total value of Hostetter's contribution equal to $22,500.
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A
Hanson first contends that substantial evidence does not support the trial
court's factual findings concerning the existence of the CIR.
Washington law does not recognize the existence of common law
marriages. In re Pennington, 142 Wash. 2d 592, 600, 14 P.3d 764 (2000). "The
CIR doctrine is a judicially created doctrine used to resolve the property
distribution issues that arise when unmarried people separate after living in a
marital-like relationship and acquiring what would have been community property
had they been married." In re Kelley & Moesslanq, 170 Wash. App. 722, 732, 287
P.3d 12(2012).
The determination of whether a CIR existed depends on the facts of each
case. Our Supreme Court has announced five nonexclusive factors for courts to
consider when making such a determination: "continuous cohabitation, duration
of the relationship, purpose of the relationship, pooling of resources and services
for joint projects, and the intent of the parties." Pennington, 142 Wash. 2d at 601
(quoting Connell v. Francisco, 127 Wash. 2d 339, 346, 898 P.2d 831 (1995)).
"These characteristic factors are neither exclusive nor hypertechnical. Rather,
these factors are meant to reach all relevant evidence helpful in establishing
whether a [CIR] exists." Pennington, 142 Wash. 2d at 602 (citing Connell, 127
Wash. 2d at 346).
Here, the trial court heard testimony that Hanson and Hostetter began
dating sometime in 1999 and that they had moved in together by the summer of
2000. The trial court heard testimony that Hanson and Hostetter worked together
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No. 76054-8-1/6
to build and maintain the cabin property. The trial court heard testimony that
Hostetter and Hanson purchased personal property together and paid bills
together. Hostetter, Hanson, and Hanson's son were on a family health plan
together. After Hanson and Hostetter finished building the cabin property and
purchased the orchard property, they split their time between the three
properties. Hanson testified that he continued to have an intimate relationship
with Hostetter after the cabin was built and the orchard property was purchased.
Although Hanson and Hostetter provided conflicting testimony as to the precise
date that the relationship ended, the trial court heard testimony establishing that
the relationship lasted at least 10 years.
The trial court found that the parties cohabitated continuously beginning in
1999 or 2000, that they were intimate and intended a common household as a
couple, and that they pooled their resources for joint projects, maintained
households together, made joint purchases of personal property, and each
contributed toward big purchases. In light of these findings, the trial court
concluded that the parties were in a CIR that began sometime in 1999 or 2000.
Hanson first contends that substantial evidence does not support the trial
court's finding that the parties cohabitated. Hanson asserts that cohabitation
requires the parties to continuously live in the same house.2 Because he did not
2 Hanson relies on In re Marriage of Byerlev, 183 Wash. App. 677, 689, 334 P.3d 108
(2014), in support of his assertion that continuous cohabitation is a necessary condition for a CIR.
But the issue before the court in Byerlev was not whether the parties were in a CIR—they agreed
that they were—but, rather, whether the house in which they resided was community property.
183 Wash. App. at 686-87. The court held that the house was not acquired during the CIR because
a CIR "cannot ... commence prior to the date the parties begin living together." Byerley, 183
Wash. App. at 689. Byerley does not support Hanson's assertions.
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spend every night with Hostetter, Hanson avers, he was not cohabitating with
her. But Hanson's own testimony reveals that the parties stopped living
exclusively in the same house in 2006 not because they were no longer in a
relationship but, rather, because "[o]ne of us had to stay at the other property."
Hanson testified that he and Hostetter continued an intimate relationship after
they purchased the ranch property, spending several nights a week together.
The trial court's finding is supported by substantial evidence.
Hanson next contends that substantial evidence does not support the trial
court's finding that the relationship ended sometime within the three years
preceding the filing of the petition. Hanson asserts that the trial court improperly
shifted the burden to him to establish when the relationship ended. But Hanson
confuses the burden of establishing the existence of the CIR—which rests on the
petitioner—with the burden of establishing that the petition is time barred. Here,
the trial court found that, although the evidence did not support a particular date
that the relationship ended, the evidence did support a finding that the
relationship ended within the three years preceding the filing of the petition. The
trial court's finding is supported by the testimony presented at trial.
Hanson next contends that the trial court failed to make any findings as
o to
the purpose of the relationship. But the trial court explicitly stated in its oral ruling
that "the parties operated with a general purpose to operate and keep a common
household and to reside together." The trial court's finding is supported by the
testimony at trial.
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Hanson also contends that there was insufficient evidence to support the
trial court's finding that Hanson and Hostetter "pooled their resources for joint
projects and to maintain households together." As discussed herein, neither
party was able to produce bank statements, W-2s, tax returns, or any other form
of documentation that could adequately explain their income or expenses. This
is reflected in the trial court's finding that "[t]he genesis of the cash used during
the parties' relationship cannot be traced and it is impossible to segregate whose
cash was used for what purchases or payments." Rather, the trial court relied on
the testimony given by Hanson and Hostetter to determine whether resources
were pooled. The trial court heard and credited testimony that Hostetter
contributed financially to the purchase of real and personal property. Hanson's
assertions that the trial court should not have believed Hostetter are without
merit.
