In re Marriage of Zier

• Decision Date: 21 November 2006
• Docket Number: No. 24367-2-III.,24367-2-III.
• Citation: 136 Wn. App. 40,147 P.3d 624
• Court: Washington Court of Appeals
• Parties: In re the MARRIAGE OF Donna Lynn ZIER, Appellant, and Kelly Glen Zier, Respondent.

147 P.3d 624

136 Wn. App. 40

In re the MARRIAGE OF Donna Lynn ZIER, Appellant, and

Kelly Glen Zier, Respondent.

No. 24367-2-III.

Court of Appeals of Washington, Division 3.

November 21, 2006.

COPYRIGHT MATERIAL OMITTED

Mary Elizabeth Schultz, Attorney at Law, Spokane, WA, for Appellant.

Jeff Alan Morris, Scott A. Morris, Morris & Morris PS, Spokane, WA, for Respondent.

PUBLISHED OPINION

BROWN, J.

¶ 1 This is a marriage dissolution property division dispute between Donna Zier and Kelly Zier. Ms. Zier's appeal centers on whether the trial court erred in deciding the parties converted separate property stock into community property when they executed a status agreement despite a stockholder's agreement restriction. The evidence shows the parties knowingly, and without objection from key shareholders, executed the status agreement and considered it binding between them. Because the trial court did not abuse its discretion in making a just and equitable distribution of all property before the court when ordering an equal division of the stock, we affirm.

FACTS

¶ 2 The Ziers were married in 1986 and separated in 2002. In 1992, they moved to Spokane where Ms. Zier's parents, Judith and Bill Williams, the founders and majority shareholders of Telect, Inc., resided. For estate planning purposes and prior to the Ziers' relocation, the Williamses began gifting shares of stock to their grandchildren, children, and their children's spouses.

¶ 3 Before receiving shares, the recipients were required to sign a stockholders' agreement, promising not to "sell, transfer, assign, pledge, or otherwise encumber to another stockholder, or anyone else, any of his shares of stock in the Company unless such action is preapproved by the affirmative vote of Stockholders who own at least sixty-six and two-thirds percent (66 2/3%)." Exhibit P-114 (Article VII(A)). The agreement further stated any lifetime transfer "shall be void." Exhibit P-114 (Article (I)).

¶ 4 The Williamses gifted stock to Mr. Zier and Ms. Zier separately, with Ms. Zier receiving the larger portion. Ms. Zier purchased additional stock with dividends from the existing stock. Telect grew very profitable, increasing the Ziers' financial worth.

¶ 5 Concerned about estate tax ramifications, the Ziers contacted Telect's corporate counsel, Scott Simpson. Mr. Simpson offered to draft a status agreement similar to an agreement between Ms. Zier's brother, Wayne Williams, Telect's CEO and significant shareholder, and his wife. Mr. Simpson explained the favorable tax consequences to the Ziers of converting their separately owned shares of stock to community property. Mr. Simpson testified he expressly warned the Ziers the type of agreement they were contemplating would immediately convert their separate property stock to community property. He advised the Ziers to assume all of their Telect stock would be divided equally should they get divorced. Mr. Simpson counseled them not to sign the agreement if there was a problem in their marriage. Ms. Zier refutes this.

¶ 6 On June 11, 1998, the Ziers signed an Agreement as to the Status of Telect Stock, which stated "all shares of stock of TELECT, INC., a Washington corporation, owned by either of them or standing in the name of either of them, shall be, and is hereby declared to be, the community property of the two of them." Exhibit R-215. Mr. Simpson did not advise either party to obtain independent counsel or that he might have a conflict of interest. The Williamses later issued 9,339,405 shares of Telect stock to the Ziers in both names. These shares were in exchange for the Ziers forgiving a $1,494,304 debt owed by Telect.

