IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
ZACHARY HARJO, No. 70562-8-1
Appellant,
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GELSEY HANSON,
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Respondent. :•=-» ,:;-,',
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ZACHARY HARJO, No. 71260-8-1 4r- :--;• -.
Appellant,
v.
GELSEY HANSON, UNPUBLISHED
Respondent. FILED: January 20. 2015
Cox, J. - These successive appeals follow a first appeal in which we
substantially affirmed the trial court's decisions, remanding the case only on
limited issues.1 We substantially affirm the trial court's decisions following the
first remand, but vacate the CR 11 sanctions that the trial court imposed on
Zachary Harjo for moving for clarification. We remand this time for the limited
purpose of the trial court clarifying an apparent oversight: the compensation to
Harjo "for his labor in running the [parties' restaurant] business on his own from
June 2009 to [trial in December 2010]."
1 Hanson v. Hario, noted at 170 Wn. App. 1044, 2012 WL 4335455.
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The material facts of this case are set forth in our prior decision. Harjo
and Gelsey Hanson were in a committed intimate relationship. At the end of their
relationship, the parties proceeded to trial in King County Superior Court to
distribute the pseudo community property they acquired during their relationship.
The property included a restaurant, a condominium, and a house.
The court awarded the restaurant to Harjo, ordering him to buy out
Hanson's 50 percent share. The court also awarded Harjo the condominium, but
ordered him to pay Hanson 50 percent of the rent he had collected from the
condominium prior to the action. The court then awarded Hanson the house,
though it credited Harjo with improvements he had made and part of the equity.
The court also found that Hanson was entitled to 50 percent of the restaurant's
profits in 2010.
The court made additional findings about the parties' restaurant. The
court found that it was appropriate to compensate Harjo for his work managing
the restaurant by himself from June 2009 until the time of trial, December 2010.
The court found that Harjo had received $30,408 from the restaurant in 2010 and
the value of his labor was $75,000. Accordingly, the court calculated that Harjo
was entitled to "$75,000 - $30,405 [=] $44,695" [sic].
Although the court calculated that Harjo was entitled to $44,695 for his
services, it did not include this amount in its final tally of what each party owed to
the other. The court's decree likewise did not account for this figure. The court
ultimately ordered Harjo to pay Hanson an equalization payment.
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Harjo appealed, arguing that the court had abused its discretion on
several bases. One of his arguments was that the court miscalculated the
amount of condominium rent that Harjo owed Hanson. He also argued that the
court should have offset the equalization payment by the amount the court found
he was entitled to as compensation for his labor.
In our prior opinion, we remanded to the superior court on the issue of
rent.2 Because the court's findings on rent were inconsistent, we remanded for
the court to clarify its findings or adjust its calculations.3
We affirmed the trial court on all other bases.4 But we noted that Harjo's
compensation for his labor remained unresolved. We noted that the trial court
"expressly found that Harjo should be compensated for the difference between
the value of his services in managing the restaurant between June 2009 to the
end of 2010 and the actual compensation he received."5
But we rejected Harjo's argument that his equalization payment to Hanson
should have been offset by this amount. We stated:
Harjo fails to acknowledge, however, that in addition to
finding that Harjo was entitled to additional compensation for his
work in 2009 and 2010, the court also determined that Hanson,
who received no compensation or benefits from the business since
June 2009, was entitled to share in the profits for 2010. This claim
was not liquidated. It appears therefore that the court's findings
about compensation due to Harjo are relevant to the
2ld
3ld, at *4.
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5 Id. at *3.
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calculation, yet to be determined, of the distribution amount
owed to Hanson for 2010S6]
Following remand, the court made two rulings that are now before us. Its
judgment resolved the issue of condominium rents on which we had remanded,
compelled Harjo to provide an accounting of the restaurant's profits, and
sanctioned Harjo for failing to provide the accounting before being compelled to
do so. Hanson then moved for a judgment on her share of the 2010 restaurant
profits. The court awarded her a 50 percent share in a separate order. It did not
address Harjo's claim that this amount should be offset by the amount of
compensation that the court had previously found he was entitled to. There is
nothing in the record before us that explains this omission.