Finally, Hanson contends that the trial court's finding that he and Hostetter
intended to be in a CIR is not supported by substantial evidence. This is so, he
asserts, because neither he nor Hostetter intended to marry. But the trial court
never found that Hanson and Hostetter intended to marry. Rather, the trial court
found that Hanson and Hostetter "were intimate and intended a common
household as a couple." Intent to marry is not a necessary precondition for a
CIR—the relevant consideration is whether the parties "mutually intended to be in
a [C1R]." Pennington, 142 Wash. 2d at 606. The trial court's finding is supported by
substantial evidence.
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The trial court's factual findings are supported by substantial evidence.
Those findings in turn support the trial court's conclusion that Hanson and
Hostetter were in a CIR. There was no error.
Hanson next contends that the trial court erred by awarding him the
orchard property subject to a $22,500 judgment lean in favor of Hostetter. This is
so, he asserts, because the trial court's findings of fact were not supported by
substantial evidence.
After a trial court has determined that a CIR exists, the court then
evaluates the interest that each party has in the property acquired during the
relationship. Then, the trial court makes a just and equitable distribution of such
property. Pennington, 142 Wash. 2d at 602. "While property acquired during the
(CIR] is presumed to belong to both parties, this presumption may be rebutted."
Pennington, 142 Wash. 2d at 602. "If the presumption of joint ownership is not
rebutted, the courts may look for guidance to the dissolution statute, RCW
26.09.080,[31 for the fair and equitable distribution of property acquired during the
[CIR]." Pennington, 142 Wash. 2d at 602. We review a trial court's distribution of
3 ROW 26.09.080 instructs courts to consider all relevant factors including, but not limited
to:
(1) The nature and extent of the community property;
(2) The nature and extent of the separate property;
(3)The duration of the marriage or domestic partnership; and
(4) The economic circumstances of each spouse or domestic partner at
the time the division of property is to become effective, including the desirability
of awarding the family home or the right to live therein for reasonable periods to a
spouse or domestic partner with whom the children reside the majority of the
time.
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property for an abuse of discretion. Brewer v. Brewer, 137 Wash. 2d 756, 769, 976
P.2d 102(1999).
Here, the trial court heard testimony from Hostetter that she provided
$22,000 for the purchase of the orchard property. The trial court heard testimony
that the purchase price of the orchard was $88,000. The trial court also heard
expert testimony that the orchard appraised for $90,000 as of November 6, 2015.
The trial court found that the cabin property belonged to Hanson, that
Hanson made no claim as to the ranch property, and that the orchard property
was purchased jointly by the parties and was placed in Hostetter's name for tax
purposes. The trial court found that the orchard property had increased in value
by $2,000 since its purchase price and that Hostetter had contributed $22,000 to
the purchase of the orchard property. Accordingly, the trial court awarded
Hanson the orchard property subject to a $22,500 judgment in favor of Hostetter.
On appeal, Hanson contends that the trial court's factual findings are not
supported by substantial evidence. Hanson asserts that Hostetter did not
contribute to the purchase of the orchard property at all. Hanson produced two
cashier's checks totaling $81,000 in support of his assertion. Hanson now states
that he paid cash for the remainder of the purchase price. But, as discussed
herein, the trial court heard extensive testimony that Hanson and Hostetter
pooled their money and purchased nearly everything in cash. The trial court did
not have the benefit of financial documentation before it and, thus, relied on the
testimony of the parties to make its findings.
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No. 76054-8-1/11
Although Hanson testified that he paid for the orchard property himself,
Hostetter testified that she contributed $22,000 toward the property. The trial
court found Hostetter's testimony credible and awarded her the amount that she
contributed, adjusted for the increase in value. There was no abuse of
discretion.
Ill
Hanson next contends that the trial court erred by not crediting his statute
of limitation defense.
The equitable doctrine of CIR is subject to a three-year statute of
limitation. The petitioner must sue to establish the existence of the CIR within
three years of the end of the relationship. Kelley, 170 Wash. App. at 737. The
statute of limitation is an affirmative defense and the defendant carries the
burden of proof. Rivas v. Overlake Hosp. Med. Ctr., 164 Wash. 2d 261, 267, 189
P.3d 753(2008)(citing CR 8(c)). The burden shifts to the plaintiff if he or she
alleges that the statute was tolled and does not bar the claim. Rivas, 164 Wash. 2d
at 267.
Here, Hostetter filed the petition to determine the validity of the CIR on
August 7, 2013. On February 22, 2016, Hanson moved to amend his response
to the petition to include the affirmative defense that the petition was time barred.
The motion was granted.
At trial, Hanson testified that his relationship with Hostetter ended on July
27, 2010. Hanson argued that, by the time that Hostetter sued to establish the
existence of the CIR, the statutory limitation period had run. On the other hand,
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Hostetter testified that the relationship did not end until Valentine's Day 2011.
Each party offered testimony from family members in support of their assertions.
