In the Matter of the Marriage of: Mary Alice Carlson & Hugh David Carlson

FILED
MAY 30, 2019
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. 34443-6-III
)
MARY ALICE CARLSON, )
)
Respondent, )
) UNPUBLISHED OPINION
and )
)
HUGH DAVID CARLSON, )
)
Appellant. )

FEARING, J. — Hugh David Carlson (David) and Mary Carlson, spouses of a

dissolved marriage, cross-appeal numerous discretionary rulings of the dissolution court

dividing property and liabilities, awarding spousal maintenance, and awarding attorney

fees. Arguments from both parties that the trial court’s rulings erroneously benefitted the

other party suggest wise rulings by the dissolution court. Nevertheless, we independently

review the record cited by the parties to determine if the dissolution court abused its
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discretion. We hold the trial court did not abuse its discretion and affirm the rulings,

except that we agree with David that the trial court may have performed a mathematical

error, and we remand for clarification.

In a consolidated action, a limited partnership formed by David Carlson appeals

the trial court’s dismissal, based on the statute of limitations, of a suit to collect loans that

the partnership extended to the marital couple. The partnership also appeals the trial

court’s dismissal, due to the statute of limitations, of a claim against Mary Carlson for

alleged breach of a fiduciary duty. We affirm the dismissals.

FACTS

David and Mary Carlson married in May 1989, when David was age 46 and Mary

age 34. A perceptive dissolution court described the couple’s relationship, at least in

recent years, as more of a business association than a romantic bond. The couple bore no

children together, but generated children during earlier marriages. The couple separated

in July 2012. This appeal primarily concerns the division of property on dissolution.

During their marriage, David and Mary Carlson toiled as orchardists. The couple

grew tree fruit on multiple properties in the Yakima Valley through the entities Carlson

Orchards, Inc., South 80 Orchards Limited Partnership, and Carlson Agribusiness, LLC.

The Carlsons also operated two other entities: HMD, LLP, formed by David and his

father in 1999, and RMT Holdings, LLC, formed by Mary in 2005. The dissolution court

needed to divide the entities and assets of the various entities between David and Mary.

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David Carlson managed the orchard growing, packing, and marketing operations,

and Mary oversaw the orchard finances. David also served as the salaried chair of the

Washington State Apple Commission from 2003 to 2008 and, at the time of the marital

dissolution, earned $6,500 per month as a consultant to Borton Fruit, a grower, packer,

and shipper of fruits in the Yakima Valley.

David Carlson incorporated Carlson Orchards in 1971 or 1972 with sixty-eight

orchard acres. Eventually Carlson Orchards farmed 1,900 acres of apples, cherries,

apricots, peaches, and nectarines on orchards in Mattawa, Selah, Terrace Heights,

Wapato, and Sunnyside. In addition to owning some of the orchard land, Carlson

Orchards leased land from other entities, including the Bureau of Indian Affairs (BIA),

the State Department of Natural Resources, and the Carlson owned company of South 80

Orchards. David Carlson formed South 80 Orchards between 1997 and 1999.

David Carlson and his father, Hugh Carlson, formed HMD, LLP in 1999, with the

father and son as general partners and with four members of the family of Marla Contini,

David’s sister, as limited partners. The limited partnership engaged in acquiring, leasing,

selling, and developing real estate and personal property, including farm, ranch, and

commercial property. Management and control of the partnership rested exclusively with

the general partners.

In 1999, Carlson Orchards’ young, productive orchard in Mattawa suffered a

financial loss due to a fire and spray used by government workers to douse the fire. The

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spraying caused damage to fruit trees and buds. The loss limited Carlson Orchards’

ability to repay loans.

After Hugh Carlson died in 2000 and after the commencement of the financial loss

to Carlson Orchards, HMD amended its partnership agreement to designate three general

partners: the estate of Hugh Carlson, with David as personal representative; Mary

Carlson, as her separate estate; and Marla Contini. The amended agreement listed

Mary’s percentage of interest as a 2.5 percent general partner and a 4.0 percent limited

partner. The agreement listed Hugh Carlson’s estate’s interest as a 2.5 percent general

partner and an 80 percent limited partner. At the time of the 2015 Carlson marital

dissolution trial, HMD owned assets worth $1 million.

In 2001, Carlson Orchards entered receivership due to unpaid bank loans, and

David Carlson eventually liquidated the company. The lenders waived rights to the

lessee’s interest in BIA leases and allowed the Carlsons to use working capital needed to

continue operation of the leased properties. David Carlson had personally guaranteed

Carlson Orchards’ bank loans. When one bank garnished his wages from the Apple

Commission, David declared personal bankruptcy.

Because of the bankruptcy of Carlson Orchards, the limited partnership South 80

Orchards began its own grow operations in 2002 and eventually farmed 400 acres of

orchards. David Carlson held no partnership interest in South 80 Orchards. Mary

Carlson, who owned 65.4 percent of South 80 Orchards, was the general partner and

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David’s son, Nicholas, who owned a 27.5 percent interest, was one of three limited

partners.

Mary Carlson suffered serious injuries in an automobile accident in 2002. At the

time of the 2016 dissolution trial, Mary continued to suffer disability from the injuries,

although the disability did not prevent her from work duties.

In 2005, Mary Carlson received $500,000 in life insurance proceeds from one of

her son’s death. Mary then formed the company, RMT Holdings, LLC to hold the

insurance proceeds. RMT Holdings stands for Robert, Mary, and Tracy. Robert and

Tracy are Mary’s two other sons. On August 25, 2006, RMT Holdings purchased a lot

on Scenic Loop in Yakima for $70,000.

Mary Carlson maintained the bookkeeping records for the limited partnership

HMD and paid debts for the partnership through 2011. In 2003 and 2007, Mary wrote

checks on HMD’s account totaling $153,400 to South 80 Orchards to cover shortages in

the latter’s operating funds. South 80 Orchards signed no promissory note.

During trial, David Carlson submitted a purported July 11, 2008 addendum to the

HMD limited partnership agreement that announced that Mary Carlson and Marla

Contini had withdrawn as general partners, that David was now the sole general partner,

and that Mary’s percentage interest in the partnership was only one percent as a limited

partner. At trial, a forensic document examiner declared that someone copied signatures,

including Mary’s signature, from earlier documents, and pasted the signatures on the

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purported 2008 addendum.

In 2009, Mary wrote three checks totaling $165,000 on HMD’s account to South

80 Orchards as working capital for the orchard. The 2009 checks contain the

abbreviation “N/P S-80,” which may be shorthand for “note payable South 80.” Clerk’s

Papers (CP) at 292. None of the 2003, 2007, and 2009 debts owed by South 80 Orchards

to HMD had been repaid by the time of the dissolution trial.

Beginning in 2002, South 80 Orchards sold fruit to the warehouses, Borton &

Sons, Inc. and Zirkle Fruit Co. In 2009, David Carlson directed the fruit warehouses to

issue payment in the name of David Carlson and Carlson Agribusiness instead of South

80 Orchards.

In 2012 and early 2013, HMD loaned a total of $400,000 to David Carlson for

farming operations. David memorialized the $400,000 loan with promissory notes that

established the terms, including interest. David repaid $221,850 of the 2012-13 debt.

On January 1, 2011, David Carlson commenced conducting orchard business

under the name of Carlson Agribusiness LLC rather than South 80 Orchards. David

transferred a grower account that South 80 Orchards maintained with Tree Top Company

to the name of Carlson Agribusiness. The grower account still remains in the name of

Carlson Agribusiness. Throughout 2011, David also moved working capital funds from

South 80 Orchards bank accounts to Carlson Agribusiness bank accounts. Mary, general

partner of South 80 Orchards, did not authorize the transfer of the Tree Top account to

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Carlson Agribusiness or the transfer of funds between bank accounts. Mary claims she

objected to any name change in the orchard business and contends that David, who was

not a general partner in South 80 Orchards, possessed no authority to transfer a grower

account from South 80 Orchards to Carlson Agribusiness. During trial, when asked if he

informed Mary of the formation of the new company, Carlson Agribusiness, David

responded: “I believe so, but I’m not sure.” Report of Proceedings (RP) (June 17, 2015)

at 587. When asked if Mary participated in the “transition from the bookkeeping at South

80 Orchards to Carlson Agribusiness,” David answered: “I believe so.” RP (June 17,

2015) at 588.

RMT Holdings opened two bank accounts. In January through December 2009,

RMT Holdings deposited $80,225 of David Carlson’s consulting fees into one of its

accounts. In his appeal brief, David cites his testimony for the factual proposition that

Mary placed farming income into the RMT Holdings accounts. Nevertheless, David

testified that he lacked knowledge as to whether anyone deposited fruit sales income into

the accounts.

Mary and David Carlson separated in July 2012, and Mary vacated the family

home in September 2012. In turn, Mary filed a petition for legal separation in June 2013.

During the years of the formal separation, David managed the orchard operations. Mary

later converted the separation action into this marital dissolution action.

On November 19, 2013, Mary Carlson withdrew $226,485.05 from the HMD bank

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account, and she closed the account. In February 2014, the trial court found Mary in

contempt for withdrawing the funds, ordered her to place the withdrawn money into the

registry of the court pending trial, and ordered her to pay David $500 to purge the

contempt order. The money remained in the registry of the court at the time of trial.

Remember that, beginning in 2009, David Carlson directed Borton & Sons, Inc.

and Zirkle Fruit Co. warehouses to issue fruit payments to Carlson Agribusiness rather

than South 80 Orchards. In December 2013, South 80 Orchards filed suit against David

Carlson and Carlson Agribusiness for conversion of income and tortious interference

with business relationships. In response, David and Carlson Agribusiness filed

counterclaims against South 80 Orchards for breach of contract, unjust enrichment,

conversion, violation of the computer fraud and abuse act, aiding and abetting the

violation of a restraining order, violation of a court-ordered confidentiality agreement,

tortious interference, and breach of fiduciary duty. The counterclaims related in part to

the 2003, 2007, and 2009 loans from HMD to South 80.

In the lawsuit initiated by South 80 Orchards, HMD filed an intervenor complaint

in March 2014 against South 80 Orchards and Mary Carlson. HMD alleged that South 80

Orchards breached contracts by refusing to repay the 2003, 2007, and 2009 loans from

HMD. HMD claimed that Mary breached the HMD partnership agreement and her

fiduciary duty by withdrawing $226,485.05 from the HMD bank account in November

2013. HMD did not allege that Mary violated a fiduciary duty by distributing HMD

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funds to South 80 Orchards or by asserting the statute of limitations on any debt owed by

South 80 Orchards. HMD requested a judicial order removing Mary from HMD.

The intervenor complaint read in part:

11. On or about November 19, 2013, Mary withdrew $226,485.05
from bank account 0109024540 at Yakima· Federal Savings & Loan
Association (the “Withdrawn Funds.”)
12. The Withdrawn Funds are the property of HMD.
13. Judge Elofson ordered Mary to pay the Withdrawn Funds into
the Court’s registry on January 7, 2014.
....

IV. FIRST CAUSE OF ACTION- CONVERSION AGAINST MARY

18. HMD here incorporates all prior allegations in this Complaint in
Intervention.
19. Mary willfully took possession of the Withdrawn Funds.
20. The withdrawal was without lawful justification.
21. The withdrawal deprived, and continues to deprive, HMD of
possession.
22. Mary’s actions damaged, and continue to damage, HMD.

V. SECOND CAUSE OF ACTION- BREACH OF PARTNERSHIP
AGREEMENT AND BREACH OF FIDUCIARY DUTY AGAINST
MARY

23. HMD here incorporates all prior allegations in this Complaint in
Intervention.
24. By withdrawing funds in excess of her right to do so, Mary
violated the HMD partnership agreements.
25. Mary has a fiduciary duty to HMD and her other partners
pursuant to the HMD partnership agreements and RCW 25.05.165.
26. By acting in excess of her authority in such a way that damaged
HMD, Mary breached that fiduciary duty.
27. Mary’s violation of the partnership agreement and breach of
fiduciary damaged, and continues to damage, HMD, for which it is entitle
to recover.

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CP at 1643-45 (boldface omitted).

In February 2014, the superior court entered an Order re: Interim Farming

Operations. The order listed eleven properties being farmed by Carlson Agribusiness and

managed by David Carlson, and the order approved a farming budget prepared by David.

