Court Opinion

ID: 2715464
Source: CourtListenerOpinion
Date Created: 2014-08-06 17:24:06.521576+00
Date Added: 2024-06-11T15:11:41.942976
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

In the Matter of the Marriage of
                                         )      No. 70415-0-1
JACQUELINE E. BERNI,                                                           CZ3        .—*J £^

                                         )      DIVISION ONE
                      Appellant,

                 v.
                                                                                            ton"
                                         )      UNPUBLISHED OPINION
WILLIAM J. BERNI,
                                         )      FILED: June 30, 2014                 cn      °r
                      Respondent.

       Becker, J. — This appeal challenges postdecree rulings interpreting

maintenance provisions of a separation contract. We affirm the trial court's

determination that the term "earned income" was not intended to include

amounts the husband reported on tax returns as gambling winnings. We also

affirm the rulings denying the wife's motions for contempt and requests for

attorney fees.

       On March 24, 2010, William and Jacqueline Berni (Bill and Jaci) executed

a separation agreement. The decree dissolving their marriage, entered on March

26, 2010, confirmed the separation agreement. Relevant to this appeal, section

7 of the agreement provided a formula for maintenance:

       In any calendar year through December 31, 2016, in which the
       Husband has earned income in excess of $75,000.00, as reported
No. 70415-0-1/2

       on all W-2 forms, 1099s, and Husband's federal income tax return,
       he shall pay to the Wife as maintenance an amount equal to fifty
       percent (50%) of his earned income in excess of $75,000.00 (e.g.,
       in a year in which the Husband has earned income in the amount of
       $125,000, he shall pay maintenance to the Wife in the amount of
       $25,000). The maintenance obligation as determined under the
       terms of this subparagraph shall be paid to Wife by the end of
       February following the calendar year in question. The Husband
       shall provide the Wife with full and complete copies of all W-2
       forms, 1099 forms by the end of February and his federal income
       tax returns on or before April 16 of each year, through April 16,
       2017, and in the event the documents reveal that the Husband did
       not pay the full amount of maintenance for the prior year in
       February, the remaining balance, if any, shall be paid in full on or
       before May 1 of each year. For the purposes of determining the
       maintenance obligation as set forth herein, the Husband's earned
       income does not include any amount the Husband may withdraw
       from a 401 (K) Plan or retirement plan, and further does not include
       any income earned by an individual with whom the Husband may
       file a joint federal income tax return.

Also pertinent is section 1.13: "both parties shall provide answers to previously

asked interrogatories to the other party's satisfaction."

       In section 7, paragraph 1 of the separation agreement, Bill agreed to

continue spousal maintenance payments to Jaci of $750 per month through

2010. He made these payments. In section 7, paragraph 2, Bill agreed that for

any year (through 2016) in which he had an earned income in excess of $75,000,

he would make additional maintenance payments of 50 percent of the excess.

Bill made some additional payments under this provision, some of them before

the due date, but Jaci believed he was understating his earned income.

Although the agreement required Bill to provide his income tax returns to Jaci,

Bill told Jaci in an e-mail in January 2012 that he would not disclose his 2010 and

2011 returns until he received proof that Jaci had done certain things that he

viewed as being her obligation under the agreement.
No. 70415-0-1/3

       On March 9, 2012, Jaci filed a motion for an order to show cause and for

clarification of the divorce decree. Attaching a copy of the e-mail, Jaci requested

enforcement of what she believed were Bill's past due maintenance obligations.

She asked the court to find Bill in contempt for violating the income disclosure

provisions of separation agreement, to enforce Bill's obligation to provide full and

complete copies of his income tax returns, and particularly to require him to

provide W-2G forms documenting Bill's gambling winnings.