Harjo separately appealed each ruling. This court assigned separate
appeal numbers to each. We now consolidate these successive appeals.
DISTRIBUTION OF PROPERTY
Harjo challenges three aspects of the trial court's property distribution on
remand. He argues that the court abused its discretion when it awarded Hanson
more than half of the rental income from a jointly owned condo, that it
miscalculated Hanson's share of the 2010 profits from the parties' restaurant,
and that it failed to award Harjo compensation that the court had found he was
entitled to. These arguments are all unpersuasive.
6 Id.
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A committed intimate relationship7 "is a stable, marital-like relationship
where both parties cohabit with knowledge that a lawful marriage between them
does not exist."8 Once the court finds a committed intimate relationship exits, it
distributes all property the parties acquired "through efforts extended during the
relationship."9 Courts divide property from the dissolution of a committed intimate
relationship in a "just and equitable" manner.10 But the court does not need to
distribute the property equally.11
We review the trial court's property distribution for abuse of discretion.12 A
trial court abuses its discretion when its "decision is 'manifestly unreasonable or
based on untenable grounds or untenable reasons.'"13
7Washington courts also refer to committed intimate relationships as
"equity relationships." See Walsh v. Reynolds Wn. App. 335 P.3d 984,
986 (2014). Courts previously referred to committed intimate relationships as
"meretricious" relationships, but have abandoned that terminology because of its
prejudicial connotations. Qlver v. Fowler. 161 Wn.2d 655, 657 n.1, 168 P.3d 348
(2007).
8 Connell v. Francisco, 127 Wn.2d 339, 346, 898 P.2d 831 (1995).
9 In re Marriage of Lindemann, 92 Wn. App. 64, 69, 960 P.2d 966 (1998).
10 In re Marriage of Lindsev, 101 Wn.2d 299, 304, 678 P.2d 328 (1984); In
re Relationship of Long and Fregeau, 158 Wn. App. 919, 928-29, 244 P.3d 26
(2010).
11 In re Meretricious Relationship of Sutton and Widner, 85 Wn. App. 487,
491.933P.2d 1069(1997).
12 In re Long and Fregeau, 158 Wn. App. at 928.
13 State v. Dye, 178 Wn.2d 541, 548, 309 P.3d 1192 (2013) (quoting hue
Marriage of Littlefield, 133 Wn.2d 39, 46-47, 940 P.2d 1362 (1997)).
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Distribution of Condominium Rent
First, Harjo argues that the court abused its discretion when it chose to
award Hanson more than 50 percent of the condominium rent. We disagree.
At trial, the court awarded Hanson 50 percent of the rental income Harjo
collected from the condominium prior to the dissolution trial. The court found
Harjo had collected $7,204 after the parties separated. But the court later
calculated 50 percent of the rent as $6,500. Because of this inconsistency, we
remanded for the court either to clarify its findings, or to adjust Harjo's
equalization payment to Hanson.
On remand, the court confirmed that it intended to award Hanson $6,500.
It acknowledged that $6,500 was more than 50 percent of the rent, but stated
that "while not mathematically precise, the higher amount accomplishes the
court's goal of providing a fair result to [Hanson], given her greater need and the
award of the parties' business[] to [Harjo]."14
This award was not an abuse of discretion. As stated earlier, the court
does not need to distribute property equally, as long as the distribution is fair and
equitable.
Here, the court's division was both fair and equitable. The total amount of
property that Hanson received was only $2,898 more than 50 percent of the
parties' community property. And the court found that the award of the parties'
business to Harjo made this slight imbalance equitable. Because the parties
received substantially similar shares of property, and Harjo received the
14 Clerk's Papers (No. 70562-8-I) at 188.
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business, the court did not abuse its discretion by awarding Hanson slightly more
than 50 percent of the condominium rents.