The order precluded David from disbursing funds from the Carlson Agribusiness bank

account except for reasonable business expenses within the limitations of the budget.

David could solely sign checks written on the Carlson Agribusiness account in an amount

equal to or less than $2,000. Kathy Nicoloff, the Carlson Agribusiness office manager,

needed to co-sign checks exceeding $2,000, and Nicoloff could sign checks only for

“legitimate office expense[s].” CP at 79. The February 2014 order also directed Carlson

Agribusiness to send a monthly statement of account activities to the company’s

accountant, who was to assess the reasonableness of business expenses. During trial, the

Carlson Agribusiness accountant admitted that he never saw a co-signed check, and he

never reviewed a statement of account.

David Carlson wrote a check from the Carlson Agribusiness business account for

$50,000 to his attorneys. David used funds from the Carlson Agribusiness bank account

to, without Mary Carlson’s approval, develop a new orchard, the New Snow Valley

Ranch.

The February 2014 order regarding interim farming operations recognized that

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David would manage the couple’s orchards during the pendency of the dissolution action.

The order also read:

10. For the period of the approved Budget, no salary shall be paid to
Hugh David Carlson, but within the constraints of the Budget, a reasonable
salary may be accrued and paid, except upon order of this court upon the
court’s approval of a motion duly made, noted, and heard.

CP at 79.

This appeal in part concerns the community or separate property character of

subaccounts at Solarity Credit Union. In his appellant’s brief, David Carlson writes that,

from the time of separation in 2012, he primarily used Solarity Credit Union subaccounts

for deposit of his salary, Social Security benefits, and other postseparation income.

David further writes that he used funds from the Solarity accounts to pay Mary support

before she filed for separation in June 2013 and thereafter to pay temporary maintenance.

In support of these facts, David cites a January 8, 2016, letter from his counsel asserting

such facts. He further cites to a January 31, 2015, Solarity Credit Union statement for

account number 248246, a different bank account number. The credit union statement

lists David Carlson as the account holder and references four subaccounts: a primary

savings account with $25 therein, a checking account with $66,058.86 therein, a money

market account with $3,996.17 therein, and an individual retirement account with

$9,361.29 therein. The total sum is $79,441.32. The bottom of the statement lists

deposits and withdrawals from dividend checking with a balance of $4,300.26 in this

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subaccount. This subaccount received deposits of $2,245.00 in Social Security payments.

One check for the sum of $3,000.00 is consistent with the maintenance amount paid by

David to Mary, but the statement does not identify the payee of the check.

In support of his factual statement concerning the Solarity Credit Union

subaccounts, David Carlson also cites a trial court exhibit that constitutes a summary of

bank account activity for checking account #0000248246 at the credit union. The

summary does not identify the account holder. The summary shows deposits during 2015

from an unidentified person’s payments from Social Security and the State of

Washington. The summary also evidences deposits into the account from payments from

Borton & Sons and Carlson Agribusiness. During 2015, withdrawals from the account

exceeded the deposits. The summary does not identify the purpose of the withdrawals.

At the end of 2015, the account, according to the summary, held $2,741.13.

During trial, Mary Carlson testified that Solarity Credit Union subaccounts

belonged to David. Nevertheless, she claimed the subaccounts were a mixture of

separate property and community property. She explained:

Q The Solarity bank account, the [2]48246.
A Yes, that’s Dave’s account.
Q All right. Do you have or did you have signature access on that
account?
A No, we have never had an account together.
Q All right. And what’s your—can you tell the Court what your
position is on the character of the funds in this account whether they’re
community or separate?
A It’s a combination. There’s also a matter of the money that he had

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the checks changed to his name clear back in 2009.
....
Q What deposits were made in that account, from what sources?
A His Apple Commission checks were direct deposits. His Social
Security is direct deposit and retirement is direct deposit. And then there
was a lot of fruit proceeds that went in there, several million.
Q All right. And where were those fruit proceeds grown?
A Pardon.
Q The fruit proceeds that went into that account, what farms were
they grown on?
A They were grown on all of the farms, the 901, the 902, the 903,
and 1941 were 90 percent of it. And then there’s Parker Heights, West 50
and Snow Valley and the house.

RP (June 10, 2015) at 205-06.

David Carlson, in his own name or in the name of one of his entities, opened an

account at Central Valley Bank, known as the 4610 account or court ordered account. In

his appeal brief, David Carlson writes that “[u]nder the farming orders,” he deposited all

proceeds from the orchard operations into the Central Valley Bank account and paid all

orchard expenses from the account. Br. of Appellant at 20 n.25. He also writes that the

dissolution court directed all farm working capital to be confined to the Central Valley

Bank account. David further writes that he never placed proceeds from the orchard

operations into the Solarity Credit Union subaccounts. He cites RP (June 17, 2015) at

615-16 for these facts. On those pages, David Carlson testified:

Q Now that is not the Court appointed report directed to the trust
account, correct?
A No.
Q That was the 610 account.
A That’s correct, finally. Initially it was the one we used for the

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Court.
Q Okay, and we saw from Mr. Petersen that checks were deposited
into the 405 account and then immediately, same day, a check was
deposited into the 610 account, that is the court directed account, correct?
A Most of the time, yes.

In June 2014, based on an agreement of the parties, the trial court consolidated all

claims, counterclaims, and intervenor claims among South 80 Orchards, HMD, Carlson

Agribusiness, David Carlson, and Mary Carlson with this marital dissolution action. The

dissolution trial included trial on these commercial claims.

In June 2015, David Carlson purportedly sent notice of a HMD partnership special

meeting to the partnership’s limited and general partners. Mary Carlson, general and

limited partner, never received notice of the meeting. David, his sister Marla Contini,

and his sister’s husband attended the partnership meeting. The attending partners

removed Mary as a general partner, on the assumption that she remained a general

partner. Remember a purported 2008 HMD amendment to the limited partnership

agreement stated that Mary Carlson had withdrawn as a partner.

During the pendency of this dissolution proceeding and in 2014, David Carlson

developed a new property, Snow Valley North Ranch. The property consisted of a lease

from the Bureau of Indian Affairs commencing in 2014. David diverted assets from

other community operations to fund the planting of trees and the extension of irrigation,

among other development expenses. David also used community funds to pay for labor

on the orchard. David did not inform Mary about the development. Mary testified that

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David took $433,592.95 from Central Valley Bank account 4610 and $281,738.63 from

bank account 4933 for Snow Valley North Ranch, for a total sum of $715,331.58. David

testified he invested between $210,000 and $220,000 in funds into the new orchard.

By the time of the June 2015 trial, Mary Carlson had last worked in late 2014 as a

bookkeeper for Topp Creek Farms. Mary earned $25 per hour. Depending on her hours

of work, she garnered between $500 and $800 per month. She did not seek other

employment because of the time she spent reviewing records for purposes of this

dissolution proceeding. She rented a single room as her residence.

Because of injury to her back, Mary cannot sit for lengthy periods. On July 31,

2013, the Department of Labor & Industries closed Mary’s worker compensation claim

such that she no longer receives worker compensation benefits. She applied for Social

Security disability benefits, but the government denied the application. During the

pending of the dissolution, Carlson Agribusiness paid for Mary’s medical insurance, but

Mary feared that, at the conclusion of the proceeding, she would need to pay her own

medical insurance premium at a cost of $850 per month. At trial, Mary had $21,700 in

credit card debt.

The trial court ordered David Carlson to pay $3,000 in maintenance to Mary

during the pending of the dissolution proceeding. As of trial, she could not pay all of her

debts on that sum.

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TRIAL

After filing for dissolution, Mary Carlson hired forensic accountant, Matt

Peterson, to review records for the Solarity Credit Union and Central Valley Bank

accounts and deposits and grower account records from Borton Fruit, Zirkle Fruit, and

Treetop. The review of the bank account records would determine whether David

Carlson obeyed the February 2014 order to obtain the signature of Kathy Nicoloff of all

checks exceeding $2,000 and to only write checks for legitimate expenses. David failed

to timely produce business records such that Peterson could not determine whether

orchard expenses incurred justified the issuance of the checks from the bank accounts.

Peterson’s review of the records showed an unusual number of checks issued for the sum

of $2,000. Writing checks for that sum would allow David to avoid the 2014 court order

to obtain approval of checks exceeding $2,000. Thus, Peterson concluded David

structured payments in order to avoid the court order. Peterson also found that David

often overpaid accounts so that the records would appear he garnered less income.

Finally, Peterson found that David failed to cash over $449,808.82 in checks from Borton

Fruit in order to hide income. Peterson testified to his findings during trial.

Mary Carlson also hired James Tarver, a forensic document examiner. Mary’s

counsel sent Tarver numerous documents, with signatures thereon, for review. Tarver

concluded that someone copied the signature of Mary Carlson from one document and

posted that signature on the July 11, 2008, addendum to the partnership agreement of

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HMD, which addendum removed Mary as a partner in the limited partnership. That same

person also pasted from other documents onto the addendum the signatures of Nicholas

Carlson, Anthony Contini, Marla Contini, and Tanya Contini. In other words, the

signatures on the addendum were not genuine. Tarver testified at trial by videotape

deposition.

The superior court conducted a trial beginning in June 2015. During trial

testimony, David Carlson remarked about the 2003 and 2009 loans from HMD to Carlson

Agribusiness:

Q Now, we’ve looked at the 2003 and 4 [sic] loans or amounts paid
to the—(inaudible—coughing) from—to the working capital, if you will,
from HMD, correct?
A I didn't hear the first part of the question.
Q We’ve looked at the checks that we were arguing over which are
now, based on your testimony, not 160,400, but 153,400, correct?
A Correct.
Q And then we have the 165,000 in 2009, correct?
A Correct.
Q And we have some 180,000, just talking principal, all of which
has come out of HMD into the family working capital, correct?
A Correct.
Q Now as you sit here today, chief executive of Carlson
Agribusiness, you acknowledge that those amounts are still owing to HMD.
A Correct.
Q You’re acknowledging the debt right here, right now, correct?
A Correct.

RP (June 17, 2015) at 566.

The dissolution court announced oral findings and an oral ruling in September

2015. Custom demands that the dissolution court enter findings of fact and conclusions

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of law on a constructed form, and the form constrains the court from entering thorough

and creative findings. Thus, we rely more on the dissolution court’s oral announcement

of its decision rather than the written findings.

David and Mary Carlson disputed the community or separate property nature of

two Carlson entities, South 80 Orchards Limited Partnership and HMD, LLP. During its

September 2015 oral ruling, the dissolution court found that the Carlson marital couple

operated Carlson Orchards, South 80 Orchards, and Carlson Agribusiness “very loosely,”

with “very little attention or respect paid to the various corporate entities.” CP at 289.

According to the court, outsiders viewed the corporate entities as separate, but David and

Mary moved funds and debts among the entities as needed to run their orchards. The

court remarked:

I think the other reality is, is I don’t know how to describe it other
than that they seemed to operate South 80, Carlson Orchards, Carlson
Agribusiness, all of the entities, each in the same way, each entity very
loosely, very little attention or respect paid to the various corporate entities.
They were really almost outward shells so that outsiders would see that
these were corporate entities, but they, they moved in and out of them with
kind of a personal flavor to it.

CP at 289-90.

During the oral ruling, the dissolution court noted that David Carlson disavowed

any interest in South 80 Orchards when he filed bankruptcy. Nevertheless, the parties

always commingled funds in South 80 Orchards with the other Carlson entities.

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Therefore, against Mary’s contention, the court found South 80 Orchards to be

community property. The court remarked:

[T]hey together began the migration of assets from South 80 into
their various other business entities. The assets weren’t dissipated. They
weren’t concealed. They weren’t sequestered for any one individual’s
benefit over the other. They were moved for their mutual benefit.
Consequently, I would find that South 80 has been commingled and is now
community property.

CP at 290.

The dissolution court found HMD, LLP, unlike South 80 Orchards and Carlson

Agribusiness, to remain the separate property of David Carlson. David and his father

formed the partnership with the father owning nearly all of the entity. The court found

evidence of only a single payment from community orchard operations to HMD, which

the court deemed appropriate probably because of loans issued by HMD.