      After a hearing on March 30, 2012, Superior Court Commissioner

Jacqueline Jeske ordered Bill to provide "answers to previously asked

interrogatories" to Jaci's satisfaction, as contemplated by section 1.13 of the

separation agreement. "The court finds no reason for the discovery requests to

have been included in the separation contract except to allow for maintenance

owed for 2009 to have been addressed under the formula set forth." The

commissioner accordingly found that Bill had an obligation to disclose his 2009

tax information, that he had not done so, and that this information was required to

calculate maintenance he owed for that year. Bill was ordered to pay $1,500 for

Jaci's attorney fees on the motion to enforce. The issue of whether Bill owed

additional maintenance for 2009 and 2010 was reserved pending his disclosure

of full and complete records for those years. The court noted that there was as

yet no issue of noncompliance regarding Bill's income in 2011. Under the

agreement, he did not have to provide the tax return until April 2012. The

commissioner declined to hold Bill in contempt:

       The lack of clarity or definition of various provisions in the
       agreement and earned income language, in combination with the
No. 70415-0-1/4

       husband's prior voluntary payments, were considered when
       determining reasonable fees, along with other appropriate factors.
       Mr. Berni's unfortunate "titfor tat" approach to providing his 2010
       and 2011 returns aside, enforcement is sufficient, without the
       coercive remedy of contempt, along with clarification, to provide the
       necessary relief to Jacqueline Berni herein.

       Bill moved to revise the ruling that maintenance was due for 2009.

Superior Court Judge Laura Middaugh granted this motion on August 3, 2012,

and ruled that Bill's maintenance obligation did not begin until 2010. This order

was not appealed.

       Judge Middaugh's order did not revise that portion of Commissioner

Jeske's order that required Bill to "provide the wife, to her satisfaction, all the

records not exchanged in discovery through and including March 2010." The

order stated, "Wife's counsel will specify within 30 days; Husband must comply

with disclosure within 30 days of receipt of specific requests." Between April and

December 2012, Bill and Jaci corresponded through counsel about what was

required under this order. In April 2012, Bill timely provided his 2011 tax return.

In May, he provided his W-2 and W-2G forms for 2010. Jaci requested answers

to her previous discovery requests for bank statements, Bill's parents' trust

information, cell phone records, credit card statements, tax information for 2009,

check registers, and rental applications. Bill responded, but not completely, and

portions of the information he provided were not received by Jaci until well after

the 30-day deadline.

       The information Jaci received from Bill during this time showed that the W-

2G forms attached to Bill's tax returns reported $48,322 in gambling winnings for

2010 and $31,806 for 2011. The disclosures also included records from Tulalip
No. 70415-0-1/5

Resort and Casino showing transactions where his player's club card was used.

Bill had sustained a net loss of $59,963.05 in 2010 and a net loss of $40,320.05

for 2011.

       On December 7, 2012, Jaci filed the motions leading to the orders

presently on appeal. In a motion to show cause, she requested that Bill be

ordered to produce certain financial documents and be found in contempt for

failing to comply with Commissioner Jeske's disclosure order and deadlines.

She requested that Bill pay $18,521.83 plus interest in spousal maintenance for

2010, and $10,432.00 plus interest for 2011. She calculated these amounts on

the assumption that gambling winnings were "earned income" as that term is

used in the agreement. Jaci asked that Bill be required to pay $16,120 in

attorney fees.

       Superior Court Commissioner Julia Garratt heard the matter on January

25, 2013. Jaci argued she was still entitled to all the various financial records

she had requested concerning Bill's income in 2009 even though Judge

Middaugh had ruled Bill owed no maintenance for 2009. This was so, Jaci

argued, because Commissioner Jeske had interpreted section 1.13 of the

separation agreement as literally requiring that full disclosure be made "to the

other party's satisfaction." Commissioner Garratt did not find the argument

compelling:

       But it doesn't make any sense. Why should he have to produce
       records for 2009 when there's no income that would be produced
       from that? I mean, we're talking about going back almost four
       years now. But if no maintenance—I mean, the parties have been
       divorced for a couple of years, and there's a very specific
       separation contract that spells out certain affirmative things that are
No. 70415-0-1/6

       to happen. But if 2009 is off the chessboard, I mean, what's the
       point?

