Court Opinion

ID: 4541680
Source: CourtListenerOpinion
Date Created: 2020-06-16 15:14:34.777777+00
Date Added: 2024-06-11T08:49:32.109602
License: Public Domain

FILED
                                                                        JUNE 16, 2020
                                                                In the Office of the Clerk of Court
                                                               WA State Court of Appeals, Division III
        IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                           DIVISION THREE

  In the Matter of the Marriage of               )
                                                 )          No. 36393-7-III
  BEVERLY SEVIGNY,                               )
                                                 )
                Respondent/Cross Appellant,      )      ORDER GRANTING MOTION
                                                 )      FOR RECONSIDERATION,
         and                                     )      WITHDRAWING OPINION,
                                                 )      AND SUBSTITUTING
  MICHAEL G. SEVIGNY,                            )      OPINION
                                                 )
                Appellant/Cross Respondent.      )

       Respondent, Beverly Sevigny, filed a motion for reconsideration on May 11, 2020

of the opinion filed in the above matter on April 21, 2020. Appellant, Michael Sevigny,

has filed a response to respondent’s motion. The court has determined that respondent’s

motion for reconsideration should be granted, the opinion should be withdrawn and a

substitute opinion be filed. Now, therefore, it is hereby

       ORDERED that respondent’s motion for reconsideration is granted. It is further

       ORDERED that the opinion filed on April 21, 2020, is withdrawn and a substitute

opinion be filed.

       PANEL: Andrus, Lawrence-Berrey, Pennell

FOR THE COURT:

                                     ___________________________________
                                     REBECCA PENNELL
                                     Chief Judge
                                                                       FILED
                                                                    JUNE 16, 2020
                                                            In the Office of the Clerk of Court
                                                           WA State Court of Appeals, Division III

      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                         DIVISION THREE

In the Matter of the Marriage of              )
                                              )
BEVERLY SEVIGNY,                              )        No. 36393-7-III
                                              )
             Respondent/Cross Appellant,      )
                                              )
             and                              )
                                              )        UNPUBLISHED OPINION
MICHAEL G. SEVIGNY,                           )
                                              )
             Appellant/Cross Respondent.      )

        ANDRUS, J. — After 33 years of marriage, Beverly and Michael Sevigny

 separated, and two years later, Beverly1 filed for divorce. The trial court awarded

 Michael the marital community’s interest in two ongoing businesses, a construction

 company and a real estate investment limited liability company (the “LLC”), that

 Michael and his oldest son started during the marriage and continued to manage

 after the parties’ separation. Michael challenges the trial court’s valuation of the

 LLC, arguing it was inappropriate to include real estate investments the LLC

 acquired after separation. Michael contends this error led to an excessive transfer

        1
          Because the parties share the same last name, we use their first names for
 clarity. No disrespect is intended.
No. 36393-7-III
In re Marriage of Sevigny

payment of $707,485 to Beverly, an amount he argues is an unfair and inequitable

distribution of community and separate property. Finally, Michael maintains that,

in light of the large property award Beverly received, the trial court abused its

discretion in ordering him to pay her maintenance of $6,500 a month for 10 years.

Beverly cross appeals the trial court’s determination that her judgment against

Michael will accrue interest at 4 percent.

       We affirm the trial court’s characterization of the couple’s property, the

property distribution, and the post-judgment interest rate. We reverse the award of

maintenance and remand for reconsideration of the amount awarded.

                                      FACTS

       Michael and Beverly married in 1979. Beverly briefly worked in retail

before becoming a full-time, stay-at-home mother after their first child was born.

In 1995, when their youngest child was in first grade, Beverly became a part-time

substitute teacher, and five years later, she began working as a full-time

paraprofessional, helping in the classroom with students. She also worked as a

secretary for the school district.

       Michael worked construction in his father’s business until 2007, when he and

his oldest son, Matthew, started their own construction company, M. Sevigny

Construction Inc.     In mid-2012, Michael and Matthew formed 16th Avenue

Properties LLC (the “LLC”) as equal partners and began acquiring income-

producing real estate.