After the trial court characterized South 80 Orchards, Carlson Agribusiness, and

HMD as either community property or separate property, the court awarded Mary

Carlson fifty-five percent and David Carlson forty-five percent of the “property.” CP at

296. The court qualified its ruling by commenting that the percentages might change.

The court commented:

I’m allocating the property overall 55/45, 55% in favor of Mrs.
Carlson, and I will readily admit these numbers may change, but that’s the
overall perspective.

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CP at 296. The court did not expressly limit this percentage allocation to community

property, although the court’s other comments and the court’s distribution of separate

property suggests the court intended to limit the percentage split to community property.

The dissolution court valued the HMD limited partnership at $1 million.

Consistent with the court’s ruling that HMD remained separate property, the court

declared David’s interest in HMD, which interest he primarily held as the personal

representative of his father’s estate, to be David’s separate property. He awarded the

entire interest in HMD to David. Nevertheless, the court found that Mary Carlson held a

6.5 percent interest in HMD. The addendum allegedly removing Mary’s interest in the

limited partnership was fraudulent. The court characterized Mary’s interest as a

community property interest. The value of Mary’s interest amounted to $65,000.

The court characterized the Solarity Credit Union subaccounts as community

property. The court included the amounts in the account in the percentage division of

community property, but reserved until later a determination of the amounts in the

account because of further business operations affecting the amount.

When allocating the orchard properties between David and Mary Carlson, the

dissolution court endeavored to divide the orchards fifty-five percent to forty-five percent

in line with its previous comments and to allow both parties to continue farming. The

court awarded the 901 Ranch lease to David Carlson, even though South 80 Orchards

was the lessee of the United States Department of Interior. The dissolution court also

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awarded Homeplace Orchard and Snow Valley Orchards to David. A house and shop

needed for farming lies on Homeplace Orchard. Snow Valley Orchards has a two-

bedroom residence. The court also allocated to David the West 50 orchard property. In

turn, the dissolution court awarded Mary the Davenport lot and three leased farming

properties, referred to as the 902, 903, and 1941 orchards. None of the leased properties

awarded Mary included a residence or a shop building for storing and maintaining farm

equipment.

The dissolution court characterized the Scenic Loop lot to be the separate property

of Mary Carlson, and the court awarded her the lot.

During the September 2015 oral ruling, the dissolution court performed a tentative

calculation of the respective allocations of assets. When doing so, the court awarded

David Carlson some $25,000 for three years for managing Mary’s share of the

community property during the pendency of the dissolution proceeding. The court, after

performing the calculation, ordered a transfer payment to Mary of $180,740.

The leases, I’ve described how those would be allocated and, again,
that’s 902, 903 and 1941 to Mrs. Carlson, and that generated roughly 225
acres to her, the home place, New Snow Valley, Snow Valley, West 50,
901 to Mr. Carlson for 210 acres.
The value of the trees is, I don’t have a value of that, but I do have
wind machines that have been valued and allocated per property, and
looking at the figures that were given to me—902, 903, and 1941 all going
to Mrs. Carlson, came to $259,500.00. 902 was $91,000.00. 903—
$89,000.00. 1941—$79,500.00.
The properties allocated to Mr. Carlson and the value of the wind
machine is 901 as $71,000.00, the home property ten, west 50—

21
No. 34443-6-III
In re Marriage of Carlson

$52,000.00, and the New Snow Valley wind machines are encompassed in
the value awarded to Mr. Carlson when I gave him the $300,000.00 asset,
so that would total for him $133,000.00 and, again, the HMD, I said that in
the beginning, the six and a half interest, percent interest goes to Mrs.
Carlson, $65,000.00.
My calculations show, and again, I haven’t counted the bank
accounts or the fruit proceeds, but come to $947,137.00 to Mr. Carlson,
$399,500.00 to Mrs. Carlson and, again, what I allocated to Mr. Carlson
was the home property, the New Snow Valley, the Bayliner, the life
insurance, wind machines, came to $947,137.00.
I’ve allocated to Mrs. Carlson, her total is $399,500.00, made up of
the Davenport lot, the HMD money of $65,000.00, and the wind machines
of $259,500.00. Total—$399,500.00.
I’ve also subtracted the debt owing to HMD. I found that to be a
valid debt, and that is $216,654.00, that’s assigned to Mr. Carlson, and that
left, and also subtracting—Mr. Carlson had asked for a wage in the sum of,
I believe, $80,000.00 or $85,000.00, rather, for the last three years, and it’s
been almost exactly three years. I looked at that. Part of what he’s, what
he’s really done is he’s managed his own property, for which he should not
receive a salary, but he’s also managed Mrs. Carlson’s property, and what
I’ve done is given it an allocation of $25,000.00 a year, for a total of
$75,000.00, so the net, after the—the assets were $947,147.00. I subtracted
the debt of $216,654.00, and I subtract $75,000.00, representing his wage.
That yielded a total of $655,483.00 to Mr. Carlson, and $399,500.00 to
Mrs. Carlson. With a 55/45 transfer, that would generate a $180,740.00
transfer to equalize that division equitably.

CP at 300-03.

The dissolution court found that David Carlson signed notes evidencing the

remaining loans from HMD in 2012-2013 and that the parties intended the loans to

benefit the marital community’s business interests. Accordingly, the trial court

characterized the remaining $216,654 balance on the 2012-2013 debt as community debt,

and the court assigned liability for the debt solely to David.

22
No. 34443-6-III
In re Marriage of Carlson

The court found that Mary Carlson withdrew funds from HMD’s account in

November 2013 in order to protect herself and not due to malice. Therefore, the trial

court dismissed David’s and Carlson Agribusiness’ claims against Mary related to the

withdrawal of funds. The superior court ordered Mary to pay interest for the period of

time between withdrawal of the funds from the HMD account on November 19, 2013,

and the deposit of the funds into the court registry on January 7, 2014. The amount of

interest accrued was $3,648.56. The court found that after January 7, the funds were

unavailable to either party due to court-ordered sequestration to protect the status quo,

and thus the court did not compel Mary to pay interest after January 7, 2014.

Remember that the court ruled that Mary Carlson held a 6.5 percent interest in

HMD. Mary’s interest was valued at $65,000 since the value of HMD was $1 million.

To facilitate the payment of the interest owed on the HMD withdrawn funds, to facilitate

the termination of Mary’s interest in HMD, to facilitate the payment to Mary of her

retired interest in HMD, and to facilitate the withdrawal of the HMD funds on deposit

with the court, the dissolution court held that the $3,648.56 in accrued interest be

deducted from $65,000. In turn, the dissolution court directed that the clerk release

$61,351.88 of the funds to Mary and the remaining funds to HMD.

During the September 2015 oral ruling, the dissolution court ordered David

Carlson to pay Mary $3,000 per month spousal maintenance for three years in part

because of her limited disability and to give her a chance to develop her orchard

23
No. 34443-6-III
In re Marriage of Carlson

operation and to become self-sufficient. The court directed Mary to pay $1,000 of that

amount as the monthly premium on David’s life insurance, with Mary as beneficiary.

The court ordered David to maintain the policies. The court commented:

Spousal maintenance—Mr. Carlson is 72, Mrs. Carlson is 60. The,
each has described their health histories as being somewhat tenuous. Mr.
Carlson frankly portrays as a very vibrant 72-year-old who, I don’t think he
knows the meaning of not working, and, certainly, you’ve gotta, whether
you like my decision or not, that’s a compliment, but the length of the
marriage has some factor here, but I think Mrs. Carlson has demonstrated
that she has a need, but what’s interesting, as I said earlier, I thought this
was going to be more of a spousal maintenance case than it was. She has
represented herself to be competent and capable. She can make it on her
own, and on the flip side she’s described these serious health issues that
she’s dealt with over the last number of years. There are certain emotional
issues that were, became rather apparent and that simply just affect how
you get through life. The loss of a child. So I was somewhat surprised, but
I have to respect that.

CP at 304-05.

The trial court dismissed South 80 Orchards’ claims for conversion and tortious

interference against Carlson Agribusiness and David Carlson as unsupported by the

evidence. The court dismissed HMD’s claims for repayment of the loans made to South

80 Orchards in 2003, 2007, and 2009 as untimely under the three-year statute of

limitations. During the September 15 oral ruling, the trial court commented about the

loans:

Next, there are loans from HMD to Dave Carlson and Carlson
Orchards, and it’s, they are broken into two categories. One is, the first
category is June of 2003 to March of 2007. The transfers were
approximately $153,400.00. They had been originally asserted at

24
No. 34443-6-III
In re Marriage of Carlson

$160,400.00, but Mr. Johnston indicated there’d been a $7,000.00 check
located. These are transfers of money. There are no promises to pay, no
terms indicated in any of the documents, other than some comments by Mr.
Carlson offered well after the events. No interest is described. I find that
the statute of limitation is three years. The three years has expired. The
obligation is extinguished to that extent.
There are another series of loans. July of 2009 to September of
2009. There are three transfers totaling $165,000.00. The only notations
that were provided were N/P S-80. I presumed that that meant, and I
believe the testimony would confirm, note payable South 80. There are no
other entries, no other terms described, no promises to pay. I find that the
three-year statute of limitations applies.

CP at 292. The trial court noted that both Mary and David made withdrawals from HMD

for their corporate and mutual interests.

When recognizing that HMD argued that Mary was acting as a fiduciary of HMD

when she issued the checks to South 80 Orchards, the court found that David was fully

aware of the transfer of HMD’s money to the family business and was mutually

responsible. The trial court also found that David presented no credible evidence that

HMD’s loans to South 80 Orchards in 2003, 2007, and 2009 were made without the

knowledge of the other partners, his sister, and the sister’s family.

When dismissing the claim of HMD against South 80 Orchards and Mary Carlson,

the dissolution court also commented:

So, again, on the HMD checks, I just make it clear, I guess, if, it’s
either bound by the statute of limitations or I would treat it as a, I can go
either way, treat it as a fiduciary obligation and the community is obligated,
but I would assign, because of the unique nature of Mr. Carlson’s
relationship with HMD, the, those debts and I would not count that in the
calculation.

25
No. 34443-6-III
In re Marriage of Carlson

CP at 310.

Mary Carlson requested attorney and expert fees due to David’s intransigence.

The trial court found that David, through forged documents, fraudulently removed Mary

as a partner in HMD and that Mary needed to hire and pay an expert to expose the fraud.

The court also found that $400,000 in fruit proceeds from the Borton warehouse

mysteriously disappeared during David’s orchard management. The court found that

David arranged for Borton & Sons to hold $400,000 and pay the money to David after

the completion of the dissolution. The trial court also found that David

uncharacteristically “pre-paid” Zirkle Fruit warehouse’s packing charge in order to

reduce his assets for purposes of the dissolution proceeding. Mary needed the services of

an accountant to expose the hiding of income and reduction of income by prepaid

expenses. The court found David to be intransigent.

David Carlson argued that Mary’s forensic accountant and attorneys performed

deficiently when investigating the missing funds such that he should not need to pay the

expert fees. The dissolution court disagreed with David’s “interesting” argument of

deflecting blame on others.

Mary Carlson requested $186,363.47, including $28,151.90 for the expert services

of accountant Matt Peterson and document examiner James Tarver. On the basis of the

finding of intransigence and also based on Mary’s need for payment and David’s ability

26
No. 34443-6-III
In re Marriage of Carlson

to pay, the dissolution court ordered David to pay Mary $50,000 in attorney fees. The

court commented during the September 2015 ruling:

Attorney’s fees. Mr. Carlson has suggested that each bear their own
fees. Mary Carlson has asked for an award. The elimination of Mary
Carlson from HMD by, I guess, the forged documents and the investigation
that went with it. This was a case that was kind of smothered in what I call
high-octane gasoline or high octane emotion, and something happened.
The suggestion was that maybe it was Mary Carlson or someone else. I
don’t find that. I think the only person that had any interest in this and was
clearly at odds with Mary was Mr. Carlson. The fact that it was such a
highly emotional issue, the fact that he was in control of the various assets,
the operations, the money, and when you’re, I think it’s fair to say ‘cause
I’m in that age group, that as you get older you become more vulnerable
and alert to your resources and their, their potential elimination. It, it put
Mrs. Carlson in an extremely emotion—or vulnerable position, and it was
already an emotional and combative case. I think that is a factor that I think
was unnecessary, and I think Mr. Carlson was clearly the force behind it.
The missing fruit proceeds at Borton was an interesting issue.
Again, that was an evolving issue throughout this case. Mr. Carlson’s
deposition was taken. Mr. Peterson was retained. The amount that was
taken was just shy of $400,000.00. There was some criticism offered of
Mr. Carlson, or of Mr. Peterson and of Mrs. Carlson’s attorneys for not
doing a better job in investigating the records and the missing money. They
didn’t make the records incomplete, they didn’t make the money go
missing, and it’s hard to track down what someone else has done. I thought
that interestingly the records were all maintained by, created, rather, and
maintained by either Mr., created by Mr. Carlson and either maintained by
him or third parties. They were always going to be incomplete records
because they weren’t created by Mrs. Carlson. These are his records, and
they are only as available as he had made them.
It was interesting, Mr. Peterson’s, the criticism of his work, I don’t
think, was accurate. It was Mr. Peterson who brought to light the issue.
Had he not brought to light this issue, $400,000.00 would have remained
missing, and it would have been simply a question. The fact that through
efforts that counsel was able to discover the missing money doesn’t change
the fact that it was missing.
....

