Court Opinion

ID: 2784912
Source: CourtListenerOpinion
Date Created: 2015-03-09 23:11:00.429719+00
Date Added: 2024-06-11T11:28:33.945503
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

In re the Marriage of:                                     No. 71212-8-1

SYLVIA A. BOLTON,                                          DIVISION ONE               en

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                      Respondent,
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MATTHEW E. SCHNEIDER,                                      UNPUBLISHED
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                      Appellant.                           FILED: March 9, 2015

       Cox, J. — In order to convert separate property to community property,

the presumption of its separate character must be overcome by clear, cogent,

and convincing evidence.1 Here, there is such evidence to show that Matthew

Schneider converted his separate real property to community property. His

claims to the contrary are unpersuasive. Accordingly, we affirm the trial court's

distribution of property in this dissolution proceeding.

       Matthew Schneider and Sylvia Bolton married in 1999. During their

thirteen-year marriage, the parties lived in the Commodore Way Seattle home

that Schneider purchased in 1989, 10 years before their marriage. At several

points during the marriage, the parties had significant work done on the home

and refinanced the mortgage encumbering the property. Just after they married,

the parties had some plumbing repaired and a shower rebuilt. In 2000-2001, the

        In re Estate of Borqhi. 167 Wash. 2d 480, 484-85, 491-92, 219 P.3d 932 (2009).
No. 71212-8-1/2

parties had the kitchen remodeled. The final and most extensive remodel that

increased the size of the home to its structural maximum occurred in 2004-2005.

      Schneider paid for the first two remodels out of savings generated from his

separate income. In conjunction with the final remodel, Schneider refinanced the

mortgage with a different bank and took out approximately $200,000 in equity to

pay for the remodel.

       In July 2003, Schneider executed a quit claim deed that conveyed the

property to both Schneider and Bolton, as "husband and wife." The deed recites

that the consideration of the conveyance is "to create community property." The

cover letter attached to the deed also states that it is "understood" that "my/our

intention" is to "create community property." In May 2012, a few months before

the parties separated, they entered into an agreement to divide property as

follows: Schneider would retain the Commodore Way home. Bolton would retain

three Arizona rental properties, and the parties agreed to sell a vacation home in

Arizona.

       Bolton commenced this dissolution proceeding in June 2012. The parties

agreed to a parenting plan to provide for the care of their son born during the

marriage. The only issues before the trial court were property characterization

and distribution and the amount of income for purposes of setting child support.

Bolton and Schneider were the only witnesses who testified at the two-day trial.

       The trial court characterized the Commodore Way home as community

property and entered the following finding of fact:

       This house was purchased by the husband in 1989 for $194,000.
       He paid all the mortgage payments through 1999. At that time its
No. 71212-8-1/3

      value was 410,000, net of any mortgage owing. Mortgage
      payments made after marriage were made by the community.
      Shortly after the marriage, they remodeled [the] bathroom [with]
      funds of the husband[']s separate assets. A second remodel
      occurred in 2001, which included the kitchen and enlarging the
      back side of the house. The husband testified the source of those
      funds came from his pre-marriage savings. This was not rebutted.
      In 2004-5 a third and major remodel occurred. Cost[s] were paid by
      a 2003 refinance of the home. At that time the net equity in the
      house was $443,000 ($552,000 value, less $119,000 owed). The
      wife, a professional designer, designed the remodel. The house
      was also refinanced in 2001 to take advantage of a better interest
      rate, and in 2009 to take equity out of the house to purchase a
      vacation home. The parties agree the net value of the home is
      $382,716. The husband handled the transaction for the 2003
      refinance. At that time, he executed a quit claim deed (Ex. 49).
      The cover page of that deed provided: "It is understoodand my/our
      intention to create community property and that title be vested in
      Matthew E. Schneider and Sylvia A. Bolton, Husband and Wife."
      The language of the quit claim deed include the following: "for and
      in consideration ofTO CREATE COMMUNITY PROPERTY".
      Based upon the conduct of the parties, post marriage, through the
      payment of the mortgage, their joint efforts in improving the house,
      and the execution of the quit claim deed, the evidence supports a
      finding that Schneider's separate interest was gifted to the
      community. Furthermore, itwould be speculative for the court to
      attempt to segregate the asset, given the addition of community
      efforts improving the home and community funds used to pay the
      "mortgage" since 1999.[2]
      The court also determined that an equal division of the assets was

equitable:

       Each party is healthy and appropriately trained for the work that
       they do. The wife is being awarded income producing assets. The
       husband has had the ability to earn more [than] the wife in the past.
       There is no reason that one of the spouses should be awarded
       more than the other.[3]

       Accordingly, the court allocated significant financial assets to each party.
The court also distributed the real property in accordance with the parties' pretrial

       2Clerk's Papers at 51-52 (internal footnote omitted).
       3 Clerk's Papers at 55.
No. 71212-8-1/4

agreement, awarding the Commodore Way property to Schneider and the three

Arizona rental properties to Bolton. The court also awarded the proceeds from

the post-separation sale of the Arizona vacation home to Schneider.

      Schneider appeals.

                              Characterization of Property

      Schneider contends the trial court erred in characterizing the Commodore

Way home as community property. Because the quit claim deed and related

documents show by clear, cogent, and convincing evidence that he converted

this separate property to community property, we disagree.

       In a dissolution action, all property, community and separate, is before the

court for distribution.4 The trial court's characterization of property as community

or separate is a mixed question of law and fact.5

       The character of property as separate or community property is

determined at the date of acquisition.6 Presumptions play a significant role in

determining the character of property as separate or community property.7 Once

the separate character of property is established, a presumption arises that it

remained separate property in the absence of sufficient evidence to show an

intent to transmute the propertyfrom separate to community property.8

Overcoming this presumption requires clear and convincing evidence.9

       « In re Marriage of Stachofskv. 90 Wash. App. 135, 142, 951 P.2d 346 (1998).
       5 In re Marriage of Skarbek. 100 Wash. App. 444, 447, 997 P.2d 447 (2000).
       6 Borghi. 167 Wash. 2d at 484.
       7 li at 483.
       8 Id, at 484.
       9 Id. at 491.
No. 71212-8-1/5

       Characterization of property as community or separate is not controlling in

division of property between the parties in a dissolution proceeding, but the court

must have in mind the correct character and status of the property before dividing

the property.10 Mischaracterization does not require remand unless the

characterization is crucial to the distribution.11

       Schneider claims there was no clear and convincing evidence to

overcome the presumption that the home remained his separate property. He

points to his unequivocal testimony that he did not intend to transfer the property

to the marital community or create community property and he executed the

deed merely to satisfy the bank's requirements to secure the loan for the

remodel. Schneider points out that there was a refinance in 2001 and he did not

take this earlier opportunity to transfer the property. Therefore, he argues that

the trier of fact could only infer that the later conveyance was solely an

accommodation to the demands of the bank. We disagree.

       The chief problem with this argument is that it conflicts with the objective

manifestations of this actions. He executed a quit claim deed and associated

documents that clearly show his objective intent to convert his separate property

to community property. His motive in doing so is irrelevant. In short, this

evidence is sufficient to overcome the presumption that the character of the

property remained separate.

       Relying on the Supreme Court's plurality opinion in In re Estate of Borqhi,

Schneider argues that the trial court in this case erroneously applied a

       10 In re Marriage of Brewer, 137 Wash. 2d 756, 766, 976 P.2d 102 (1999); Blood v. Blood.
69 Wash. 2d 680, 682, 419 P.2d 1006 (1966).
       " In re Marriage of Lanoham & Kolde. 153 Wash. 2d 553, 563-64 n.7, 106 P.3d 212 (2005).