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No. 36393-7-III
In re Marriage of Sevigny

       Michael and Beverly separated in February 2013, and Beverly filed for

divorce in 2015. After a bench trial, the trial court divided $2.1 million in net assets

as follows: Beverly received the family home in Zillah, a Hawaii timeshare, a

vehicle, specific household goods, various bank accounts, deferred compensation

accounts, and the parties’ IRA accounts and life insurance policies. The trial court

valued these assets at $572,911.

       Michael received the community’s 50 percent interest in M. Sevigny

Construction, valued at $775,000, and its 50 percent interest in the LLC, valued at

$341,332. Michael also received the family’s vacation cabin in Yakima, valued at

$200,000. Finally, the court deemed two distributions Michael had received from

the LLC in 2016 and 2017, totaling $240,000 after taxes, as predistributions of

community assets. The total value of these assets was $1,561,082.

       The trial court adopted Michael’s recommended asset split of 60/40, favoring

Beverly. The result was a final distribution to Michael of $853,597 and to Beverly

of $1,280,396. To effectuate this division of assets, the court required Michael to

make a transfer payment of $707,485 to Beverly. The trial court entered a judgment

against Michael for this amount, plus an additional $10,000 in fees awarded to

Beverly, and set the interest rate on the judgment at 4 percent per annum. In

addition, the court awarded Beverly spousal maintenance of $6,500 a month until

her 70th birthday.

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In re Marriage of Sevigny

       Michael appeals, raising three main challenges to the trial court’s division of

assets. First, he argues the trial court erred in characterizing the LLC and the

income-producing real estate the LLC purchased after the parties’ separation as

community property. He further argues the trial court erred in awarding Beverly

any portion of the LLC’s post-separation acquisitions. Second, he maintains the

trial court erred in valuing the LLC as of the date of trial, rather than the date of

separation. Finally, he contends the maintenance award is unjust and inequitable in

light of the large transfer payment and the fact that Beverly received all the liquid

assets in the divorce. He asserts that he is unable to pay Beverly $6,500 each month,

fulfill his own obligations, and satisfy the money judgment.

                                     ANALYSIS

Characterization of the LLC as Community Property

       Michael assigns error to the trial court’s characterization of the LLC as

community property. Because Michael formed and capitalized the LLC before the

couple separated, the trial court did not err in concluding Michael’s interest in the

LLC was community property.

       Under RCW 26.09.080, in any dissolution proceeding, the court must dispose

of the parties’ property and liabilities, whether community or separate, as is just and

equitable. In performing its obligation to make a just and equitable distribution of

property, the trial court must characterize the property as either community or

separate. In re Marriage of Kile, 186 Wash. App. 864, 875, 347 P.3d 894 (2015).

                                         -4-
No. 36393-7-III
In re Marriage of Sevigny

       “Property is characterized as of the date of its acquisition.” In re Marriage

of Sedlock, 69 Wash. App. 484, 506, 849 P.2d 1243 (1993). “The test of character is

‘whether it was acquired by community funds and community credit, or separate

funds and the issues and profits thereof.’” Id. (internal quotation marks omitted)

(quoting Katterhagen v. Meister, 75 Wash. 112, 115, 134 P. 673 (1913)). “A trial

court’s characterization of property as separate or community presents a mixed

question of law and fact.” Kile, 186 Wash. App. at 876. The time and method of

acquisition are questions for the trier of fact. Id. We review the factual findings

supporting a trial court’s characterization for substantial evidence. Id. “‘Substantial

evidence exists if the record contains evidence of sufficient quantity to persuade a

fair-minded, rational person of the truth of the declared premise.’” In re Marriage

of Griswold, 112 Wash. App. 333, 339, 48 P.3d 1018 (2002) (quoting Bering v.