27
No. 34443-6-III
In re Marriage of Carlson

He [David Carlson] describes himself as a very highly-qualified
farmer and orchardist.

CP at 305-08.

David Carlson claimed that Mary Carlson was intransigent and sought an award of

attorney fees against her or at least sought to use her intransigence to preclude an award

against him for his behavior. The court found Mary not to be intransigent.

After the September 2015 oral ruling, Mary Carlson submitted a five-page

summary of activity in the Solarity Credit Union subaccounts during 2015. The

summaries showed the total funds in the subaccounts, presumably at the end of 2015, as

$16,680.39. Nevertheless, at the time of the March 2016 written decree of dissolution

and final division of property, the six Solarity subaccounts included the following sums:

i. 8426-00 $ 25.00
ii. 8426-09 $ 5,923.79
iii. 8426-10 $ 89,458.37
iv. 8426-17 $ 3,995.83
v, vi. 8426-71, 72 $ 9,359.83

CP at 1313. The accounts then totaled $108,762.82.

The dissolution court entered a written order in March 2016 that dissolved David

and Mary Carlson’s marriage, determined the legal and property rights of the parties, and

distributed the property. Findings of fact and conclusions of law accompanied the March

2016 order.

28
No. 34443-6-III
In re Marriage of Carlson

LAW AND ANALYSIS

David Carlson, Mary Carlson, and HMD appeal or cross-appeal rulings of the

superior court. We organize the assignments of error presented by the parties based on

the party asserting the error, beginning with David’s assignments.

We politely scold David Carlson for the content and nature of his appeal brief.

RAP 10.3(a) addresses the content of the appellant’s opening brief. Subsection 5 of the

rule directs the writing of a statement of the case and the subsection declares:

Statement of the Case. A fair statement of the facts and procedure
relevant to the issues presented for review, without argument. Reference to
the record must be included for each factual statement.

Instead of following the rule, David, with few citations to the record, presents argument

in his statement of the case as to why the trial court inequitably divided the property. He

contends that the trial court cast a concrete division of the property into a fifty-five

percent to forty-five percent split, when the court stated the numbers may change. David

then presents numerous hypothetical calculations in an attempt to show the trial court

committed arithmetical error.

Compliance with RAP 10.3(a)(5) permits this reviewing court to readily discern

the important facts and confirm those facts from the record. In turn, the rule facilitates an

orderly and learned decision from this court. David Carlson’s statement of the case

impedes rather than assists this court in reviewing the trial court’s rulings.

29
No. 34443-6-III
In re Marriage of Carlson

David Carlson Appeal

Issue 1: Whether the dissolution court mischaracterized the Solarity Credit Union

account as community property rather than David Carlson’s separate property?

Answer 1: No. At least, we cannot determine by the facts forwarded by David

Carlson that the trial court committed error.

David Carlson challenges the dissolution court’s division of the marital couple’s

property. We first address David’s assignments of error as to discrete factors influencing

the property division. We later address the overall question of whether the trial court

equitably divided the property and liabilities.

David Carlson assigns error to two of the dissolution court’s characterizations of

assets. He contends the court mischaracterized the Solarity Credit Union bank

subaccounts as community property and the Scenic Loop lot as the separate property of

Mary. As to the bank subaccounts, according to David and with the dissolution court

awarding Mary fifty-five percent of the community property, he lost fifty-five percent of

the savings he accumulated in his separate property subaccounts during the marital

separation because of the classification of the Solarity funds as community property.

RCW 26.09.080 controls a dissolution court’s division of the marital couple’s

assets and liabilities. The statute directs the court to reach a just and equitable division of

all of the couple’s property and liabilities, whether community or separate, after

considering all relevant factors. These factors include, but are not limited to:

30
No. 34443-6-III
In re Marriage of Carlson

(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.

RCW 26.09.080.

To make a fair and equitable division of the property and liabilities in a marriage

dissolution, the court must first characterize each asset owned by one or both parties as

either community or separate. In re Marriage of Kile, 186 Wn. App. 864, 875, 347 P.3d

894 (2015). Regardless of the characterization, all property, whether community or

separate, is before the court for distribution. In re Marriage of Neumiller, 183 Wn. App.

914, 920, 335 P.3d 1019 (2014).

Community property generally consists of property acquired during a marriage by

either spouse or both spouses. RCW 26.16.030. Separate property is property owned by

a spouse before marriage, or acquired by him or her during marriage by gift, bequest,

devise, descent, or inheritance. RCW 26.16.010.

In Washington, the law determines each item of property’s character as either

separate or community property at the date of its acquisition. In re Estate of Borghi, 167

Wn.2d 480, 484, 219 P.3d 932 (2009). The separate property character of fungible

assets, such as money or stocks, may be destroyed through comingling. In re Marriage

31
No. 34443-6-III
In re Marriage of Carlson

of Schwarz, 192 Wn. App. 180, 190, 368 P.3d 173 (2016).

To aide in determining an asset’s character, Washington courts deploy several

presumptions. 19 SCOTT J. HORENSTEIN, WASHINGTON PRACTICE: FAMILY AND

COMMUNITY PROPERTY LAW § 10.1, at 189. (2d ed. 2015). The strongest presumption is

that the marital community owns property acquired during a marriage. In re Marriage of

Skarbeck, 100 Wn. App. 444, 449, 997 P.2d 447 (2000); HORENSTEIN § 10.2, at 190.

The party claiming an asset acquired during the marriage as separate property bears the

burden of proof. In re Marriage of Skarbeck, 100 Wn. App. at 449. The claimant

overcomes the marital property presumption when offering clear and convincing

evidence that the property was acquired with separate funds. In re Marriage of Schwarz,

192 Wn. App. at 189.

In his appeal brief, David Carlson alleges various facts and impliedly contends

that, based on those facts, the undisputed evidence established that neither party

deposited community funds into the Solarity Credit Union subaccounts. David writes

that the trial court ordered all community farming income to be deposited into an account

other than the Solarity Credit Union accounts and that he obeyed the order. He writes

that Mary agreed that the Solarity subaccounts constituted his sole property and that

Mary submitted no evidence to the contrary. David also pens that Mary’s forensic

accountant testified that David deposited his Social Security and pension payments into

the Solarity Credit Union subaccounts.

32
No. 34443-6-III
In re Marriage of Carlson

David Carlson does not bespeak the entire truth. Mary also testified that David

deposited farm income or fruit proceeds and his wages from the Apple Commission into

the Solarity Credit Union subaccounts. In support of his factual allegation regarding

Mary’s accountant’s testimony, David cites CP at 251, which constitutes a summary of

deposits and withdrawals in 2015 from a subaccount at Solarity Credit Union. The

summary lists deposits from the Washington State Treasurer and from Social Security.

But the summary also documents deposits from Borton and from or to Carlson

Agribusiness, which would involve orchard operations. These deposits could confirm

Mary’s testimony of the deposition of farming income into the Solarity Credit Union

accounts.

This reviewing court will not disturb decisions or findings made by the trial court

when they fall within the scope of the evidence presented. In re Marriage of Mathews,

70 Wn. App. 116, 122, 853 P.2d 462 (1993). The dissolution court solely determines the

weight that evidence receives. In re Marriage of Clark, 13 Wn. App. 805, 810, 538 P.2d

145 (1975). This court defers to the trial court on issues of credibility. In re Marriage of

Rideout, 150 Wn.2d 337, 350-52, 77 P.3d 1174 (2003). Substantial evidence supported

the trial court’s conclusion that the Solarity Credit Union accounts constituted

community property.

David also maintains that, because of deposits of his Social Security payments into

a Solarity Credit Union subaccount, the dissolution court effectively treated his Social

33
No. 34443-6-III
In re Marriage of Carlson

Security deposits as community property, in violation of 42 U.S.C. § 407(a) of the Social

Security Act. This section forbids transfer or reassignment of “‘[t]he right of any person

to any future payment under this subchapter.’” 42 U.S.C. § 407(a); In re Marriage of

Zahm, 138 Wn.2d 213, 219, 978 P.2d 498 (1999).

In Marriage of Zahm, the trial court characterized one party’s monthly Social

Security payment as community property, but never assigned nor calculated a future

value of this payment as part of the distribution of property. The Washington Supreme

Court held that, although the trial court mischaracterized the Social Security payment as

community property, the error was harmless because the trial court did not award a party

an offset based on future benefits. Zahm adopted the analysis of the Court of Appeals,

which approved consideration of Social Security benefits in determining the parties’

relative economic circumstances at dissolution: “‘A trial court could not properly

evaluate the economic circumstances of the spouses unless it could also consider the

amount of Social Security benefits currently received.’” In re Marriage of Zahm 138

Wn.2d at 223 (quoting In re Marriage of Zahm, 91 Wn. App. 78, 85, 955 P.2d 412

(1998)).

Marriage of Zahm is both distinguishable and instructive. The Carlsons’

dissolution court did not characterize David’s monthly Social Security payments as

community property and did not assign any future benefits to Mary. Although evidence

showed that David deposited the Social Security payments in a Solarity Credit Union

34
No. 34443-6-III
In re Marriage of Carlson

subaccount, David presented no evidence that any certain sum of those benefits existed in

the account at the time of distribution.

David Carlson’s insistence that the Solarity Credit Union accounts be categorized

as his separate property assumes that he would necessarily be awarded the entire amount

in the accounts without any offset in assets to Mary. Since the trial court may award one

spouse the separate property of the other spouse and since the trial court should equitably

distribute all assets, with the separate or community nature of each asset being only one

consideration, we reject this assumption. Nevertheless, since the trial court did not abuse

its discretion in classifying the accounts as community property, we need not discuss

David’s presumption.

In the body of his brief, David Carlson challenges the value assigned by the

dissolution court to one of the five Solarity Credit Union subaccounts. Nevertheless,

David never assigned error to the valuation of any of the subaccounts. This court will not

review a claimed error unless the appellant assigns error to the ruling. BC Tire Corp. v.

GTE Directories Corp., 46 Wn. App. 351, 355, 730 P.2d 726 (1986); RAP 10.3(a)(5),

10.3(g).

Issue 2: Whether the dissolution court mischaracterized the Scenic Loop lot as

Mary Carlson’s separate property rather than community property?

Answer 2: No.

David Carlson next argues that the court should have characterized the Scenic

35
No. 34443-6-III
In re Marriage of Carlson

Loop lot as community property. David asserts that the lot presumptively constituted

community property, although he does not explain why. He writes that accounts, in

which the parties commingled community funds, paid for some of the expenses of the lot,

presumably after its initial purchase. David probably contends that payment of the

expenses by community funds necessarily transformed the lot into community property.

But he cites no case law or statute in support of his contention. The law disagrees.

Therefore, we affirm the dissolution court’s characterization of the lot as Mary’s separate

property.

In Washington, the law determines each item of property’s character as either

separate or community property at the date of its acquisition. In re Estate of Borghi, 167

Wn.2d at 484 (2009). Once the separate character of property is established, a

presumption arises that the asset remained separate property in the absence of sufficient

evidence to show an intent to transmute the property from separate to community

property. In re Estate of Borghi, 167 Wn.2d at 484. Significantly, the evidence must

show the intent of the spouse owning the separate property to change its character from

separate to community property. In re Estate of Borghi, 167 Wn.2d at 484-85. The law

generally demands an acknowledged writing when changing the nature of real property.

