In re Marriage of O'Rourke v. O'Rourke, No. 58096-5-I (Wash. App. 10/15/2007)
| Decision Date | 15 October 2007 |
| Docket Number | No. 58096-5-I.,58096-5-I. |
| Parties | In re the Marriage of: SHANN O'ROURKE, Respondent, and v. MICHAEL O'ROURKE, Appellant. |
| Court | Washington Court of Appeals |
Appeal from King County Superior Court. Docket No: 04-3-04225-2. Judgment or order under review. Date filed: 03/24/2006. Judge signing: Honorable Catherine D Shaffer.
Counsel for Appellant(s), Patricia S. Novotny, Attorney at Law, 3418 Ne 65th St Ste A, Seattle, WA, 98115-7397.
Gwen Christina Mathewson, Attorney at Law, 811 1st Ave Ste 630, Seattle, WA, 98104-1457.
Counsel for Respondent(s), Deborah Anne Bianco, Deborah A Bianco PS, 14535 Bel Red Rd Ste 201, Bellevue, WA, 98007-3907.
Catherine Wright Smith, Edwards Sieh Smith & Goodfriend PS, 1109 1st Ave Ste 500, Seattle, WA, 98101-2988.
Valerie A Villacin, Edwards, Sieh, Smith & Goodfriend, 1109 1st Ave Ste 500, Seattle, WA, 98101-2988.
The issues in this dissolution case are whether the trial court abused its discretion in its property distribution and awards of spousal maintenance and child support. Also at issue is whether a court may award child support in a lump sum. We affirm because the property distribution and awards of spousal maintenance and child support are supported by the evidence and lump sum child support awards are valid in Washington.
Shann O'Rourke, age 49, and Michael O'Rourke, age 53, were married in 1982 and have two children — Ciara, age 20, who is in college and not at issue in this case, and T.O., age 16, who is developmentally disabled due to oxygen deprivation at birth. Before the marriage, Shann worked as a receptionist, but during the marriage, the parties agreed that she would stay home to care for the children, which was especially important because of T.O.'s disabilities. Shann testified that it was typical for Michael to write her a check for $2,400 to pay for the family's living expenses, not including the mortgage. Michael is a self-described entrepreneur who bought, sold, and managed real estate throughout the marriage. He testified that he bought and sold 30 to 40 properties during the marriage and solely managed the parties' community business, Olympic Recycling, which he founded in 1996. By the time of trial, the parties had over $3 million in assets, most of which were real estate holdings.
Starting in December 2003, Michael began to spend substantial time away from home, sometimes not returning for weeks at a time. Neither Shann nor the children could contact him when he was away. By July 22, 2004, when Shann filed for legal separation, Michael had been home only one day between July 1 and July 22.
Shann suspected that Michael was using drugs because of his appearance and erratic behavior. Michael was arrested for possession of drug paraphernalia twice in 2004 and pleaded guilty to at least one such charge. He also tested positive for cocaine in a court ordered urinalysis. At the end of the trial, however, the court found, Findings of Fact (FF) at 13.
There was extensive testimony at trial about the parties' postdissolution earning potentials. Shann had been out of the workforce since 1986. After the separation, she began working as a records clerk for the Bellevue Police Department, earning $13.42 per hour working 20 hours per week and only while T.O. was in school. In order to decide what to pursue as a career, Shann consulted Jan Reha, a vocation counselor. Based on her background, interests, and Reha's assessment, she decided to pursue a career in social work. This field would allow her the flexibility to care for T.O. when T.O. was not in school. Shann, who was six classes short of a bachelor's degree, planned to finish college and then earn her master's degree in social work from the University of Washington. Reha estimated that the total cost of Shann's education would be $37,143. Shann could then earn between $28,000 to $35,000 per year in a community-based job or $30,000 to $50,000 in a hospital-based job.
Michael has a high school education. As an entrepreneur, however, he was able to support his family's lifestyle at the cost of $100,000 annually. During the marriage, he acquired over $3 million in real property and other investments. He testified that he would likely focus on real estate development after the dissolution because he had done well in that field during the marriage. He also testified that he had been looking for investments during the separation and had the opportunity to become a silent partner in a restaurant, but the deal fell through because the dissolution was still pending. He also testified that he considered partnering with his brothers in buying and selling fine art. He was not concerned about obtaining the funds necessary for his business ventures because he still had connections with banks that would loan him money.