SHARE, 106 Wash. 2d 212, 220, 721 P.2d 918 (1986)). The ultimate characterization

of the property as community or separate based on the trial court’s findings of fact

is a question of law that we review de novo. Kile, 186 Wash. App. at 876.

       The LLC was formed and capitalized during the marriage. Michael testified

he and Matthew started the LLC sometime in 2012 and each owns a 50 percent share

of that entity. The 2012 tax return for the LLC identified the date of business

formation as June 26, 2012. The LLC’s assets on the date of formation were a

                                         -5-
No. 36393-7-III
In re Marriage of Sevigny

commercial building located at 1212 N. 16th Avenue, in Yakima, Washington2 with

a cost basis of $544,250, and a separate parcel of land valued at $429,660. There is

no evidence in the record as to the source of funds Michael and Matthew used to

capitalize the LLC or to purchase these two initial assets.

       The LLC then acquired a parcel in Yakima with three rental houses located

at 1607, 1611, and 1703 River Road on December 11, 2012.3 The LLC’s 2013 tax

return identified the cost basis of this parcel as $378,744. This acquisition also

occurred during the marriage. Again, Michael presented no evidence as to the

source of funds he and Matthew used to make this acquisition.

       Finally, Michael admitted Beverly had a 25 percent ownership interest in the

LLC, stating, “I’ve never disputed that.” Beverly testified she and Michael planned

to use the purchase of these properties as their retirement plan to compensate them

over and above their wages. She also testified that she was asked to sign sale

documents every time the LLC purchased or changed properties because she was

part of that company. This evidence supports the trial court’s conclusion that the

marital community’s 50 percent interest in the LLC was community property.

Valuation of the LLC Including Post-Separation Acquisitions

       Michael next argues the trial court erred in valuing the LLC as of the date of

trial, rather than the date of separation. He contends the LLC acquired several

       2
       The LLC held this property at the time of trial, where it was identified in
Steve Korn’s appraisal report, obtained by Beverly, as Parcel 1.
       3
           The appraisal identified the River Road property as Parcel 3.

                                          -6-
No. 36393-7-III
In re Marriage of Sevigny

parcels of real estate after the couple’s separation, emphasizing the trial court’s

finding that “the parties stopped acquiring community property and incurring

community debt” when they separated in February 2013.             He maintains the

appreciation in the LLC’s value should have been characterized as his separate

property under RCW 26.16.140. We reject this argument because Michael did not

prove he used separate property to enhance the value of the LLC.

       All property acquired during marriage is presumptively community property.

RCW 26.16.030; Kile, 186 Wash. App. at 876. “The burden of rebutting this

presumption is on the party challenging the asset’s community property status, and

[the presumption] ‘can be overcome only by clear and convincing proof that the

transaction falls within the scope of a separate property exception.’” Dean v.

Lehman, 143 Wash. 2d 12, 19-20, 18 P.3d 523 (2001) (citation omitted) (quoting

Estate of Madsen v. Commissioner, 97 Wash. 2d 792, 796, 650 P.2d 196 (1982),

overruled in part on other grounds by Aetna Life Ins. v. Wadsworth, 102 Wash. 2d
652, 659-60, 689 P.2d 46 (1984)). RCW 26.16.140 provides one such exception:

when spouses are living separate and apart, their respective earnings and

accumulations shall be their separate property.

       After Michael and Beverly separated in February 2013, the LLC bought and

sold several parcels of real estate. In July 2013, the LLC purchased property located

at 503 S. Elm Street in Toppenish, Washington for $337,000. According to Beverly,

the LLC later sold this parcel for $500,000.