In re Estate of Borghi, 167 Wn.2d at 485. Assuming the community pays for expenses

on one spouse’s separate property, the property does not metamorphose to community

property, but the community may obtain reimbursement for the contributions. In re

36
No. 34443-6-III
In re Marriage of Carlson

Hickman’s Estate, 41 Wn.2d 519, 526, 250 P.2d 524 (1952).

Evidence shows that Mary Carlson, in 2006, purchased the Scenic Loop lot from

proceeds from insurance benefits on her son’s life, which benefits she deposited into an

RMT Holdings bank account. David adduced evidence that Mary deposited community

funds in the bank account, but only after 2006. David presents no law that imposes

community property status on an asset purchased from death benefits resulting from only

one spouse’s child. Therefore, we assume the lot gained separate property status when

purchased.

David presents no evidence of Mary deeding the Scenic Loop lot to the marital

community, let alone any intent to donate the asset to the community. Therefore, the

Scenic Loop lot always retained its separate property status. The community may be

entitled to reimbursement for expenses paid, but David never sought reimbursement for

the community.

Issue 3: Whether the dissolution court failed to consider a required factor when

dividing the couples’ property?

Answer 3: No.

David Carlson contends the trial court failed to consider all factors in RCW

26.09.080, including the parties’ resulting economic circumstances, when it distributed

the parties’ assets. David emphasizes that the trial court gave Mary more property. He

received only forty-five percent of the community assets and alleges he received less than

37
No. 34443-6-III
In re Marriage of Carlson

forty-five percent of the community’s net working capital. He characterizes the award as

dooming him to bankruptcy, particularly because he must also pay Mary spousal

maintenance and some attorney fees. David emphasizes that he is of advanced age. He

criticizes the award as inequitable particularly when he managed the community’s assets

during the pending of the dissolution at compensation below the minimum wage.

We review the dissolution court’s distribution of property and debts for abuse of

discretion. In re Marriage of Muhammad, 153 Wn.2d 795, 803, 108 P.3d 779 (2005); In

re Marriage of Neumiller, 183 Wn. App. at 920 (2014). Discretion is abused if exercised

for untenable reasons or if the court uses an incorrect legal standard. In re Marriage of

Neumiller, 183 Wn. App. at 920. We hold that the dissolution court did not abuse its

discretion when allocating the parties’ property.

As already noted, when dividing marital property, RCW 26.09.080 directs the trial

court to reach a just and equitable division of the couple’s property and liabilities,

whether community or separate, after considering all relevant factors. These factors

include, but are 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.

38
No. 34443-6-III
In re Marriage of Carlson

No single factor holds greater weight than another, but the economic circumstances of

each spouse on dissolution loom paramount. In re Marriage of Olivares, 69 Wn. App.

324, 330, 848 P.2d 1281 (1993). The property division need not be equal or

mathematically precise, but must be fair. In re Marriage of Doneen, 197 Wn. App. 941,

949, 391 P.3d 594, review denied, 188 Wn.2d 1018, 396 P.3d 337 (2017). To reach that

goal, the court must consider all the circumstances of the marriage and exercise its

discretion rather than apply inflexible rules.

In a long-term marriage, the trial court generally tries to place the parties in

roughly equal financial positions for the rest of their lives. In re Marriage of Rockwell,

141 Wn. App. 235, 243, 170 P.3d 572 (2007). Still and perhaps contrary to the previous

sentence, the longer the marriage, the more likely a court will make a disproportionate

distribution of the community property. In re Marriage of Rockwell, 141 Wn. App. at

243. When one spouse is older, semiretired, and dealing with ill health, and the other

spouse is employable, the court does not abuse its discretion in ordering an unequal

division of community property. In re Marriage of Schweitzer, 81 Wn. App. 589, 596,

915 P.2d 575 (1996), remanded on other grounds by 132 Wn.2d 318, 937 P.2d 1062

(1997). Nevertheless, an obvious disparity in the economic condition of the parties after

the award may show an abuse of the court’s discretion. In re Marriage of Kim, 179 Wn.

App. 232, 253, 317 P.3d 555 (2014).

David Carlson proclaims that the property award relegates him to bankruptcy,

39
No. 34443-6-III
In re Marriage of Carlson

particularly because he must also pay Mary spousal maintenance and some attorney fees.

Nevertheless, he provided the dissolution court no analysis to verify a forty-five percent

to fifty-five percent split doomsday result. On appeal, David does not identify what split

he would consider equitable, but presumably he seeks an equal split. David fails to

answer how a forty-five percent share of the community assets consigns him to business

failure, but a fifty percent share of assets would guarantee success.

David Carlson criticizes the dissolution court for failure to consider his advanced

age. RCW 26.09.080 does not expressly direct the trial court to contemplate the spouse’s

respective ages. Nevertheless, we recognize that the court should evaluate how the age

may impact the parties’ long-term financial conditions.

During the September 2015 oral ruling, the dissolution court specifically

mentioned David Carlson’s age as seventy-two and Mary Carlson’s age as sixty when

awarding spousal maintenance. We reasonably conclude that the trial court also had

those ages in mind when allocating the community property owned by the couple. The

dissolution court also considered David Carlson’s strong work ethic as a factor in the

court’s expectation that David will continue to operate orchards in the future despite his

age.

David admits that this court may rely on the trial court’s oral ruling when

assessing whether the dissolution court considered all factors. In re Marriage of

Steadman, 63 Wn. App. 523, 526, 821 P.2d 59 (1991). The dissolution court need not

40
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In re Marriage of Carlson

enter formal findings of fact on each factor. In re Marriage of Steadman, 63 Wn. App. at

526.

David Carlson fails to recognize numerous factors that render equitable the

dissolution court’s forty-five percent to fifty-five percent division of community

property. Mary Carlson has a limited disability. The trial court awarded David all

interest in HMD, valued at $1 million, minus a payment of $65,000 to Mary for her

terminated interest and the repayment of a debt. The court awarded David orchard

property that already had homes and sheds. The court also awarded David other separate

property. Unlike Mary, David garnered, in 2015, a separate wage of $6,500 per month as

an orchard consultant.

The dissolution court likely would not have abused its discretion if it awarded

Mary Carlson a higher percentage of the couple’s community property. In In re

Marriage of Kim, 179 Wn. App. at 253-54 (2014), this court affirmed an award to the

wife of sixty percent of community property. In In re Marriage of Rockwell, 141 Wn.

App. at 243 (2007), this court affirmed a similar split of property.

Issue 4: Whether the dissolution court erred in its award to David of a salary for

farm management?

Answer 4: We do not know and remand for clarification by the dissolution court.

David Carlson also assigns error to the trial court’s award to him of only $13,750

per year for managing the couple’s orchard property during the pending dissolution

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In re Marriage of Carlson

action. We find no abuse of discretion in the dissolution court’s determination of a

reasonable salary, but we note a probable arithmetic error of $33,750 that likely resulted

in David receiving less salary than the court intended. We remand so the trial court can

determine whether it wishes to amend the judgment.

To repeat, the February 2014 order regarding interim farming operations read:

10. For the period of the approved Budget, no salary shall be paid to
Hugh David Carlson, but within the constraints of the Budget, a reasonable
salary may be accrued and paid, except upon order of this court upon the
court’s approval of a motion duly made, noted, and heard.

CP at 79. The dissolution court did not approve a salary amount for David until the

conclusion of trial, when it calculated an equalizing payment that David would pay to

Mary.

David testified during the trial that a reasonable annual salary for his services

would be $140,000, “but in the interest of getting things resolved, I’m willing to take

85,000.” RP (June 19, 2015) at 653. In announcing its oral decision, the court provided

the following explanation of the salary it intended to award:

[David] had asked for a wage in the sum of, I believe, $80,000.00 or
$85,000.00, rather, for the last three years, and it’s been almost exactly
three years. I looked at that. Part of what he’s, what he’s really done is
he’s managed his own property, for which he should not receive a salary,
but he’s also managed Mrs. Carlson’s property, and what I’ve done is given
it an allocation of $25,000.00 a year, for a total of $75,000.00.

CP at 302. David concedes on appeal that the trial court’s comments reflect a finding

that a reasonable salary for managing the community farming business “was in the

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In re Marriage of Carlson

neighborhood of $50,000 [annually], allocat[ing] approximately one half, or $25,000, of

that to [David] for managing his share of the farms and conclud[ing] that $25,000 would

be the fair salary for managing [Mary’s] share.” Br. of Appellant at 12. We agree.

David contends on appeal that “[t]here is no evidence in the record to support a

reduction of the fair salary of $140,000 per year . . . down to $50,000 per year.” Id.

Nevertheless, in addition to David’s agreement that he would accept $85,000 a year,

evidence emphasized by Mary showed that David lived in the family home and used the

farming account to pay many personal living expenses and some business expenses

incurred in connection with his separate property. The salary amount ordered by the

dissolution court fell within the range of the evidence presented.

David also contends that the trial court’s method for effectuating Mary’s payment

of a share of his salary contained an arithmetical flaw. We agree and attribute the error to

the trial court first giving David the benefit of entitlement to only one-half of the fair

salary but then inconsistently treating that amount as if it must be shared with Mary.

In dividing the couple’s assets and liabilities, the dissolution court allocated some,

mostly nonliquid assets, one hundred percent to one spouse or the other. Because the

court allocated David a net value of $730,483 of those assets and liabilities and Mary

received only $399,500 in value, the court entered a judgment in favor of Mary so that

she would receive 55 percent in value of the total assets and David would receive 45

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In re Marriage of Carlson

percent in value. The court referred to the award to Mary as an “equalizing” payment

even though the court arrived at something other than a 50/50 allocation.

Before calculating the equalizing payment, the court reduced the value of the

assets David received by the “$75,000.00 representing his wage.” RP (June 10, 2015) at

302. This likely constituted error. It was a legitimate way to account for the wage in the

sense that David would actually receive $730,483.00 in value of the assets, but would be

treated, in calculating the equalizing payment, as if he received only $655,483.00. Yet,

by subtracting only half of David’s wage before calculating the equalizing payment, the

court likely required him to share a wage already reduced to $75,000.00.

We illustrate this potential error by comparing the judgment amount arrived at by

the dissolution court with the judgment amount reached if we first calculated an

equalizing payment without adjusting for Mary’s half of the wages owed and then adjust

for her $75,000 liability for her share of David’s wage.

The court made the following calculation.

H (Husband’s assets’ value) + W1 (Wife’s assets’ value) = T (total assets)
.55T = W2 (Wife’s intended value allocation)
W2 – W1 = E (equalizing payment)

Applying the numbers used by the court, this was

$655,483.00 + $399,500.00 = $1,054,983.00
$1,054,983.00 x 55% = $580,240.65
$580,240.65 - $ 399,500.00 = $180,740.65 equalizing payment, which (rounded)
was used as the judgment amount.

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In re Marriage of Carlson

Had the trial court first determined the equalizing payment and then adjusted the

payment by the $75,000 of David’s salary owed by Mary, the equalizing payment would

have been calculated as follows:

$730,483.00 + $399,500.00 = $1,129,983.00
$1,129,983.00 x 55% = $621,490.65
$621,490.65 - $399,500.00 = $221,990.65 equalizing payment.

This would not be the judgment amount. Instead, to arrive at the judgment
amount, the equalizing payment would be reduced by the $75,000.00 share of
David’s salary that was owed by Mary. The equalizing payment of $221,990.65
to Mary, less the $75,000.00 share of David’s wage owed by her, produces a
judgment amount for Mary of $146,990.65 ($221,990.65 - $75,000.00).

As further evidence that the trial court treated the $75,000.00 David should receive

from Mary as an amount she is permitted to share with him, one can look at the

difference between the trial court’s approach and our own and consider what explains the

difference. The difference between what would have been the trial court’s unrounded

judgment in Mary’s favor of $180,740.65 and our calculation of a judgment amount of

$146,990.65 is $33,750.00 ($180,740.65 - $146,990.65). $33,750.00 is 45 percent

(rounded) of $75,000.00. Again, this probably results from the trial court’s method of

calculation requiring David to share 45 percent of the one-half of his salary owed by

Mary.