Harjo argues that the court abused its discretion, because it partially relied
on Hanson's "greater need," and its initial findings at trial did not include a finding
that Hanson had greater need. But we remanded this case to the court in order
for it to clarify its findings or adjust the equalization payment. Accordingly, it is
not an abuse of discretion for the court to enter an additional finding to explain
why it awarded Hanson $6,500, one of the options we designated.
Harjo also argues that the court abused its discretion because it actually
awarded Hanson $13,000. The text of the court's order does say Hanson is
"awarded a total of $13,000 for half of the rents collected "15 But it appears
that this is a clerical error. Hanson's principal judgment was for $52,205. This
amount indicates that the court actually awarded Hanson $6,500, despite the
language in the order. Thus, this argument is not persuasive.
Restaurant Profits
Second, Harjo argues that the court abused its discretion by incorrectly
measuring the 2010 profits of the parties' restaurant. We disagree.
At trial, the court awarded Hanson 50 percent of the 2010 profits. The
court's initial decree did not liquidate Hanson's share of the profits. In the
proceedings following our remand, the court found that the profits were $11,839
and accordingly awarded Hanson $5,919. The court calculated this amount
15]d
7
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based on the restaurant's 2010 tax return. The return listed $11,839 as "ordinary
business income"—total income minus deductible expenses.
Thus, the record supports the trial court's determination of the 2010
profits. Accordingly, the court's decision is based on tenable grounds, and was
not an abuse of discretion.
Harjo argues that the court abused its discretion by failing to account for
non-deductible expenses in its calculation of profits. Harjo argues that the
restaurant's profits were actually $114. The two main non-deductible expenses
Harjo identifies are the result of claiming a tax credit for the partners' income
taxes and IRS penalties and fines from 2008 and 2009 filings.
While Harjo is correct that Hanson received a tax credit of $4,833, Harjo
himself received the same credit. Additionally, the restaurant's tax liability for
2008 and 2009 was presumably accounted for in the restaurant's valuation and
the court's award of the restaurant to Harjo. Harjo does not explain why the court
should have deducted these fines and penalties from Hanson's share of the 2010
profits. Accordingly, this argument is unpersuasive.
Managerial Compensation
Third, Harjo argues that the court abused its discretion by failing to offset
the 2010 profits awarded to Hanson by the amount of compensation the court
had previously found Harjo was entitled to. The record appears to support this
argument because there is no explanation showing either that this was done or, if
not, why not. Accordingly, we remand for appropriate action by the trial court on
this limited issue.
8
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At trial, the court expressly found that Harjo should be compensated for
the difference between the value of his services in managing the restaurant
between June 2009 and trial in December 2010 and the actual compensation he
received. Specifically, it stated: "It is appropriate to compensate [Harjo] for his
labor in running the business on his own from June 2009 to present."16 The court
found that Harjo had received $30,408 from the restaurant in 2010, and that his
labor was worth $75,000 a year. Accordingly, the court calculated that Harjo was
entitled to "$75,000 - $30,405 [=] $44,695" [sic].
Although the court found that Harjo was entitled to this figure, nowhere in
this record regarding calculation of what each party owed to the other does this
figure appear. The court's decree likewise did not account for this figure. The
court ultimately ordered Harjo to pay Hanson an equalization payment, but this
payment does not address the compensation due Harjo.
The court's order awarding Hanson a portion of the profits is silent on the
issue of Harjo's compensation. Similarly, the court's orders denying Harjo's
motions for reconsideration and clarification do not address this issue.
We requested supplemental briefing on this point. But this briefing fails to
satisfactorily address the point. Two unanswered questions remain: whether
Harjo was compensated in the amount the court stated and, if not, why not.
Thus, a remand to the trial court to clarify this limited issue is required to bring
this matter to a close.
16 Clerk's Papers (No. 70562-8-I) at 53.
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TRIAL COURT SANCTIONS
Harjo argues that the trial court abused its discretion when it sanctioned
him. We affirm some sanctions and vacate others.