                                        -7-
No. 36393-7-III
In re Marriage of Sevigny

         In September 2013, the LLC acquired commercial property located at 1928

Rudkin Road, in Union Gap, Washington, for $1.2 million.4 Then in November

2014, the LLC purchased commercial property located at 1177 W. Lincoln Avenue,

in Yakima, for $594,377.5 And at the time of trial, the LLC also owned a piece of

undeveloped land at 1725 River Road in Yakima, although the record does not

indicate when it was acquired or its purchase price.6

         Michael had the burden of proving by clear and convincing evidence that the

LLC’s acquisitions involved an investment of his separate property. Sedlock, 69
Wash. App. at 509; see also In re Marriage of Schwarz, 192 Wash. App. 180, 189, 368
P.3d 173 (2016). While Michael is correct that RCW 26.16.140 characterizes

earnings and assets accumulated after separation as separate property, he produced

no evidence that he used his separate earnings to purchase any of real estate the LLC

holds.

         The requirement of clear and satisfactory evidence is not met by the
         mere self-serving declaration of the spouse claiming the property in
         question that he acquired it from separate funds and a showing that
         separate funds were available for that purpose. Separate funds used
         for such a purpose should be traced with some degree of particularity.

         4
             The appraisal identified the Rudkin Road property as Parcel 5.
         5
             The appraisal identified the Lincoln Avenue property as Parcel 4.
         6
             The appraisal identified this undeveloped land as Parcel 2.

                                            -8-
No. 36393-7-III
In re Marriage of Sevigny

Berol v. Berol, 37 Wash. 2d 380, 382, 223 P.2d 1055 (1950). Michael did no tracing

to establish that he used separate funds to acquire any of the properties the LLC

purchased after separation and, thus, failed to meet his burden of proof.

       Moreover, throughout their separation, Michael and Beverly filed joint tax

returns declaring income from the LLC as community income. In the tax years 2013

through 2016, the marital community reported income from the LLC of $15,252,

$93,310, $81,960, and $140,760, respectively. Michael and Beverly both treated

the LLC as a community asset and the income generated from properties the LLC

purchased both before and after separation as community income.

       We further conclude the trial court did not abuse its discretion in valuing the

LLC as of the date of trial, rather than the date of separation. The dissolution statutes

give courts broad discretion to pick a valuation date that is equitable. Lucker v.

Lucker, 71 Wash. 2d 165, 167, 426 P.2d 981 (1967). Choosing to value a community

asset on the date of trial, rather than the date of separation, is not an abuse of

discretion. Koher v. Morgan, 93 Wash. App. 398, 405, 968 P.2d 920 (1998).

       Beverly presented expert testimony from real estate appraiser Steve Korn as

to the value of the LLC’s assets as of February 2017, some four years after

separation and one year before trial. The appraisal identified six parcels in which

the LLC held an ownership interest: Parcel 1 and Parcel 3, properties purchased

before separation, and Parcels 2 and 4 through 6, properties in which the LLC

obtained an interest after separation.

                                          -9-
No. 36393-7-III
In re Marriage of Sevigny

       Michael presented no expert testimony regarding the value of the LLC on the

date of separation. Instead, he testified he believed the community interest in the

LLC as of December 2012, and therefore at the time of separation, was $153,228.

It appears he pulled this number from the LLC’s 2012 tax return identifying the

value of each partner’s capital account. But Michael did not explain why his

valuation approach was preferable or a more reliable method of valuing the LLC

than Korn’s appraisal.

       The trial court chose to adopt Korn’s valuation. It found the community

interest in the real estate held by the LLC had a value, as of the appraisal date, of

$2,355,250. After subtracting the outstanding debt of $2,013,918, the court found

the LLC business had a net value to the community of $341,332.

       We cannot conclude the trial court abused its discretion in valuing the marital

community’s interest in the LLC as of February 2017 rather than December 2012.

There is no evidence showing Michael invested any post-separation earnings to

enable the LLC to acquire any of the three parcels it purchased after February 2013.

And it is also unclear whether the LLC used rental income from parcels it acquired

before the parties’ separation to buy parcels post-separation. Although Michael

testified he could produce paperwork to demonstrate he had used post-separation

earnings, he failed to present any such evidence.