Even if the dissolution court committed an arithmetic error, the court need not

amend the judgment if satisfied that its disposition of the parties’ assets remains just and

equitable. RCW 26.09.080. Nevertheless, we wish to acknowledge for David that the

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In re Marriage of Carlson

trial court’s calculation of the equalizing payment likely deprived him of the salary

amount the trial court intended to award him. Therefore, we remand for the dissolution

court to consider this anomaly and amend the judgment if deemed suitable.

Issue 5: Whether the trial court awarded Mary Carlson excessive spousal

maintenance from David Carlson?

Answer 5: We decline to address this error since David provided no citation to

authorities in his brief’s argument with regard to this assignment of error.

David Carlson asserts that the dissolution court granted excessive maintenance to

Mary. Nevertheless, David does not expressly assign error to some award. Thus, we

assume he only argues that the amount should be decreased rather than vacated entirely.

David identifies no amount of maintenance that he would consider reasonable.

David Carlson presented a two-page argument in his opening brief in support of

his contention that spousal maintenance exceeded a reasonable sum. Nevertheless, the

argument contained no citation to legal authorities as to factors a court should consider

when assessing spousal maintenance. This court does not review errors alleged but not

argued, briefed, or supported with citation to authority. RAP 10.3; Valente v. Bailey, 74

Wn.2d at 858; Avellaneda v. State, 167 Wn. App. at 485 n.5.

Issue 6: Whether the trial court erred when solely assigning the 2012-2013 debt

owed to HMD to David Carlson?

Answer 6: We decline to address this error since David provided no citation to

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In re Marriage of Carlson

authorities in his brief’s argument with regard to this assignment of error.

The dissolution court granted David Carlson all interest in HMD. The court also

assigned to David all debt owed by the marital couple to HMD. David assigns error to

this ruling. Nevertheless, in the argument section of his brief, he presents only a one-

page analysis without any citation to legal authority. This court does not review errors

alleged but not argued, briefed, or supported with citation to authority. RAP 10.3;

Valente v. Bailey, 74 Wn.2d at 858 (1968); Avellaneda v. State, 167 Wn. App. at 485 n.5

(2012).

Issue 7: Whether the trial court awarded Mary Carlson reasonable attorney fees

and costs disproportionately to David Carlson’s intransigence?

Answer 7: No.

David Carlson next assigns error to the amount of attorney fees and costs the

dissolution court ordered him to pay to Mary for his intransigence as being

disproportionate to his misconduct. In the assignment of error, he does not expressly

state that he engaged in no intransigence or that the dissolution court should not have

awarded any fees. Nevertheless, in the body of his argument, he challenges the finding of

intransigence. Unlike some other assignments of error, David presents legal authority in

support of his argument of disproportionality.

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In re Marriage of Carlson

RCW 26.09.140 declares, in part:

The court from time to time after considering the financial resources
of both parties may order a party to pay a reasonable amount for the cost to
the other party of maintaining or defending any proceeding under this
chapter and for reasonable attorneys’ fees or other professional fees in
connection therewith, including sums for legal services rendered and costs
incurred prior to the commencement of the proceeding or enforcement or
modification proceedings after entry of judgment.

A trial court has discretion to award attorney fees in a dissolution action after considering

the financial resources of both parties and determining that one party has a need and the

other party has the ability to pay. In re Marriage of Buchanan, 150 Wn. App. 730, 739,

207 P.3d 478 (2009). When considering an award of attorney fees under this statute, the

trial court generally must balance the needs of the party requesting the fees against the

ability of the opposing party to pay the fees. Bay v. Jensen, 147 Wn. App. 641, 660, 196

P.3d 753 (2008).

The dissolution court need not balance needs and ability of the spouses if the court

finds one party to be intransigent. In re Marriage of Foley, 84 Wn. App. 839, 846, 930

P.2d 929 (1997); Bay v. Jensen, 147 Wn. App. at 660. Intransigence, in this context,

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

noncompliance with discovery requests, or making the trial unduly difficult and costly by

one’s actions. Wixom v. Wixom, 190 Wn. App. 719, 725, 360 P.3d 960 (2015); Bay v.

Jensen, 147 Wn. App. at 660. Fees incurred due to intransigence should be segregated

from the rest of the fees. In re Marriage of Crosetto, 82 Wn. App. 545, 565, 918 P.2d

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In re Marriage of Carlson

954 (1996).

Determining intransigence is necessarily factual. Wixom v. Wixom, 190 Wn. App.

at 725. We review attorney fee awards based on intransigence for an abuse of discretion.

Wixom v. Wixom, 190 Wn. App. at 725. Discretion is abused when the court’s decision is

outside the range of acceptable choices or based on untenable grounds or untenable

reasons. In re Marriage of Littlefield, 133 Wn.2d 39, 47, 940 P.2d 1362 (1997).

The evidence amply supports the trial court’s finding of intransigence by David

Carlson. A handwriting expert opined that David forged documents purporting to

remove Mary as general partner of HMD. David developed a new orchard in violation of

the interim farming order and diverted $300,000 in community funds into that project.

David made unusual prepayments of $221,350 for packing expenses in an attempt to

conceal proceeds. David hid income received from fruit packers.

Our review of the amount of the attorney fees award is also for abuse of discretion.

See In re Marriage of Kaplan, 4 Wn. App. 2d 466, 488, 421 P.3d 1046, review denied,

191 Wn.2d 1025, 428 P.3d 1184 (2018). The trial court awarded only $50,000 of the

$183,363.47 requested by Mary. Of the fees and costs requested, $33,929.55 were

charges of Matt Peterson and James Tarver, respectively the forensic accountant and the

document expert. We agree that the costs were reasonably incurred as a result of the

intransigence of David. That leaves $16,070.45 of costs and fees awarded by the trial

court. Mary fails to isolate for this court the amount of reasonable attorney fees incurred

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In re Marriage of Carlson

because of intransigence. Therefore, we would remand for a further determination of

fees if the court based the award of fees only on intransigence.

The dissolution court also awarded reasonable attorney fees and costs of $50,000

partially based on Mary’s needs and David’s abilities. David fails to recognize this

alternative basis for the award. As already analyzed when discussing the separate

property awarded to David and the current needs of Mary, David had more ability and

Mary more need. The trial court did not abuse its discretion when awarding Mary an

additional $16,070.45 because of her needs.

David Carlson contends Mary incurred attorney fees and costs primarily due to her

own unreasonable and vexatious multiplication of proceedings. He contends the trial

court, during its September 2015 oral ruling, stated that Mary also engaged in conduct

that could be called intransigent. Nevertheless, the dissolution court made no such

finding. The court mentioned that Mary annoyed and frustrated David, but the court

never blamed Mary for this frustration and annoyance. A husband typically grows

irritated with the conduct of a divorcing wife without her engaging in any blameworthy

conduct.

Mary Carlson Appeal

Issue 8: Whether the dissolution court abused its discretion by awarding Mary

Carlson only $3,000 per month in spousal maintenance?

Answer 8: No.

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In re Marriage of Carlson

We previously declined to address David Carlson’s assignment of error that the

trial court abused its discretion when awarding Mary $3,000 in monthly spousal

maintenance for three years. David failed to provide any legal citations supporting his

assignment. We now address the flip side of David’s assignment of error. Mary assigns

error to the ostensible low amount and the purported short length of the maintenance.

Mary argues that the dissolution court failed to consider the twenty-three-year

length of the marriage and her needs when it set monthly maintenance at $3,000 for only

three years and required her to pay $1,000 per month in premiums for David’s life

insurance. Because of the premium payment, Mary receives net maintenance of $2,000

per month, but will reap only fifty percent of the insurance death benefit. According to

Mary, the court should have awarded no less than $3,000 per month until at least her

retirement. She contrasts David’s monthly income, including $6,500 as a consultant,

$2,400 from Social Security, $1,200 in retirement benefits, and farming income of at

least $1,237.90. Of course, David contends the dissolution court should not have

awarded any sum.

RCW 26.09.090 controls an award of spousal maintenance and declares:

(1) In a proceeding for dissolution of marriage . . . , the court may
grant a maintenance order for either spouse. . . . The maintenance order
shall be in such amounts and for such periods of time as the court deems
just, without regard to misconduct, after considering all relevant factors
including but not limited to:
(a) The financial resources of the party seeking maintenance,
including separate or community property apportioned to him or her, and

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In re Marriage of Carlson

his or her ability to meet his or her needs independently, including the
extent to which a provision for support of a child living with the party
includes a sum for that party;
(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 or
domestic partnership;
(d) The duration of the marriage or domestic partnership;
(e) The age, physical and emotional condition, and financial
obligations of the spouse or domestic partner seeking maintenance; and
(f) The ability of the spouse or domestic partner from whom
maintenance is sought to meet his or her needs and financial obligations
while meeting those of the spouse or domestic partner seeking
maintenance.

A just award, in light of the statutory factors, poses the only limitation on the amount and

duration of maintenance. In re Marriage of Bulicek, 59 Wn. App. 630, 633, 800 P.2d 394

(1990). We rarely change on appeal trial court decisions in marital dissolution

proceedings. In re Marriage of Stenshoel, 72 Wn. App. 800, 803, 866 P.2d 635 (1993).

The party who challenges a maintenance award must demonstrate that the trial court

manifestly abused its discretion. In re Marriage of Washburn, 101 Wn.2d 168, 179, 677

P.2d 152 (1984).

We adopt Mary’s argument that she only receives $2,000 per month for three

years because she must monthly pay $1,000 for an insurance premium on David’s life.

Still, the dissolution court did not abuse its discretion when awarding this alternative

amount. In addition to maintenance, Mary received a substantial transfer payment. The

court ordered David Carlson to pay Mary $180,740, with $100,000 of that amount to be

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In re Marriage of Carlson

paid within months of the dissolution decree. This payment would allow Mary to pay her

nominal expenses for years. In addition, Mary received income producing property. She

represented to the court her competence and an ability to “make it on her own.” CP at

304.

Mary Carlson cites In re Marriage of Bulicek, 59 Wn. App. 630 (1990) and In re

Marriage of Williams, 84 Wn. App. 263, 927 P.2d 679 (1996), wherein the dissolution

court awarded the wife maintenance until the age of retirement. Nevertheless, neither

decision compels a trial court to award maintenance until the wife’s retirement. We hold

that the trial court did not abuse its discretion when awarding the amount and length of

spousal maintenance.

Issue 9: Whether the dissolution court abused its discretion by awarding Mary

Carlson only $50,000 in attorney fees and costs?

Answer 9: No.

We address the opposite side of the coin to David Carlson’s contention that the

dissolution court erred when granting Mary an award of $50,000 in fees and costs. Mary

sought recovery of $186,363.47 in reasonable attorney fees and costs. She contends the

trial court abused its discretion by awarding her less than one-third of the requested

amount of attorney fees. She posits that she faced an extraordinary burden to protect her

right to a fair division of property because of David’s foot-dragging, fraudulent

preparation of a document, concealment of fruit proceeds, duplicitous diversion of funds,

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In re Marriage of Carlson

and prepayment of expenses. Since David contends the trial court should have denied

Mary any fees, he agrees that the court reasonably limited the amount to $50,000.

We already outlined the law when we addressed David’s appeal. A trial court has

discretion to award attorney fees in a dissolution action after considering the financial

resources of both parties and determining that one party has a need and the other party

has the ability to pay. In re Marriage of Buchanan, 150 Wn. App. at 739 (2009). When

considering an award of attorney fees under this statute, the trial court generally must

balance the needs of the party requesting the fees against the ability of the opposing party

to pay the fees. Bay v. Jensen, 147 Wn. App. at 660 (2008).

The dissolution court need not balance needs and ability if the court finds one

party to be intransigent. In re Marriage of Foley, 84 Wn. App. at 846 (1997); Bay v.

Jensen, 147 Wn. App. at 660. Intransigence, in this context, includes foot dragging,

obstruction, filing repeated, frivolous, or unnecessary motions, noncompliance with

discovery requests, or otherwise making the trial unduly difficult and costly by one’s

actions. Wixom v. Wixom, 190 Wn. App. at 725 (2015); Bay v. Jensen, 147 Wn. App. at

660. Fees incurred due to intransigence should be segregated from the rest of the fees. In

re Marriage of Crosetto, 82 Wn. App. at 565 (1996). We note review of the amount of

the attorney fees award is also for abuse of discretion. See In re Marriage of Kaplan, 4

Wn. App. 2d at 488 (2018).

