Duxbury v. Duxbury (In re Estate of Duxbury)

• Decision Date: 19 June 2013
• Docket Number: No. 42933–1–II.,42933–1–II.
• Citation: 175 Wash.App. 151,304 P.3d 480
• Parties: In re ESTATE OF Mark Eugene DUXBURY, Deceased. Sojourner T. Duxbury, Appellant, and Chinyelu Duxbury, Respondent.
• Court: Washington Court of Appeals

175 Wash.App. 151

304 P.3d 480

In re ESTATE OF Mark Eugene DUXBURY, Deceased.

Sojourner T. Duxbury, Appellant,

and

Chinyelu Duxbury, Respondent.

No. 42933–1–II.

Court of Appeals of Washington,

Division 2.

June 19, 2013.

Douglas Allen Schafer, Schafer Law Firm, Tacoma, WA, for Appellant.

Hari L. Alipuria, Attorney at Law, Tacoma, WA, for Respondent.

HUNT, J.

[175 Wash.App. 155] ¶ 1 Sojourner T. Duxbury ¹ appeals the Pierce County Superior Court's order concluding that her deceased father's (Mark Eugene Duxbury) federal “ ‘qui tam action’ ” ² under the False Claims Act (FCA) ³ and any future proceeds ⁴ from it are community property, which will pass entirely to her stepmother, Chinyelu Duxbury, under Washington's intestacy statute; Sojourner also appeals the superior court's denial of her motion to reconsider this decision. Sojourner argues that the superior court erred in concluding that her father's qui tam action is community property because (1) he acquired a property interest in the qui tam action when he learned facts material to his qui tam right of action, which events occurred before his 2001 marriage to Chinyelu; and (2) if he did not acquire a property interest in the qui tam action until he filed his qui tam lawsuit in 2003 (after marrying Chinyelu), the qui tam action should be considered his separate property because they were not acquired by “onerous title” ⁵ through the labor and industry of the marriage.

¶ 2 We hold that the superior court properly characterized Mark's qui tam action as community property because he obtained a property interest in this action after marriage, when he filed his qui tam lawsuit and served a copy of his complaint and supporting evidence on the federal government in 2003. Accordingly, we affirm; and we deny both parties' requests for attorney fees.

FACTS

I. “Qui Tam” Action in Federal Court in Massachusetts

¶ 3 Mark Eugene Duxbury was employed by Ortho Biotech Products, LP (OBP) from 1992 to 1998; eventually, he became a Regional Key Account Specialist for OBP's Western Division Oncology sales force, responsible for promoting and selling OBP's drug Procrit® in the Western United States. During the course of his employment, Mark learned facts related to what he considered an illegal OBP “ ‘kickback scheme,’ ” which (1) involved OBP's giving medical providers and hospitals “kickbacks” ⁶ to induce them to prescribe Procrit® to patients; and (2) resulted in the providers and hospitals submitting false claims to Medicare. Clerks Papers (CP) at 1, 8. Although Mark learned about this OBP “kickback scheme” during his employment, he did not report the kickbacks or the false Medicare claims to the federal government at that time.

¶ 4 In February 2001, after he stopped working for OBP, Mark married Chinyelu. CP at 1, 71. In November 2003, Mark (1) first notified the United States Attorney General of the “kickback scheme” that he had learned about while working for OBP, and (2) filed a federal civil action against OBP in Massachusetts under the “qui tam” provisions of the federal FCA, 31 U.S.C. § 3730. CP at 1. Apparently, Mark's qui tam action is still pending in federal court. See CP at 72.

II. Probate Action in Pierce County

¶ 5 Mark died intestate, in October 2009; he was survived by his wife, Chinyelu, and his daughter from a previous marriage, Sojourner. Chinyelu was appointed personal representative of Mark's estate; as the estate's personal representative, she was also substituted as the “relator” ⁷ for his federal qui tam action. In 2010, Mark's estate filed an inventory of estate assets in Pierce County Superior Court, which listed Mark's qui tam action and all other property in the estate as “community property.” ⁸ CP at 5. At the time of the estate inventory, the value of Mark's qui tam action was “[u]nknown,” although it is now believed to be worth at least $150 million if successful. CP at 6. The other estate assets total $22,003.38 in value.

A. Sojourner's Motion for Order that Qui Tam Action Is Separate Property

¶ 6 In July 2011, Sojourner moved for a Pierce County Superior Court order that Mark's qui tam action is his separate property, one half of which she is entitled to inherit under Washington's intestacy statute. RCW 11.04.015(2)(a). Sojourner argued that (1) under Washington law, a cause of action and any resulting property interest in it “accrues” when a person learns about material facts necessary to the action; and (2) because Mark learned about the material facts necessary to his qui tam action during his employment with OBP (1992–1998), before he married Chinyelu, the qui tam action is his separate property. CP at 3.