                                              5
No. 71212-8-1/6

presumption based on the fact that title to his separate property was placed in

the names of both married parties.12 He is mistaken.

       In Borqhi, a third party placed title to real property the wife owned before

the marriage in the names of both spouses.13 By the time the case was

ultimately resolved, both spouses had passed away and there was no evidence

in the record as to why the third party placed both names on the title, whether the

third party was directed to do so, or whether it was error.14

       But the parties here did not simply add Bolton's name to the title. And the

Borqhi court emphasized that a party who intends to transfer separate property to

the marital community may do so by several means that evidence clear intent.

The court specified that one of those means is to "execute a quitclaim deed

transferring the property to the community, join in a valid community property

agreement, or otherwise in writing evidence his or her intent."15 The quit claim
deed provides clear evidence of Schneider's intent to transfer the property to the

community and is sufficient to overcome the presumption that Schneider's

separate property remained separate by clear and convincing evidence.

       Although Schneider testified that he did not intend to transfer the property

and his sole reason for executing the deed was to obtain a loan, the July 14,

2003 quitclaim deed conveyed the Commodore Way property to Schneider and

Bolton as "husband and wife" and the consideration listed on the deed is "to

        i2 See Borghi, 167 Wash. 2d at 488 ("We have consistently refused to recognize any
presumption arising from placing legal title in both spouses' names and instead adhered to the
principle that the name on a deed or title does not determine the separate or community
character of the property, or even provide much evidence.").
        13 Id, at 482.
        14 Id at 489.
        15 Id. at 488-89.
No. 71212-8-1/7

create community property." And in contrast to Schneider's testimony that he

signed the agreement at the behest of the bank, did not understand the legal

ramifications, and did not discuss it with Bolton, Bolton said:

        We discussed the fact that [Schneider] said that this is my property
        now, too, and we need to both take care of it and both be part of it.
        And he put me on the mortgage and he's given me paperwork to
        sign, which I've signed.1161

We defer to the fact finder on witness credibility and the persuasiveness of the

evidence.17 Because the trial court is in a superior position to weigh evidence

and assess credibility we do not revisit such decisions on appeal.18

        In addition to its reliance on the quitclaim deed, the court also found that

the community expended significant efforts to improve the home and these

efforts lent support to its determination that Schneider had converted his

separate property to community property. Schneider contends that the record

does not support these findings.19 Again, we disagree.

        The trier of fact could infer from the testimony that after the marriage, the

parties used Schneider's community earnings to pay the mortgage. And there is

no dispute that Bolton did a significant amount of design work for the remodel.

She testified that she was not compensated because "it was our house."

        Because the trial court did not err, it was under no obligation to consider

the option of a community right to reimbursement for the increase in value

attributable to community contributions. And perhaps most importantly,

        16 Report of Proceedings (July 29, 2013) at 85.
        17 In re Marriage of Akon. 160 Wash. App. 48, 57, 248 P.3d 94 (2011).
        18 In re Marriage of Olivares. 69 Wash. App. 324, 336, 848 P.2d 1281 (1993).
        19 See In re Marriage of Pennington, 142 Wash. 2d 592, 602-03, 14 P.3d 764 (2000)
(appellate court reviews trial court's property distribution to determine whether substantial
evidence supports the findings of fact, and whether those findings support the conclusions of
law).

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No. 71212-8-1/8

Schneider does not contend or demonstrate that the trial court's characterization

of the Commodore Way property was crucial to its overall distribution of property

or that the alleged mischaracterization resulted in an inequitable division of

assets. Accordingly, even if he were correct regarding the legal characterization,

Schneider fails to establish that an error in characterizing the property would be

grounds for reversal in this case.

       We affirm the decree of dissolution and the findings of fact and

conclusions of law. To the extent Bolton contends that Schneider's appeal is

frivolous and requests an award of fees on appeal, we exercise our discretion to

deny the request.
                                                         £&(,J.

WE CONCUR:

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