Cullen and Cullen

• Decision Date: 15 October 2008
• Docket Number: A131021.,043188.
• Citation: 223 Or. App. 183,194 P.3d 866
• Parties: In the Matter of the MARRIAGE OF Steven Roy CULLEN, Petitioner-Appellant, and Sally Ann Cullen, Respondent-Respondent.
• Court: Oregon Court of Appeals

194 P.3d 866

223 Or. App. 183

In the Matter of the MARRIAGE OF Steven Roy CULLEN, Petitioner-Appellant, and Sally Ann Cullen, Respondent-Respondent.

043188.

A131021.

Court of Appeals of Oregon.

Argued and Submitted November 9, 2007.

Decided October 15, 2008.

Gary J. Zimmer, Portland, argued the cause for appellant. On the opening brief were Peter Bunch and Zimmer & Bunch LLC. On the reply brief were Angela Bentz and Zimmer & Bunch LLC.

Craig Wymetalek, Portland, argued the cause for respondent. With him on the brief was Gearing, Rackner & Engel, LLP.

Before EDMONDS, Presiding Judge, and WOLLHEIM, Judge, and SERCOMBE, Judge.

SERCOMBE, J.

Husband appeals a judgment of dissolution and assigns error to the amount and duration of the trial court's award of maintenance spousal support to wife. On de novo review, ORS 19.415(3), we modify the amount of spousal support and otherwise affirm.

We state the relevant facts from our review of the record. Our findings are consistent with those of the trial court, except where noted. At the time of the dissolution, the parties had been married for 25 years. Husband was 50 years old, and wife was 44 years old; both were in good health. The parties have two daughters who were 15 and 19 years old at the time of the trial. The younger daughter attended high school and resided with wife at the family home; the older daughter was in college.

The parties started Walluski Western, an agricultural equipment business, during the early years of the marriage after husband invented a new way of bagging grass. They later formed Versa Corporation, which markets the equipment. Other corporations own the intellectual property of the business and real properties used by both companies, including the "Bumble Bee Shipyard" property used by Versa. Husband ran the business; wife took care of the books and assisted husband in the operation of the business. However, her primary work for the past 10 years was as a homemaker. Wife has one year of college education; the trial court found that wife could earn $1,200 to $1,500 per month if she entered the job market and that she "has a good eye for land investments."

The business was a success. By the time of trial, both companies were worth $2,128,084. The business generated considerable income for the parties, and they enjoyed a very comfortable lifestyle. The parties owned a spacious home on 26 landscaped acres with stables, a riding arena, and a swimming pool. Their family took expensive trips and vacations. They owned a number of automobiles, motorcycles, recreational vehicles, and show horses, together with approximately nine acres of business property (the gravel pit property), acreage on the Washington coast, a condominium on the Seaside promenade, and substantial retirement and savings accounts.

The parties received an average annual salary from the companies of $148,298 for the last five years. A majority of that salary was paid to husband. However, the parties also extracted substantial sums of money from those companies for the past 10 years for personal spending and to purchase personal, business, and investment real estate. Those withdrawals stripped most of the retained earnings from the companies. We concur in the following trial court findings:

"Mr. Fagin [the business manager] and Mr. Conner [the business accountant] are alarmed about the financial health of Walluski Western and indicate cash cannot be taken from the company as the parties have done for the past five years. Both indicate the cash flow must be reduced if Walluski will survive, pay its bills, maintain its equipment and manufacturing ability and continue to develop improvements to its products to stay competitive. [Wife's accountant] did her own analysis of husband and wife's finances which included reviewing the money the parties have been able to draw from the corporations for the past ten years. She agreed the retained earnings have been depleted and based upon the history of the companies, thought that level of withdrawal could continue. After reviewing the exhibits, the tax returns and doing my own averaging of corporate incomes and salaries for the past five years, I believe Mr. Fagin and Mr. Conner have the better feel for the present status of the corporations and their current financial situation. Historically, the parties have had average salaries of $148,298.00 available which will continue to be paid to husband. The two corporations have averaged income of $207,434.00 for the past five years, up to 2004. Doing a four year average to not include Walluski's big year in 2000 leaves an average of $52,671.00. According to Mr. Fagin, historically, the parties have withdrawn $200,000.00 to $250,000.00 from the business each year. * * *"