       Michael relies on In re Marriage of Elam, 97 Wash. 2d 811, 650 P.2d 213

(1982), for the proposition that the marital community cannot share in the increase

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No. 36393-7-III
In re Marriage of Sevigny

in value of separate property unless community funds or “efforts” went into

increasing the value of that property. But the LLC was community property, not

Michael’s separate property, as Michael admitted at trial. And Michael presented

no evidence at trial to establish that the LLC increased in value because of his

investment of separate funds or his separate efforts after the parties separated. Thus,

Elam is of no assistance to him here.

       Under these circumstances, the trial court did not err in concluding that

Michael’s 50 percent interest in the LLC was community property, as was any

appreciation in value to that interest based on the acquisition of properties after

separation.

Property Division

       Next, Michael contends the trial court erred in awarding Beverly a

disproportionate share of the parties’ property.7 Trial courts have broad discretion

in dividing parties’ property in a dissolution, and we will disturb a distribution of

property only if the trial court manifestly abuses its discretion. In re Marriage of

Brewer, 137 Wash. 2d 756, 769, 976 P.2d 102 (1999); see also In re Marriage of

Rockwell, 141 Wash. App. 235, 242-43, 170 P.3d 572 (2007). A trial court’s decision

       7
          Michael also contends the property division should be reversed because it
was influenced in part by Beverly’s intimation that Michael was living with another
woman. There is absolutely nothing in the record or the trial court’s ruling to
support this argument. Michael’s living arrangements became relevant when he
contested Beverly’s request for spousal maintenance, claiming he could not afford
to pay it. The court correctly needed to assess Michael’s ability to pay maintenance,
and this analysis made his monthly living expenses relevant.

                                        - 11 -
No. 36393-7-III
In re Marriage of Sevigny

is manifestly unreasonable if it is outside the range of acceptable choices

considering the facts and applicable legal standard, is unsupported factually by the

record, or is based on an incorrect legal standard. In re Parenting & Support of

L.H., 198 Wash. App. 190, 194, 391 P.3d 490 (2016).

       All of the parties’ property, both community and separate, is before the trial

court for distribution. In re Marriage of Shannon, 55 Wash. App. 137, 141, 777 P.2d
8 (1989). And the trial court’s characterization of property as either community or

separate is not controlling. Id. Instead, the trial court must ensure the final division

is fair, just and equitable under all the circumstances. In re Marriage of Groves, 10
Wash. App. 2d 249, 254, 447 P.3d 643 (2019), review denied, 195 Wash. 2d 1005, 458
P.3d 781 (2020).

       In dividing property, the trial court must consider: (1) the nature and extent

of the community property, (2) the nature and extent of the separate property, (3) the

duration of the marriage, and (4) the economic circumstances of each spouse at the

time the division of property is to become effective. RCW 26.09.080; Groves, 10
Wash. App. 2d at 254. No factor is afforded greater weight than any other. In re

Marriage of Konzen, 103 Wash. 2d 470, 478, 693 P.2d 97 (1985). Other relevant

factors include “the health and ages of the parties, their prospects for future earnings,

their education and employment histories, their necessities and financial abilities,

their foreseeable future acquisitions and obligations, and whether ownership of the

                                         - 12 -
No. 36393-7-III
In re Marriage of Sevigny

property is attributable to the inheritance or efforts of one or both spouses.” In re

Marriage of Gillespie, 89 Wash. App. 390, 399, 948 P.2d 1338 (1997).

       A trial court is not required to divide community property equally. Rockwell,
141 Wash. App. at 243. In a long-term marriage, “the trial court’s objective is to place

the parties in roughly equal financial positions for the rest of their lives.” Id. “‘[T]he

trial court must ensure that the final division of property is fair, just and equitable

under all the circumstances.’” Groves, 10 Wash. App. 2d at 254 (internal quotation

marks omitted) (quoting In re Marriage of Olivares, 69 Wash. App. 324, 329, 848
P.2d 1281 (1993)). Furthermore, this is a highly deferential standard, and Michael,

as the spouse challenging the decision, “‘bears the heavy burden of showing a

manifest abuse of discretion.’” Id. at 255 (quoting In re Marriage of Landry, 103
Wash. 2d 807, 809, 699 P.2d 214 (1985)).