Appellate courts review sanctions for abuse of discretion.17
Sanctions for Failing to Comply With Court Orders
Harjo argues that the court abused its discretion when it sanctioned him
for failing to comply with court orders.
As previously stated, the court granted Hanson 50 percent of the
restaurant's profits for 2010. Beginning in mid-2009, Harjo was in sole control of
the restaurant. Thus, Hanson could determine the restaurant's profits only if
Harjo provided an accounting. Harjo failed to provide an accounting until he was
compelled to do so by the court.
The court sanctioned Harjo for failing to provide an accounting by
awarding Hanson attorney fees for bringing a motion to compel. This was not an
abuse of discretion.
Harjo argues that the court had never directly ordered him to provide an
accounting to Hanson. While this is true, Harjo knew that the court had awarded
Hanson 50 percent of the profits, and he failed to provide a satisfactory
accounting when asked to do so. Because of Harjo's failure to cooperate,
Hanson had to move to compel an accounting. Thus, it was not an abuse of
discretion for the court to sanction Harjo for this failure.
17 Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994).
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CR 11 Sanctions
Harjo next argues that the court abused its discretion by sanctioning him
under CR 11 for bringing a motion for clarification. We agree.
CR 11 prohibits two types of filings—baseless filings and filings made for
improper purposes.18 A filing is baseless if it is "'(a) not well grounded in fact, or
(b) not warranted by (i) existing law or (ii) a good faith argument for the alteration
of existing law.'"19
CR 11 provides:
If a pleading, motion, or legal memorandum is signed in violation of
this rule, the court, upon motion . . ., may impose upon the person
who signed it. . . an appropriate sanction, which may include an
order to pay to the other party ... the amount of the reasonable
expenses incurred because of the filing . . ., including a reasonable
attorney fee.
Here, the court sanctioned Harjo for making a baseless filing, stating that
there was "no arguable merit" to his motion to clarify.
The motion to clarify appears to have been directed to the matter we
discussed earlier: compensation due Harjo. As stated earlier, we remand this
case in order for the court to clarify its orders based on its previous finding that
Harjo was entitled to compensation. Accordingly, we hold that Harjo's motion
was not baseless. We vacate the CR 11 sanctions the court imposed only for
Harjo's motion for clarification.
18 Stiles v. Kearney, 168 Wn. App. 250, 261, 277 P.3d 9 (2012).
19 Id (internal quotation marks omitted) (quoting MacDonald v. Korum
Ford, 80 Wn. App. 877, 883-84, 912 P.2d 1052 (1996)).
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ATTORNEY FEES ON APPEAL
Hanson argues that she is entitled to attorney fees on appeal under RAP
18.9. We disagree.
Under RAP 18.9(a), "[a]n appellate court may order a party to pay
compensatory damages or terms for filing a frivolous appeal."20 "An appeal is
frivolous if, considering the entire record, the court is convinced that the appeal
presents no debatable issues upon which reasonable minds might differ and that
it is so devoid of merit that there is no possibility of reversal. [W]e resolve all
doubts to whether an appeal is frivolous in favor of the appellant."21
Here, Harjo prevailed on his argument about managerial compensation,
as we have remanded for the court to clarify its findings. And while Harjo did not
prevail on the other substantive issues he raised, resolving the doubts in his
favor, his appeal is not frivolous. Accordingly, we deny Hanson's request for
attorney fees.
MOTION TO STRIKE
Harjo moved to strike certain language in a motion filed by Hanson.
Because we did not consider this language when deciding the case, we deny
Harjo's motion as moot.
20 Lutz Tile. Inc. v. Krech, 136 Wn. App. 899, 906, 151 P.3d 219 (2007).
21 Id.
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In sum, we affirm all decisions of the court except for the imposition of CR
11 sanctions for making a frivolous motion, and the judgment that fails to resolve
the issue of compensation due Harjo. With respect only to the latter matter, we
remand to the trial court for clarification.
^7C,T.
WE CONCUR:
A^Q&L, x
13