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In re Marriage of Carlson

As already discussed, ample evidence supports the dissolution court’s finding of

intransigence on the part of David Carlson. As a result, the dissolution court ordered

David to pay an amount that included at least the expert witness fees incurred by Mary.

The court awarded an additional sum of $21,848.10 beyond the expert fees, which

amount we attribute to attorney fees rather than costs. Mary asked for $158,211.57 in

counsel fees. Mary fails to direct us to any portion of the record where she segregated the

amount of attorney fees incurred as a result of the intransigence of David. Therefore, we

cannot conclude that the court failed to include a reasonable sum for intransigence. We

also note that we find no decision that requires the trial court to award the opposing party

an award for all fees and costs directly resulting from intransigence.

The trial court also granted Mary Carlson reasonable attorney fees and costs on the

basis of RCW 26.09.140 in that Mary had some need for financial assistance and David

had a greater ability to pay. Despite this finding, we reason that the trial court could

have, within its discretion, denied any award to Mary based on need. To repeat our

comments regarding the award of spousal maintenance, Mary received a substantial

transfer payment. Mary received income producing property. She represented to the

court her competence and an ability to support herself. If the dissolution court possessed

discretion to deny fees altogether because of an alleged need, the court did not abuse its

discretion when awarding only $21,848.10 in fees based on this reason.

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In re Marriage of Carlson

Issue 10: Whether the dissolution court abused its discretion when treating HMD

as separate property of David Carlson?

Answer 10: No.

In its distribution of the marital property, the trial court awarded all interest in

HMD, valued at $1 million, to David, less the $65,000 awarded to Mary and $216,654

owed to HMD. The court noted that Mary held a 6.5 percent interest in HMD such that

the court added the sum of $65,000 for David to pay Mary as part of the transfer

payment.

Mary complains that the dissolution court characterized her 6.5 percent interest in

HMD as community property and David’s interest in HMD as separate property. Mary

considers these differing characterizations as inconsistent and thus an abuse of discretion.

Mary also complains that the dissolution court inconsistently characterized the parties’

interest in South 80 Orchards as community property while primarily designating the

interest in HMD as David’s separate property.

We question the relevance of the characterization of the parties’ respective

interests since the trial court equitably awarded the spouses’ assets among them. Again,

the nature of the property is only one factor to be weighed by the trial court.

Nevertheless, to the extent that the trial court deemed David’s interest in HMD to be

separate property and Mary’s interest in the limited partnership to be community

property, we find no error.

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No. 34443-6-III
In re Marriage of Carlson

The only law cited by Mary for this assignment of error is the general proposition

that a trial court abuses its discretion if its decision is manifestly unreasonable or based

on untenable grounds or untenable reasons. In re Marriage of Littlefield, 133 Wn.2d at

46-47 (1997). In turn, Mary argues no legitimate reason justified the dissolution court

treating the respective spouses’ interest in HMD differently.

Mary Carlson’s analysis fails to note the history of HMD. The partnership began

primarily as the entity of Hugh Carlson, David’s father. When the partnership

commenced in 1999, Hugh owned a 98 percent interest in the partnership. Thereafter,

Hugh serially transferred limited percentages in HMD to David and David’s sister. The

trial court could reasonably conclude, based in part of partnership agreement addenda,

that the transfers were gifts from a parent to a child and thus separate property of David.

Separate property is property owned by a spouse before marriage, or acquired by him or

her during marriage by gift, bequest, devise, descent, or inheritance. RCW 26.16.010.

Once Hugh died, David inherited the remaining interest of his father in the partnership,

and David would also hold these shares as separate property.

After Hugh’s death in 2000, HMD drafted another addendum that gave the Estate

of Hugh a 2.5 percent share as a general partner and an 80 percent share as a limited

partner; Mary Carlson, as her separate estate, a 2.5 percent share as a general partner;

Marla Contini a 2.5 percent as a general partner; and the remaining 12.5 percent share as

a limited partner interest in Marla’s family and David’s son, Nicholas. Thus, by 2000,

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In re Marriage of Carlson

David, in his capacity as personal representative of his father’s estate, controlled an 82.5

percent share in HMD.

The history behind HMD shows that David received most, if not all, of his interest

in the limited partnership as a gift from his father or through an inheritance from his

father. Thus, the dissolution court characterized the interest as David’s separate property.

See In re Marriage of Urbana, 147 Wn. App. 1, 11, 195 P.3d 959 (2008).

We note that the HMD partnership agreement addendum listed Mary’s share in the

partnership as her separate property. Nevertheless, the trial court was not bound by the

document’s characterization of ownership. The trial court was free on its own to decide

the character of the ownership interest and could characterize Mary’s interest as

community property since she received the interest during the marriage. Mary does not

argue to the contrary.

The dissolution court also did not abuse its discretion when treating South 80

Orchards as community property and HMD as primarily David’s separate property.

Evidence supported the court’s finding that Mary commingled South 80 Orchards’ assets

with assets of community property. In turn, evidence supported the trial court’s finding

that David did not commingle HMD assets with community property assets.

Issue 11: Whether the dissolution court abused its discretion when treating the

postseparation debt owed to HMD as a community liability rather than David’s separate

debt?

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In re Marriage of Carlson

Answer 11: No.

Mary next assigns error to the dissolution court’s ruling that postseparation debt to

HMD constituted a community liability for both spouses. She emphasizes that David

prepared and signed the notes as both maker and payor. She never agreed to the loans.

According to Mary, the trial court should have characterized the debt as David’s separate

liability and should not have deducted the loan amount of $216,654 against the total

value of the community property for purposes of dividing the assets between the spouses

in the 55 percent to 45 percent split.

Mary Carlson cites RCW 26.16.140 to support this assignment of error. The first

sentence of the statute reads:

When spouses or domestic partners are living separate and apart,
their respective earnings and accumulations shall be the separate property
of each.

We conclude that the statute does not apply since the statute refers only to earnings and

accumulations, not debts or liabilities. We refuse to apply the statute by analogy to debts

in this instance because of the unique circumstances involved. An interim court order

directed David Carlson to manage all of the farm community property. Evidence

supports a finding that the debt to HMD incurred after separation assisted in the

community orchard operations.

The presumption of community liability for debts incurred during the marriage

may be overcome in circumstances before a dissolution decree when the couple live

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No. 34443-6-III
In re Marriage of Carlson

separate and apart. Oil Heat Co. of Port Angeles v. Sweeney, 26 Wn. App. 351, 353-54,

613 P.2d 169 (1980). Whereas, David and Mary Carlson lived apart from each other,

Mary did not overcome the presumption of community liability when David managed the

community orchards. Therefore, the trial court did not abuse its discretion when

attributing the debt to the community.

Issue 12: Whether the dissolution court abused its discretion when assessing

interest on the funds Mary withdrew from the HMD bank account and later placed in the

court registry?

Answer 12: No.

The trial court assessed interest at twelve percent per annum on the $226,485.05

Mary Carlson withdrew from the HMD bank account on November 19, 2013 and placed

into the registry of the court on January 7, 2014. The amount of interest accrued was

$3,648.56.

Mary Carlson contends the HMD funds that the trial court ordered deposited with

the registry of the court were not liquidated until the court determined the value of

Mary’s 6.5 percent interest in HMD. Therefore, according to Mary, prejudgment interest

was not appropriate. We disagree. The dissolution court did not impose interest on the

value of Mary’s share of ownership of HMD. The court assessed interest on the money

withdrawn from the HMD bank account. That amount was readily known and thus

liquidated.

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In re Marriage of Carlson

Generally, a prevailing party is entitled to prejudgment interest if the amount

claimed is liquidated. In re Marriage of Rockwell, 157 Wn. App. 449, 454, 238 P.3d

1184 (2010). A claim is liquidated if data in the evidence makes it possible to compute

the amount with exactness, without reliance on opinion or discretion. In re Marriage of

Rockwell, 157 Wn. App. at 454. Prejudgment interest is compensation for the loss of the

use of those funds. In re Marriage of Rockwell, 157 Wn. App. at 454.

Issue 13: Whether the dissolution court abused its discretion when awarding

David Carlson all of the parties’ non-leased real property, residences, and shops?

Answer 13: No.

Mary observes that the dissolution court intended to divide the couple’s orchard

properties so that both parties could continue to farm. Nevertheless, the court granted to

David all of the couple’s orchard land owned outright and assigned her the three leased

Native American trust properties. The court also denied her a useable residence and a

shop for farm equipment. From these observations, Mary contends the dissolution court

failed to properly consider the economic circumstances of the parties. Mary requests an

award of the HomePlace property so she has a residence and a shop in which to store all

of her farm equipment.

When previously addressing David’s challenge to the property division, we reviewed the

factors a court considers when allocating the marital couple’s property. As stated, our

review of the trial court’s distribution of property is for abuse of discretion. In re

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In re Marriage of Carlson

Marriage of Muhammad, 153 Wn.2d at 803 (2005). An obvious disparity in the

economic condition of the parties after the award may show an abuse of the court’s

discretion. In re Marriage of Kim, 179 Wn. App. at 253 (2014).

We know of no rule that requires the court, in a situation the same or similar to the

economic conditions of the Carlsons, to award each party at least some of the fee land, a

residence, and a large shop. Therefore, we find no abuse of discretion by the trial court

for many reasons. Mary received 225 acres of orchard to David’s 210 acres of orchard.

The value of the wind machines on her leased land exceeded the value of the wind

machines on David’s land. She received an equalization payment from David such that

she received 55 percent of the community property. She also receives spousal

maintenance.

HMD Appeal

Issue 14: Whether David’s trial testimony affirming responsibility for loans

purportedly issued by HMD to Carlson Agribusiness in 2003, 2007, and 2009 precludes

application of a three-year statute of limitations to HMD’s debt collection action against

South 80 Orchards?

Answer 14: No.

We move to HMD’s assignments of error. In December 2013, HMD sued South

80 Orchards to collect on the loans issued in 2003, 2007, and 2009. In 2003 and 2007,

Mary Carlson wrote checks on HMD’s account totaling $153,400 to South 80 Orchards

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In re Marriage of Carlson

to cover shortages in the latter’s operating funds. South 80 Orchards signed no

promissory note. In 2009, Mary wrote three checks totaling $165,000 on HMD’s account

to South 80 Orchards as working capital for the orchard. The 2009 checks contain the

abbreviation “N/P S-80,” which may be shorthand for “note payable South 80.” CP at

292.

In the dissolution court’s oral ruling, the court mentioned that David Carlson and

Carlson Agribusiness, not South 80 Orchards, borrowed the HMD funds in 2003 and

2007. Nevertheless, Mary testified that HMD loaned the money to South 80 Orchards,

not David or Carlson Agribusiness. David cites no evidence contradicting Mary’s

testimony identifying the borrower. David presumably would rather the loans be

assessed to South 80 Orchards, than him personally. Thus, we proceed on the

supposition that South 80 Orchards was the sole borrower in 2003 and 2007. HMD sues

South 80 Orchards, not David Carlson or Carlson Agribusiness, for the debt. The trial

court concluded that South 80 Orchards borrowed the 2009 funds.

No attorney has appeared for South 80 Orchards in this appeal to argue against

enforcement of the debt. We suspect that HMD seeks to impact Mary more than it seeks

to impact South 80 Orchards by its collection efforts, since its appeal argument focuses

on Mary. In fact, HMD wrongly contends that the trial court pierced South 80 Orchards’

corporate veil so as to impose individual liability for the debt on Mary and the

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In re Marriage of Carlson

community. Mary seeks to defeat the debt collection suit. Still neither David nor Mary

Carlson guaranteed the 2003, 2007, or 2009 debt.

We question the utility of any suit to collect the loans. Assuming Mary is

indirectly obligated to pay any of the debt owed to HMD, David holds the same liability,

since the trial court ruled that South 80 Orchards constitutes community property. As

part of the dissolution action, the trial court could assign the entire debt to be paid by

David, who owns and controls HMD. Or the dissolution court could impose the debt in

part on Mary, but increase her portion of the property division or increase her spousal

maintenance in order to assist her in retiring the debt. In its oral ruling, the dissolution

court suggested that, assuming the court enforced the debt, it would impose the debt on

David without offsetting the property award to Mary.