       Michael argues that under In re Marriage of Doneen, 197 Wash. App. 941, 391
P.3d 594 (2017), and In re Marriage of Kaplan, 4 Wash. App. 2d 466, 421 P.3d 1046

(2018), there is no mandate of lifetime equal financial circumstances for ex-spouses

of long-term marriages. He contends the trial court, in an attempt to provide this

financial security for Beverly, settled on a property division that was unfair to him.

But neither case supports the proposition that it is an abuse of discretion to award

60 percent of a couple’s assets to the more economically disadvantaged spouse in a

long-term marriage. Rather, the courts reaffirmed the proposition that trial courts

must exercise their discretion in considering the statutory factors of RCW 26.09.080

                                          - 13 -
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In re Marriage of Sevigny

in reaching a “fair, just and equitable division of property.” Kaplan, 4 Wash. App. 2d

at 475-76; Doneen, 197 Wash. App. at 948-51.

       Substantial evidence supports the trial court’s property distribution. Michael

and Beverly had been married more than 33 years. Beverly did not finish college

because she married Michael and remained out of the workforce to raise their five

children. Both parties were 60 at the time of trial and in good health. The parties

had very disparate earnings histories. Beverly, working as a paraprofessional and

secretary for the local school district, earned between $15 per hour and $17 per hour

in the two positions. The trial court found that her gross wages in 2017 were

$26,530. Given Beverly’s lack of a college degree, it was reasonable for the trial

court to assume her prospects for any substantial wage increases before she reaches

retirement age are low.

       Michael did not produce any income documentation for 2017, but the 2016

corporate tax return indicated Michael received a salary of $86,320 from his

construction company that year, and he testified his salary in 2017 was about the

same as in 2016. In addition, the LLC’s Schedule K-1 reflected a $150,000

distribution to Michael, and he testified he expected a similar distribution in 2017.

Thus, by awarding Michael the LLC, it was reasonable for the trial court to conclude

that Michael’s annual income would likely exceed $200,000 compared to Beverly’s

$26,530. And the financial documents showed a strong history of profitability both

for the construction company and the LLC, making it likely that Michael would

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No. 36393-7-III
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continue to receive the same level of earnings into the foreseeable future. Finally,

Michael proposed a 60/40 split with Beverly obtaining the larger share of the marital

estate.

          The court awarded the family home to Beverly and the vacation cabin to

Michael. It awarded the IRAs, bank accounts, and life insurance policies to Beverly.

It awarded the marital community’s interest in the two businesses to Michael.

Because Michael received the two assets with the highest values—the construction

company and the LLC—the only way to achieve an equal property division was to

require a transfer payment from Michael to Beverly. Given the significant disparity

in the parties’ ability to generate income in the future, the award of income-

producing property to Michael, and Michael’s request for a 60/40 split in favor of

Beverly, we cannot conclude that a 60 percent award to Beverly was an abuse of

discretion.

Maintenance

          Michael next assigns error to the trial court’s award of spousal maintenance.

Michael argues the trial court failed to consider the property awarded to Beverly in

assessing her need for maintenance and failed to take into account Michael’s

obligation to pay Beverly $707,000 when evaluating his ability to pay.

          RCW 26.09.090 outlines a nonexclusive list of factors the court should

consider in determining whether to order maintenance and in what amount:

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       (a) The financial resources of the party seeking maintenance,
       including separate or community property apportioned to him or her,
       and his or her ability to meet his or her needs independently . . . ;

       (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 . . . ;

       (d) The duration of the marriage . . . ;

       (e) The age, physical and emotional condition, and financial
       obligations of the spouse . . . seeking maintenance; and

       (f) The ability of the spouse . . . from whom maintenance is sought to
       meet his or her needs and financial obligations while meeting those of
       the spouse . . . seeking maintenance.