The court concluded that Michael has a "tremendous ability to acquire and sell property" and will be "able to go back to making money in no time flat." FF 2.12. It also concluded that Shann "will never come close to [her] husband's ability to earn money." FF 2.12. The court acknowledged Shann's ability to be "a good manager, accountable, responsible, [and] frugal," but concluded that she would "not likely . . . earn much." FF 2.12. It found that Shann would "need a degree in order to develop earning ability," and even then, "she won't have much in way of earning capacity going forward." FF 2.12.
The court awarded Shann spousal maintenance. It stated that it had
"considered all the statutory factors in making this baseline award, including the time necessary for the wife to acquire her Master's degree in Social Work, the standard of living during the marriage, the long length of the marriage, and the husband's tremendous ability to buy and sell property that he has demonstrated in the past." FF 2.12. Instead of ordering Michael to pay spousal maintenance on a monthly basis, the court found that a disproportionate award of property to Shann in the amount of $86,400 was "fair, equitable, and reasonable to both parties." FF 2.12. This was equivalent to a monthly maintenance award of $2,400 — the amount that Michael had paid Shann on a monthly basis during the marriage for the family's living expenses — for a period of three years, so that Shann could complete her degree. The trial court also awarded Shann $37,143 for the cost of her education, also in the form of a lump sum disproportionate award of property.
The court made a disproportionate property distribution, in part because it found that Michael breached his fiduciary duty to the marital community. At the time of the separation, Olympic Recycling owned three trucks and 500 to 600 steel recycling bins and lids. Michael testified that one truck caught fire in July 2004 but that he had failed to insure the truck, resulting in a total loss. The second truck was "sold for nothing at an auction" because Michael failed to retrieve it after it had been impounded at the end of July 2004 when one of his company's drivers was pulled over and arrested for driving without a valid license. 7 Verbatim Report of Proceedings (VRP) (Mar. 24, 2006) at 1038. By the time of trial, only the third truck remained and it needed repairs. Michael did not retrieve the steel bins, which were located at various businesses.
The testimony on the value of the trucks and bins was inconsistent. There was testimony that the trucks were bought used for $30,000 to $40,000 and that the trucks were bought new for $80,000 to $90,000. There was evidence that the bins were purchased for between $400 and $900 each. Finally, there was testimony that the total value of the trucks and bins was $585,000. The court stated that Michael's testimony was "all over the map on the value of things." 7 VRP (Feb. 13, 2006) at 1037. The court assigned the trucks and bins a total liquidation value of $110,000, though the court believed they were in fact worth more. It credited Michael's award with the liquidation value of these assets because he had wasted them and "it was his responsibility to manage the major assets of the business." FF 2.8.
The court also found that Michael had breached his fiduciary duty to the community by failing to collect $6,700 in rental income on some of the community's real properties. It attributed this amount to him because, just as with Olympic Recycling, it found that he had failed in his duty towards the community in his management of the real property.
The court found that both breaches of fiduciary duty were the result of Michael's "drug-using lifestyle." The court concluded that Michael had placed himself in a position to manage the community property and was therefore "required to deal with that property with the utmost care towards the other spouse's and the community's interest."
The court awarded Shann 62 percent of the community property in light of the length of the marriage, the fact that Shann had less earning potential than Michael, and Michael's breaches of fiduciary duty. The parties' assets were worth $3,225,915. The trial court thus awarded Shann $2,007,264 and Michael $1,218,651. It also ordered Michael to pay the majority of the community debts, totaling $ 148,186. The court found that Michael would be able to meet his own needs and succeed at business with the property awarded him.
The court ordered Michael to pay child support for T.O. in a lump sum of $72,000, which amounts to $1,000 per month until T.O. turns 21. The $1,000 amount includes $487.39 for basic child support and $512.61 for T.O.'s additional expenses. The court originally calculated Michael's child support obligation at $1,783.98 per month, but then reduced it because this amount was more than 45 percent of his...
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