The trial court held the three-year statute of limitations barred HMD’s debt

collection or breach of contract claim against South 80 Orchards. We agree.

A suit on a written contract generally must be commenced within six years.

RCW 4.16.040(1). A three-year limitation period applies to a contract not in writing.

RCW 4.16.080(3). When a claimant must rely on parol evidence to establish any

material element of a contract, the law deems the contract an oral agreement and subject

to the three-year statute of limitations. Barnes v. McLendon, 128 Wn.2d 563, 570, 910

P.2d 469 (1996). An account does not satisfy the writing requirement of the statute.

Hamlin v. Flick, 130 Wash. 126, 130, 226 P. 484 (1924).

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In re Marriage of Carlson

No writing confirms the 2003 and 2007 loans to South 80 Orchards. HMD does

not contend that the notation on the 2009 checks removes the claim on the 2009 loans

from the three-year limitation period.

HMD claims the three-year limitation period does not bar its suit because David

Carlson, one of the general partners in South 80 Orchards, acknowledged the debt during

his trial testimony. We disagree for numerous reasons.

First, we repeat David Carlson’s trial acknowledgment of debt:

Q Now as you sit here today, chief executive of Carlson
Agribusiness, you acknowledge that those amounts are still owing to HMD.
A Correct.
Q You’re acknowledging the debt right here, right now, correct?
A Correct.

RP (June 17, 2015) at 566. Any admission of David on behalf of Carlson Agribusiness

has no binding effect on South 80 Orchards. HMD cites no testimony of David whereby

he conceded a debt owed by South 80 Orchards.

Second, under Washington statute any new promise to pay a debt must be in

writing and signed by the debtor. RCW 4.16.280 declares:

No acknowledgement or promise shall be sufficient evidence of a
new or continuing contract whereby to take the case out of the operation of
this chapter, unless it is contained in some writing signed by the party to be
charged thereby.

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In re Marriage of Carlson

HMD contends David’s testimony in court satisfied the writing requirement of RCW

4.16.280. Nevertheless, assuming trial testimony may be deemed a “writing,” David has

never signed the testimony.

Third, in support of its argument that David’s trial testimony satisfies the writing

requirement, HMD cites Powers v. Hastings, 20 Wn. App. 837, 846, 582 P.2d 897

(1978), aff’d on other grounds, 93 Wn.2d 709, 612 P.2d 371 (1980). Powers, however,

held that trial testimony could remove an oral lease and option to purchase real property

from the statute of frauds, not the operation of a statute of limitations. HMD cites no law

that establishes that trial testimony fulfills the written and signed acknowledgment

statute. In Miwon, U.S.A., Inc. v. Crawford, 629 F. Supp. 153, 156 (S.D.N.Y. 1985), the

federal court ruled that trial testimony did not meet the requirements of the New York

statute that also required a signed writing to avoid the statute of limitations.

Fourth, HMD sued South 80 Orchards on the original debt, not on David Carlson’s

acknowledgment of the debt. When a debt is acknowledged before the statutory period,

the resulting legal action must be on the original debt or on the paper evidencing it. In re

Receivership of Tragopan Properties, LLC, 164 Wn. App. 268, 273, 263 P.3d 613

(2011). When a debt is acknowledged after the statute of limitations has run, the action

must be on the new agreement. In re Receivership of Tragopan Properties, LLC, 164

Wn. App. at 274. To collect on David Carlson’s renewed promise, HMD needed to file a

new suit or amend its intervention complaint against South 80 Orchards to seek payment

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In re Marriage of Carlson

on the new pledge.

Fifth, David acknowledged the debt but never renewed a pledge to pay the loan.

Washington cases conflict on whether the debtor must go beyond an acknowledgment

and also pledge to pay the amount of the loan. Most cases hold that the debtor must

renew the promise to pay. Dolby v. Fisher, 1 Wn.2d 181, 95 P.2d 369 (1939); Addison v.

Stafford, 183 Wash. 313, 48 P.2d 202 (1935); Beckman v. Alaska Dredging Co., 180

Wash. 321, 40 P.2d 117 (1935); Temirecoeff v. American Express Co., 172 Wash. 409, 20

P.2d 23 (1933); Tucker v. Guerrier, 170 Wash. 165, 15 P.2d 936 (1932); In re

Receivership of Tragopan Properties, LLC, 164 Wn. App. at 273-74. One case to the

contrary is Cannavina v. Poston, 13 Wn.2d 182, 124 P.2d 787 (1942).

Sixth, David Carlson acknowledged the debt not in order to require South 80

Orchards to pay, but in an attempt to impose the debt on Mary. As a general rule an

acknowledgment or part payment by a joint debtor does not suspend the statute of

limitations as to the other debtor, unless he or she authorizes or ratifies the payment or

acknowledgment. Matson v. Weidenkopf, 101 Wn. App. 472, 479, 3 P.3d 805 (2000). In

accordance with this principle, one spouse’s acknowledgment of the debt cannot bind the

other spouse unless the latter gives authority to the former to speak on behalf of the

community. Matson v. Weidenkopf, 101 Wn. App. at 480-81.

Issue 15: Whether the statute of limitations bars HMD’s suit against Mary for

breach of a fiduciary duty when distributing HMD money to South 80 Orchards and

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In re Marriage of Carlson

when asserting the statute of limitations?

Answer 15: We decline to address this question because HMD did not plead a

cause of action against Mary Carlson based on her distributing the loan funds and her

assertion of the statute of limitations.

On appeal, HMD argues that Mary Carlson breached her fiduciary duty by using

HMD’s money for her own profit in 2003, 2007, and 2009 by converting money to South

80 Orchards without disclosure to the other partners, the Contini family. HMD further

contends that Mary’s failure to disclose the loans to the Continis tolls the running of the

statute of limitations from accruing on HMD’s claims against her or against South 80

Orchards.

We note that David, who has inherited nearly the entire ownership in HMD, does

not personally contend that he lacked knowledge of the loans. He benefitted from the

loans as much as Mary did since the loans paid orchard expenses. We also note that the

Continis, David’s sister and her family, do not complain about the unpaid loans issued by

HMD to South 80 Orchards. The Contini family also inherited an interest in HMD

through Hugh Carlson, and the family also likely would have wished David’s orchard

operation to be successful.

HMD seeks to impose sole fiduciary responsibility on Mary by quoting testimony

that she controlled South 80 Orchards. Remarkably, David then claims that he, by his

testimony can bind South 80 Orchards because he was also a general partner in the entity.

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In re Marriage of Carlson

Finally, we note that David fraudulently sought to erase Mary’s interest in HMD, but now

he claims that Mary owed a fiduciary duty to HMD. We question the cleanliness of

David’s, and, in turn, his company HMD’s, hands.

We decline to address HMD’s arguments to impose fiduciary responsibilities on

Mary because of the loans to South 80 Orchards because HMD did not plead this claim.

In the intervenor action, HMD complained that Mary violated her fiduciary duty but only

alleged as a factual basis the withdrawal of funds from the HMD bank account in

November 2013.

Although courts generally construe pleadings liberally, the civil rules require that a

party’s pleadings give notice that advises the other party of the event being sued upon.

North Coast Enterprises, Inc. v. Factoria Partnership, 94 Wn. App. 855, 861, 974 P.2d

1257 (1999). HMD gave no notice that it sued based on the events of failing to notify the

Contini family of the loans and asserting the statute of limitations.

HMD may contend that, despite it not pleading these additional claims of breach

of fiduciary duty, the trial court entertained the claims, and, thus, this court should

address the claims on review. We recognize that the court impliedly ruled that Mary

breached no fiduciary duty in addition to the ruling that the statute of limitations bars any

suit for a breach. We further recognize that the trial court can amend a party’s pleading

to conform to the evidence. At the discretion of the trial court, the pleadings may be

amended to conform to the evidence at any stage in the action, including at the

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In re Marriage of Carlson

conclusion of a trial, and even after judgment. CR 15(b); Green v. Hooper, 149 Wn.

App. 627, 636, 205 P.3d 134 (2009). Nevertheless, an amendment under CR 15(b)

cannot be allowed if actual notice of the unpleaded issue is not given, if there is no

adequate opportunity to cure surprise that might result from the change in the pleadings,

or if the issues have not in fact been litigated with the consent of the parties. Harding v.

Will, 81 Wn.2d 132, 137, 500 P.2d 91 (1972); Mukilteo Retirement Apartments, LLC v.

Mukilteo Investors LP, 176 Wn. App. 244, 256-57, 310 P.3d 814 (2013).

HMD cites to no portion in the trial record whereat the trial court deemed the

intervenor complaint amended to include additional claims against Mary Carlson for

breach of fiduciary duty. HMD cites to no law and provides no analysis for this court as

to why the court should deem the complaint amended to include a claim for breach of

fiduciary duty based on the failure to inform the Continis of the loans to South 80

Orchards and the assertion of the statute of limitations. HMD does not even reference

CR 15(b) in its briefing.

Issue 16: Whether the trial court should have ordered Mary to pay interest on the

HMD funds deposited in the registry of the court during the time that the funds reposed in

the registry?

Answer 16: No.

In January 2014, the dissolution court ordered Mary Carlson to deposit into the

court registry the $226,485.05 that she withdrew from HMD. As part of the dissolution

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In re Marriage of Carlson

decree, the trial court ordered Mary to pay interest on the $226,485.05 amount from the

date she withdrew the funds from the bank account to the date she placed the funds in the

court registry. Nevertheless, the court refused to require Mary to pay interest on the sum

during the time the large amount sat in the court registry. HMD argues that, by

placement of the money in the registry, Mary wrongly denied HMD use of the money for

months and thus she should pay interest on the sum until the court ordered return of the

money to HMD. The amount of interest due on the distrained funds at twelve percent

interest from January 8, 2014 to September 25, 2015 is $46,538.02.

A party is entitled to prejudgment interest on liquidated claims to compensate

them for loss of use on money that is wrongfully withheld by another party. Mall Tool

Co. v. Far West Equip. Co., 45 Wn.2d 158, 169, 273 P.2d 652 (1954); TJ Landco, LLC v.

Harley C. Douglass, Inc., 186 Wn. App. 249, 256, 346 P.3d 777 (2015). A court may

award prejudgment interest when the claimed amount is “liquidated.” Liquidated means,

in this context, the amount can be computed with exactness from the evidence, without

reliance on an opinion or discretion. Forbes v. American Building Maintenance West,

170 Wn.2d 157, 166, 240 P.3d 790 (2010).

We agree with HMD that the sum was liquidated. We disagree that HMD was

entitled to prejudgment interest. The trial court did not find that Mary Carlson wrongly

withheld the funds from HMD after the deposit of the funds into the court registry.

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No. 34443-6-III
In re Marriage of Carlson

Issue 17: Whether this court should grant Mary reasonable attorney fees and costs

on appeal.

Answer 17: Yes, but only as to fees and costs incurred by reason of David’s

intransigence.

Mary Carlson requests reasonable attorney fees and costs under RCW 26.09.140

and RAP 18.1 based on her need and David’s ability to pay as well as David’s continued

intransigence. RAP 18.1. This court also has discretion to award fees and costs on

appeal based on a showing of intransigence or need. In re Marriage of Buchanan, 150

Wn. App. at 740 (2009).

Because Mary’s request for fees based on her need and David’s ability requires

consideration of the financial resources of the parties, she must have filed an affidavit of

need no later than 10 days before oral argument. RAP 18.1(c). She failed to do so.

Therefore, we deny any award under RCW 26.09.140.

We grant Mary Carlson reasonable attorney fees and costs on appeal to the extent

the fees were incurred were related to the forms of intransigence found by the dissolution

court. In filing her application for fees, Mary shall hold the burden of isolating those fees

related to the intransigence.

CONCLUSION

We compliment the dissolution court on its handling of this difficult dissolution

proceeding consolidated with commercial litigation. We affirm all rulings of the

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In re Marriage of Carlson

dissolution court, except as to the calculation of salary to be credited to David Carlson.

We remand to the trial court to review the potential calculation error. We grant Mary

Carlson reasonable attorney fees and costs on appeal to the extent she attributes the

expenses to the intransigence found by the dissolution court.

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.

Fe~i;:y
WE CONCUR:

Q_
Pennell, A.CJ.

73