¶ 7 Opposing Sojourner's motion, Chinyelu argued that (1) a relator's property interest in a qui tam action differs from other causes of action, such as personal injury actions, because the federal government, not the relator, is the injured party; (2) unlike other causes of action, a relator's property interest in a qui tam action is merely a statutory “fee,” which the relator “earns” by following FCA requirements—i.e., by disclosing the alleged fraud to the federal government and filing a qui tam lawsuit; and (3) because Mark did not disclose OBP's “kickback scheme” to the federal government and file his qui tam lawsuit until after he married Chinyelu, his qui tam action is community property. CP at 36. The superior court initially granted Sojourner's motion and ruled that Mark's qui tam action is separate property.

B. Chinyelu's Motion for Revision

¶ 8 Chinyelu moved the superior court for revision. Analogizing to case law involving a relator's standing to sue,⁹ Chinyelu argued that (1) the FCA's qui tam provisions operate as an enforceable “unilateral contract,” which is not accepted or formed until a relator fully performs the notice and filing requirements of the statute; (2) once a relator completes these statutory requirements, the federal government “assigns” part of its fraud claim to the relator, thus creating the relator's property interest in the cause of action; and (3) because Mark did not perform the FCA's notice and filing requirements until 2003, he did not acquire a property interest in the qui tam action until after he married Chinyelu, making the action community property. CP at 54, 62.

¶ 9 Sojourner again responded that (1) the relevant time period for evaluating when a qui tam action accrues and when a relator obtains a resulting property interest in the action is the date the relator first “acquires knowledge of the facts supporting the FCA claim,” and (2) this date should determine the cause of action's separate or community property character. CP at 58. Accepting Chinyelu's unilateral contract theory for determining the date that Mark acquired a property interest in the qui tam action, the superior court granted Chinyelu's motion for revision and ruled that Mark's qui tam action is community property that passes to Chinyelu under Washington's intestacy statute.

C. Sojourner's Motion for Reconsideration

¶ 10 Sojourner moved for reconsideration. The superior court denied the motion, again relying on Chinyelu's unilateral contract theory. Sojourner appeals.

ANALYSIS

¶ 11 Sojourner argues that the superior court erred in concluding that Mark's federal FCA qui tam action is community property because (1) he “acquired” a property interest in this action before his marriage to Chinyelu, when he first learned facts material to his qui tam right of action and when his cause of action first “accrue[d]” for statute of limitations purposes (not when he filed his qui tam lawsuit in 2003, after marrying Chinyelu); and (2) if Mark did not acquire a property interest in the qui tam action until he filed his lawsuit in 2003, we should still characterize this action as his separate property because he did not acquire it by “onerous title” through the labor and industry of his marriage. Br. of Appellant at 5, 11, 13, 16.

¶ 12 Chinyelu again responds that the superior court properly characterized Mark's qui tam action as community property because Mark did not obtain a property interest in the action until he filed his qui tam lawsuit and served a copy of his complaint and supporting evidence on the federal government in 2003, after he had married her. We agree with Chinyelu and the superior court.

I. Standard of Review

¶ 13 Where, as here, the relevant facts are undisputed and the parties dispute only the legal effects of those facts, our standard of review is de novo. In re Estate of Earls, 164 Wash.App. 447, 450, 262 P.3d 832 (2011). We also review questions of statutory interpretation de novo. Earls, 164 Wash.App. at 450, 262 P.3d 832. If a statute is susceptible to an interpretation that may render it unconstitutional, we will adopt a construction that sustains the statute's constitutionality if such construction is consistent with the statute's purposes. In re Pers. Restraint of Williams, 121 Wash.2d 655, 665, 853 P.2d 444 (1993); In re Det. of Chorney, 64 Wash.App. 469, 477, 825 P.2d 330 (1992). Such is the case here.

II. Basic Community Property Rules

¶ 14 When evaluating the parties' arguments, we begin by reviewing Washington's basic community property rules. The character of property as separate or community property is determined at the date of acquisition; and it depends, in part, on whether the property was acquired by community funds and community credit or by separate funds and separate credit. In re Estate of Borghi, 167 Wash.2d 480, 484, 219 P.3d 932 (2009); Cummings v. Anderson, 94 Wash.2d 135, 139, 614 P.2d 1283 (1980). Once the separate or community character of property is established, we presume that the property retains its character absent sufficient “ ‘direct and positive evidence to the contrary.’ ” Borghi, 167 Wash.2d at 484, 219 P.3d 932 (quoting Guye v. Guye, 63 Wash. 340, 352, 115 P. 731 (1911)); see also Cummings, 94 Wash.2d at 139–40, 614 P.2d 1283 (“The character thus established remains...