In a long term marriage, maintenance can help equalize the post-dissolution

standard of living of the parties, particularly where the superior earning capacity of

one spouse is one of the few assets of the community. In re Marriage of Sheffer, 60
Wash. App. 51, 57, 802 P.2d 817 (1990).

       At trial, Beverly sought maintenance of 50 percent of their combined

incomes for the remainder of her life. Michael paid Beverly $3,000 a month in

support after they separated in February 2013 until the date of trial. He asked the

trial court to reduce that amount to $2,500 and to require him to pay maintenance

for no more than five years. The trial court found that Beverly was in need of

maintenance and that Michael had the ability to pay it. It then determined the

couple’s net combined income was $16,534. It appears the court divided the

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In re Marriage of Sevigny

couple’s total net income in two and awarded Beverly a sufficient amount of

maintenance to ensure she received 50 percent of the couple’s total net earnings.8

       This court reviews an award of spousal maintenance for an abuse of

discretion. In re Marriage of Zahm, 138 Wash. 2d 213, 226, 978 P.2d 498 (1999). An

abuse of discretion exists only if the trial court bases its award of maintenance on

untenable grounds or for untenable reasons. In re Marriage of Wright, 78 Wash. App.
230, 237, 896 P.2d 735 (1995). A paramount concern is the economic position in

which a dissolution decree leaves the parties. In re Marriage of Washburn, 101
Wash. 2d 168, 181, 677 P.2d 152 (1984).

       The record supports the trial court’s finding that Beverly has a need for

maintenance. She testified to monthly expenses of approximately $3,000 and only

$1,701 in earnings to cover those expenses. And the record supports Michael’s

ability to pay $6,500 in maintenance to Beverly if the court considered only

Michael’s personal living expenses. He has monthly expenses of $5,000. After

paying maintenance and his monthly expenses, Michael would have approximately

$3,300 in disposable income.

       But the record does not support a finding that he has the ability to pay both

the $707,000 judgment entered against him and this level of maintenance at the

same time. RCW 26.09.090(1)(f) requires the court to consider not only the

       8
        Total net income of $16,534, divided by two is $8,267. Subtracting
Beverly’s net income of $1,701 results in $6,566.

                                       - 17 -
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In re Marriage of Sevigny

spouse’s ability to meet his own needs but also his ability to meet his other “financial

obligations” while paying spousal maintenance. As Michael indicated, he was

awarded interests in two income-generating companies but none of the parties’

liquid assets. In order to pay the $707,000 judgment, Michael would have to either

use a substantial portion of his earnings, sell his interests in his businesses, or

convince his son to sell real estate held by the LLC. But Michael’s interest in the

LLC was valued at under $350,000, and even if the LLC sold all of the properties it

held, it would not cover the judgment Michael owes to Beverly. And Michael’s

main source of income would disappear. He would no longer have an adequate

monthly income to pay the $6,500 in maintenance.

       Even if the LLC sold one or more properties to assist Michael in paying off

some, but not all, of Beverly’s judgment, it would still negatively affect his total

income, making the court’s 50/50 split of total net income unfair. It is unclear from

this record whether the trial court fairly assessed this issue. Its failure to give fair

consideration to RCW 26.09.090(1)(f), or to make findings to support a

determination that Michael can both service his debt to Beverly without a significant

loss of income and afford to pay $6,500 a month in maintenance is an abuse of

discretion. See In re Marriage of Mathews, 70 Wash. App. 116, 123-25, 853 P.2d 462

(1993) (reversing maintenance award and remanding for trial court to reconsider

factors to ensure obligor had ability to meet own expenses in addition to financial

obligations imposed by court).

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       For this reason, we reverse the maintenance award and remand to the trial

court with directions to consider maintenance in light of the monetary judgment

Michael owes to Beverly and his ability to simultaneously pay off that judgment

and pay reasonable maintenance.