The trial court went on:

"I believe the well has gone dry as far as the business being able to sustain the lifestyles husband and wife have adopted during the marriage and in particular the last two years. I expect husband, with his innovative talents, will continue to keep Walluski competitive and the business will continue to be profitable. However, more attention will need to be given to investing some of the income back into the business and keeping suppliers current with their bills. Mr. Fagin or Mr. Conner did not indicate how much profit should be kept in the corporation but holding back sufficient income to run the operation should still leave $40,000.00 available. With his salary, husband is expected to have $188,298.00 available to him to meet his living expenses, support obligations and personal needs."¹

The trial court awarded total assets in the amount of $1,419,919 to wife, $2,489,046 to husband, and ordered husband to pay an equalizing judgment to wife of $534,563.50. In the asset division, husband received the business properties and assets, and wife received the primary residence with an encumbrance, the income-producing gravel pit property, and the Washington coast investment properties. The house was valued at $720,000 and had a mortgage in the amount of $155,219. The Oregon coast condominium was to be sold and the proceeds divided equally. The personal property was divided equally. After sale of the condominium and payment of the equalizing judgment, wife would have $791,171 in liquid assets, exclusive of money held in checking and savings accounts.

In the property allocation, husband was awarded the Bumble Bee property, which was initially acquired with Walluski resources; husband testified that it was purchased to expand the business. The office building on that property could be rented for $3,000 per month, whether to Walluski, Versa, or another entity; there was indeed evidence of payment of rent for $5,000 in the past. In its ruling, the trial court stated that the "natural inclination" was to award the Bumble Bee property to wife, which would have left a more equal initial property division and would have created rental income for wife. However, the court acknowledged that husband would need to maintain and expand the business for both parties to attempt to continue their present lifestyles. Therefore, the court awarded the Bumble Bee property to husband, with the caveat that, "[i]n the event wife ends up owning the Bumble Bee property, the spousal support will be adjusted." In the court's view, husband needed the property in order to maintain and expand the business and his income, and if he was unable to pay the equalizing judgment to wife, she would be awarded the Bumble Bee property. Husband satisfied the equalizing judgment.

The trial court found husband's living expenses to be $2,480 per month. Those expenses did not include the cost of living in housing that was equivalent to the family home. Husband also had monthly obligations for the following: child support (approximately $400), college expenses ($1,620), health insurance expenses for himself and the children ($803), and taxes (approximately $6,576 at a 40 percent income tax rate). There was no evidence on any debt service on the money borrowed to pay the equalizing judgment. Much of husband's travel, entertainment, and transportation expenses would continue to be paid by the business. After payment of those monthly expenses, husband would have $4,562 in net monthly income available for payment of spousal support and other expenses (vacation and entertainment). That amount will increase when the child support and college expenses end.

The trial court found wife's monthly expenses to be $9,989, including income and property taxes, $2,600 per month for the home mortgage, and $800 per month for upkeep for the horses and other animals. Those expenses assumed that wife would continue to occupy the family home. According to the evidence at trial, wife could earn up to $1,500 per month. She would have $1,000 in rental income from the gravel pit property. The trial court found that wife would obtain $3,150 in monthly income from her investments. According to the trial court's calculations, wife's monthly expenses would likely exceed her income by $4,339 per month. Those expenses would pay for a standard of living roughly comparable to that enjoyed by wife during the marriage.

The trial court ordered husband to pay "step-down" maintenance spousal support to wife in the amount of $8,000 per month for four months, $7,000 per month for one year $6,000 per month for the next 18 months, and $5,500 per month for an indefinite time thereafter. Husband disputes the award of spousal support to wife and argues that it does not adequately take into account the amount and nature of the assets awarded to wife and the investment income that she could earn from those assets. He also contends that the family businesses were in financial peril and that the trial court overestimated his income.

Wife contends that husband "ratified" the trial court's order of spousal support by accepting the benefit of the property division, which included an award...