Commissioner Garratt found that Bill had not failed to comply with Commissioner

Jeske's order. Finding of fact 2.1. She also found it was not Bill's obligation to

produce documents not specified in the separation agreement. She denied

Jaci's request to hold Bill in contempt.

       Commissioner Garratt found that "gambling winnings are not considered

earned income." Finding of fact 2.6. In her oral ruling, she explained why:

       The IRS [Internal Revenue Service] does not appear to describe it
       as earned income, and I certainly note that nobody gets rich over
       slot machines. I guess I can liken it to if somebody sells something
       on eBay and earns money, it may be reported to the IRS on your
       tax forms. But if you paid more for the item than you received on
       eBay, you're not going to pay taxes on that amount of money that
       you received.
              So for the purposes of this hearing, I don't find that gambling
       proceeds received is earned income. I would certainly assume that
       there was a great deal of losses as well as gains. But under the
       circumstances, I'm not finding the gambling winnings to be
       considered earned income.

       Jaci moved to revise Commissioner Garratt's ruling. On March 14, 2013,

Judge Julie Spector denied the motion. On the issue of gambling income, Judge

Spector commented that Jaci was trying to have it only one way—counting only

the winnings but not the losses. For example, she reasoned, if Bill had bet and

lost all his money, he would not be entitled to reduce his support obligations

according to the amount of his losses. Judge Spector noted she had never seen

so much litigation following a divorce. She reminded the parties that it costs a

great deal of money to keep coming to court.
No. 70415-0-1/7

      Jaci appeals. Her primary argument is that the definition of "earned

income" under the separation agreement includes gambling winnings. This

argument requires interpretation of the separation agreement.

      The language of a separation contract in a dissolution decree is reviewed

de novo. In re Marriage of Smith, 158 Wash. App. 248, 255, 241 P.3d 449 (2010).

The intent of the parties must be ascertained at the time of the agreement. In re

Marriage of Smith, 158 Wash. App. at 255-56. Courts should generally give words

in a contract their ordinary, usual, and popular meaning unless the entirety of the

agreement clearly demonstrates a contrary intent. Hearst Commc'ns, Inc. v.

Seattle Times Co., 154 Wash. 2d 493, 504, 115 P.3d 262 (2005). A court may

resort to dictionary definitions to ascertain a term's plain and ordinary meaning.

State v. Myers, 133 Wash. 2d 26, 33, 941 P.2d 1102 (1997).

      The agreement does not provide a specific definition of "earned income."

We resort to dictionary definitions to determine the plain and ordinary meaning of

the term. The term "earned income" has been defined as "income (as wages,

salary, professional fees, or commissions) that results from the personal labor or

services or an individual." Webster's Third New International Dictionary 714

(2002). Another definition is "money derived from one's own labor or active

participation; earnings from services." Black's Law Dictionary 831 (9th ed.

2009). The IRS explains that "earned income" is income generated either by

working for someone or by running a business or a farm.1

       1http://www.irs.gov/lndividuals/What-is-Earned-lncome%3F.
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No. 70415-0-1/8

         Jaci contends that the plain meaning of "earned income" as used in the

agreement necessarily includes everything reported on a W-2G form. We

disagree. The agreement says "earned income ... as reported on all W-2

forms." Gambling winnings are reported as "winnings" on W-2G forms, not as

income.

         Jaci points out that the parties chose to exclude from Bill's earned income

any 401 (k) withdrawals and any income earned by his spouse. She argues that

this context indicates they intended to include gambling winnings in "earned

income." Her argument begs the question. Withdrawals from a 401 (k) and a

spouse's earnings are clearly forms of earned income. It is not clear that money

coming into Bill's hands through gambling is "earned income" in any sense, and

so the lack of an explicit exclusion does not bring it within the term.

         The plain meaning of the term "earned income" is income received in

exchange for work. Gambling winnings are a result of chance. They are not paid

in exchange for work done or services rendered. Including gambling winnings in

the definition of "earned income" would not be consistent with the dictionary

definitions of the term.