The trial court found that the conflicting evidence did not support a
particular date of separation. However, the trial court found that there was
evidence that the relationship continued beyond the date that Hanson identified
as the end of the relationship. The trial court noted that it was Hanson's burden
to prove that the statute of limitation had run by the time that the petition was
filed. The trial court found that Hanson had failed to meet his burden of proving
that the petition was barred by the statute of limitation.
On appeal, Hanson contends that the trial court erred by failing to shift the
burden of proof to Hostetter. This is so, he asserts, because Hostetter alleged
that the statute of limitation was tolled.
Hanson's assertion is puzzling. Hostetter argued at trial—and maintains
on appeal—that the relationship ended in February 2011. Rather than asserting
that the statute was tolled, Hostetter asserted that the petition was filed within the
three-year time limit. This does not implicate tolling and the burden does not shift
to Hostetter.
As the petitioner, Hostetter had the burden of establishing the existence of
the CIR, including when the relationship ended. The trial court found that a CIR
existed and that, although the exact date of the end of the CIR could not be
established, the relationship ended sometime within the three years preceding
the filing of the petition. The trial court's finding is supported by substantial
evidence. Given the court's factual finding, the burden of establishing that the
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petition was time barred properly rested on Hanson. He failed to meet that
burden. There was no error.
IV
Finally, Hanson contends that the trial court erred by refusing to enforce
the written agreement between the parties.
Settlement agreements are governed by general principles of contract law.
Saben v. Skagit County, 136 Wash. App. 869, 876, 152 P.3d 1034 (2006). "A valid
contract requires a meeting of the minds on the essential terms." Evans & Son,
Inc. v. City of Yakima, 136 Wash. App. 471, 477, 149 P.3d 691 (2006). "Mutual
assent to definite terms is normally a question of fact for the fact finder." P.E.
Sys., LLC v. CPI Corp., 176 Wash. 2d 198, 207, 289 P.3d 638(2012). In
determining whether informal writings are sufficient to establish a contract when
the parties contemplated signing a more formal written agreement, Washington
courts consider whether "(1) the subject matter has been agreed upon,(2)the
terms are all stated in the informal writings, and (3) the parties intended a binding
agreement prior to the time of the signing and delivery of a formal contract."
Morris v. Maks,69 Wn. App. 865, 869, 850 P.2d 1357(1993).
Here, Hanson and Hostetter produced a written document following a
series of mediations. This writing purports to divide several assets between the
parties. For example, the writing provides that Hostetter "has no rights to cabin
or [the orchard]." The writing also contemplates that each party will complete a
variety of tasks. For example, the writing states that Hostetter will "do the railings
on deck" and that Hanson will cover Hostetter's health insurance until October
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No. 76054-8-1/14
31, 2011. The writing does not contain any references to the division of debt and
neglects to divide up certain personal property, such as the parties' vehicles.
After the parties signed the writing, Hostetter signed a quitclaim deed to the
orchard property.
At trial, Hostetter testified that the written agreement was a list that the
parties made to "start to resolve" their differences. Hostetter testified that the
writing did not include all of the parties' mutually owned assets or debts and that
it did not list the vehicles or the mortgage on the ranch property. Hostetter
testified that the parties intended to review the writing with their attorneys and
continue mediation to reach a final agreement. Hostetter also testified that the
parties' conduct following the creation of the writing deviated from the conduct
contemplated by the writing. For example, Hostetter testified that Hanson
refused to address half of the things on the list and refused to move forward with
mediation. Finally, Hostetter testified that she signed the quitclaim deed in an
effort to continue negotiations.4
The trial court made a factual finding that the writing was a preliminary
agreement, not a complete settlement. The trial court found that the writing
contemplated a division of tasks to be done as well as a division of some
property but that it did not address with sufficient particularity all of the issues and
all of the property in dispute. The trial court found that the writing did not address
the mortgage on the ranch, omitted a substantial amount of personal property,
4 Hanson offered little testimony on the written agreement. Hanson testified that the
writing was signed following mediation and that he believed that the writing was a final agreement
between the parties.
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and was still contingent upon the completion of certain tasks. The trial court
found that the writing was a preliminary agreement and that the parties did not
intend for it to be enforceable. Accordingly, the trial court concluded that the
writing was not enforceable.
The trial court's finding that the written agreement was a preliminary
agreement is supported by substantial evidence. The writing divides up a
mixture of personal and real property as well as a number of uncompleted tasks.
The writing omits material items in dispute such as the parties' vehicles, the
mortgage on the ranch property, Hostetter's interest in the orchard property, and
the debt owed by both parties. Although Hanson contends that both parties
intended the writing to be the final settlement agreement, he does not explain
how negotiations between the parties could have been concluded when the
writing omits material terms still in dispute. Given the trial court's finding that the
parties had not mutually assented to the material terms, the court's conclusion
that the written document was unenforceable is sound. There was no error.5
Affirmed.
We concur:
5 Hanson requests an award of attorney fees and costs pursuant to RCW 4.84.185 for
defending against a frivolous lawsuit. Because we affirm the trial court's order, his request is
denied.
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