Post-Judgment Interest

       Beverly argues the trial court erred by imposing only a four percent interest

rate on the equalizing payment and attorney fee judgment. We reject this argument.

       We review a trial court’s decision setting the interest rate on a judgment for

an abuse of discretion. In re Marriage of Knight, 75 Wash. App. 721, 731, 880 P.2d
71 (1994). Trial courts must enter judgments in compliance with RCW 4.56.110,

which requires interest on judgments to accrue at the maximum rate permitted under

RCW 19.52.020—12 percent. In re Marriage of Harrington, 85 Wash. App. 613,

630-31, 935 P.2d 1357 (1997). “Although the trial court has discretion to reduce

the rate of interest on deferred payments under a property distribution decree, the

court abuses its discretion if it fixes an interest rate below the statutory rate without

setting forth adequate reasons for the reduction.” Id. at 631 (citations omitted).

“‘Failure to do so constitutes error meriting remand for correction of the judgment’s

interest rate to the statutory rate.’” Id. (quoting Knight, 75 Wn. App. at 731).

       Michael asked the court to set the interest on any monetary judgment at 3 or

3.5 percent given the size of the judgment and the monthly maintenance he had to

pay. Beverly requested the 12 percent statutory rate because Michael’s businesses

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No. 36393-7-III
In re Marriage of Sevigny

were so profitable. The trial court stated, “I’m going to set the interest rate at 4

percent. That’s reasonable under the circumstances given the uneven distribution

as well as the . . . maintenance.”

       Beverly argues the trial court’s reference to the disproportionate property

division and maintenance is an insufficient justification for a reduced interest rate.

We disagree. The trial court found persuasive Michael’s argument that setting post-

judgment interest at 12 percent would impose too great of a financial burden on him

given the amount of judgment and maintenance. This is an adequate reason to

depart from the statutory post-judgment interest rate.

       Beverly also argues the low interest rate creates a disincentive for Michael to

pay the judgment. But Beverly relies on evidence outside the trial court record to

make this argument. There is nothing in the record before the trial court to

substantiate this assertion.

       Moreover, Beverly has methods under the law for collecting the judgment,

even if Michael refuses to pay. She has the right to initiate collection proceedings

through which she can garnish wages or proceeds he may hold in bank accounts, or

attach and sell other assets. See chapter 6.25 RCW (attachment); chapter 6.27 RCW

(garnishment); chapter 6.32 RCW (supplemental proceedings against judgment

debtor). She is not without a legal remedy here. Because the trial court provided

an adequate reason for reducing the interest rate, we conclude the trial court did not

abuse its discretion by reducing the interest rate to four percent.

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No. 36393-7-III
In re Marriage of Sevigny

       AFFIRMED in part; REVERSED in part, and REMANDED for

reconsideration of maintenance in a manner consistent with this opinion.9

       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.

                                                            Andrus, J.

WE CONCUR:

_________________________________
      Lawrence-Berrey, J.

_________________________________
      Pennell, C.J.

       9
         Beverly has requested an award of attorney fees and costs as allowed by
RAP 18.1 and RCW 26.09.140. RCW 26.09.140 provides, “Upon any appeal, the
appellate court may, in its discretion, order a party to pay for the cost to the other
party of maintaining the appeal and attorney's fees in addition to statutory
costs.” “A party to a dissolution action is not entitled to attorney fees as a matter of
right.” In re Marriage of Harrington, 85 Wash. App. 613, 635, 935 P.2d 1357 (1997),
as amended on reconsideration (May 5, 1997). In addition, when deciding whether
to award attorney fees, we must balance Beverly’s needs against Michael’s ability
to pay. Id. Because we remand for reconsideration of the maintenance award based
on Michael’s ability to meet his financial obligations and otherwise affirm the trial
court, we exercise our discretion under RCW 26.09.140 and deny Beverly’s request
for attorney fees on appeal.

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