         We conclude the ordinary meaning of "earned income" does not include

gambling winnings. The assignments of error related to this issue are not well

taken.

         Jaci also contends the court should have enforced Commissioner Jeske's

discovery order. Commissioner Jeske ordered Bill to respond, within 30 days of

a demand by Jaci, to the discovery requests that remained unanswered at the

                                           8
No. 70415-0-1/9

time of the 2010 separation agreement. Jaci contends Commissioner Garratt

failed to consider her argument that Bill violated Commissioner Jeske's order.

Jaci is mistaken. Commissioner Garratt specifically found that Bill had not

refused to comply with previous lawful orders of the court and that the order was

not violated. Findings of fact 2.1, 2.3.

       Jaci contends Commissioner Garratt erred by refusing to hold Bill in

contempt. A determination of contempt is within the sound discretion of the trial

court and will not be disturbed on appeal absent an abuse of discretion. In re

Marriage of Mathews, 70 Wash. App. 116, 126, 853 P.2d 462, review denied, 122
Wash. 2d 1021 (1993). An abuse of discretion occurs where a decision is

manifestly unreasonably or exercised on untenable grounds or for untenable

reasons. Moellerv. Farmers Ins. Co of Wash., 173 Wash. 2d 264, 278, 267 P.3d

998(2011).

       Commissioner Garratt explained her denial of the contempt motion as

follows:

              There is a request for contempt in this matter. I'm not finding
       bad faith on either side, and I certainly am not holding Mr. Berni in
       contempt based on the Court's reviewing the information at hand.

This was not an abuse of discretion. After several months of litigation, Judge

Middaugh revised Commissioner's Jeske's ruling that maintenance was due for

the year 2009. That ruling put a large portion of Jaci's discovery requests

beyond the scope of disclosure authorized by the agreement. Bill admitted to

some delay with respect to the documents he did provide, but offered the
No. 70415-0-1/10

reasonable excuse that the financial documents requested were so old it was

difficult to extract them from the archives of the various financial institutions.

       Although Commissioner Garratt did not find Bill in contempt, she did grant

Jaci's request for subpoena power over Bill's bank account records:

       I am, however, going to authorize the wife subpoena authority
       since she—until the obligation is over in 2016 if she believes that
       she needs to subpoena additional records to show that her former
       husband has somehow not reported all appropriate income, then
       she can do the searching.

       It's not the responsibility of Mr. Berni to produce these additional
       records. He is to produce what is spelled out in the separation
       contract, which is the W-2 forms, the 1099s, and his scheduled
       income tax forms.

Commissioner Garratt also granted Jaci's request to order Bill to give the IRS

permission to release his tax information to Jaci.

       On the record before us, it was within Commissioner Garratt's discretion to

find that Bill's actions were not willful or in bad faith. We conclude that the court

did not abuse its discretion when it refused to hold Bill in contempt.

       Finally, Jaci contends the court below should have required Bill to pay her

attorney fees. She requests attorney fees totaling $37,950 for her efforts

beginning with her first enforcement action through this appeal, based on Bill's

alleged intransigence and failure to comply with court orders. Intransigence

includes foot dragging and obstruction, filing repeated unnecessary motions, or

making the trial unduly difficult and costly by one's actions. In re Marriage of

Bobbitt, 135 Wash. App. 8, 30, 144 P.3d 306 (2006). Intransigence also includes

incremental disclosures of income. In re Marriage of Mattson, 95 Wash. App. 592,

606, 976 P.2d 157 (1999). The rulings below indicate that the court did not

                                           10
No. 70415-0-1/11

perceive Bill as intransigent or contemptuous, and the record does not provide us

with a compelling reason to take a different view.

      Alternatively, Jaci requests attorney fees under RCW 26.09.140. We

exercise our discretion to deny this request.

       Bill requests attorney fees for having to defend a frivolous appeal. We

deny this request as well.

      Affirmed.

                                                                  0
WE CONCUR:                                                       0

  \ r\ f ^

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