¶ 7 After separating in December 2002, Ms. Zier petitioned for dissolution in September 2003. At the time of the decree, Ms. Zier had 6,509,586 Telect shares and Mr. Zier had 1,194,978 shares. The court characterized all the stock as community property. The court found the parties' status agreement evidenced their intent to gift to the community all shares owned by them at the time the document was signed. Ms. Zier unsuccessfully requested reconsideration. On Mr. Zier's request for an order dividing the stock, the court awarded all shares in Mr. Zier's name to him, all shares in Ms. Zier's name to her, and the 9,339,405 shares in both names divided with 7,327,007 to Mr. Zier and 2,012,399 to Ms. Zier. The result was an equal division of the disputed shares. Ms. Zier appealed.

ANALYSIS

¶ 8 The issue is whether the trial court erred in making a fair and equitable property division after characterizing the parties' Telect stock as community property.

¶ 9 Initially, Mr. Zier challenges Ms. Zier's standing to challenge the validity of the status agreement. He also alleges the issue is raised for the first time on appeal. The doctrine of standing generally prohibits a party from asserting another person's rights. Timberlane Homeowners Ass'n, Inc. v. Brame, 79 Wash.App. 303, 307, 901 P.2d 1074 (1995). RAP 2.5(a) generally precludes a party from raising an issue for the first time on appeal. Since the parties developed an extensive record of how they created and treated the status agreement between themselves, and since we are not deciding corporate or third party rights, we analyze the status agreement evidence in the fair and equitable division context as did the trial court.

¶ 10 In a marriage dissolution, all property, both community and separate, is before the court for distribution. Friedlander v. Friedlander, 80 Wash.2d 293, 305, 494 P.2d 208 (1972). The trial court has broad discretion in awarding property under RCW 26.09.080, and this court will reverse only upon the appellant's showing of a manifest abuse of discretion. In re Marriage of Kraft, 119 Wash.2d 438, 450, 832 P.2d 871 (1992). A court abuses its discretion if it is exercised on untenable grounds or in an unreasonable manner. In re Marriage of Gillespie, 89 Wash.App. 390, 398-99, 948 P.2d 1338 (1997).

¶ 11 We review de novo a trial court's property characterizations. In re Marriage of Skarbek, 100 Wash.App. 444, 447, 997 P.2d 447 (2000). "Once established, separate property retains its separate character unless changed by deed, agreement of the parties, operation of law, or some other direct and positive evidence to the contrary." Id.; see also RCW 26.16.010. And, "the burden is on the spouse asserting that separate property has transferred to the community to prove the transfer by clear and convincing evidence, usually a writing evidencing mutual intent." Skarbek, 100 Wash.App. at 448, 997 P.2d 447. We review the court's findings of fact for substantial evidence and the conclusions of law de novo. In re Marriage of Dodd, 120 Wash.App. 638, 643, 86 P.3d 801 (2004).

¶ 12 Ms. Zier first contends the status agreement violated the restrictive stockholders' agreement signed by the Ziers. In construing a contract, we give great weight to the parties' intent. In re Estates of Wahl, 99 Wash.2d 828, 830-31, 664 P.2d 1250 (1983). We read contracts as a whole and will not read an ambiguity into a contract that is otherwise unambiguous. Berg v. Hudesman, 115 Wash.2d 657, 669, 801 P.2d 222 (1990).

¶ 13 Stock purchase restrictions "are often employed to enable shareholders in close corporations to control the identity of their associates and maintain harmonious business relationships." Rogers Walla Walla, Inc. v. Ballard, 16 Wash.App. 81, 91, 553 P.2d 1372 (1976). A transfer restriction, which is unambiguous, clearly sets forth its terms, and is executed by capable parties is enforceable. Rao v. Rao, 927 So.2d 356, 366-67 (La.Ct.App.2005).

¶ 14 While the Ziers' status agreement transfers Ms. Zier's individual ownership of her stock to the community, the record contains evidence showing her brother Wayne, the corporate CEO and extensive Telect shareholder, executed a similar status agreement with his wife, Terina. Further, evidence derived from Ms. Zier shows her parents, the major Telect stockholders, approved of the arrangement. Given the Williamses' family interest in tax avoidance, it is unsurprising they would support the Ziers' tax planning effort as apparently was the case for Wayne and his wife. In any event, the trial court did not err in disregarding the restrictive stockholder agreement under the circumstances. The evidence is overwhelming that the Ziers intended to regard this particular asset as community for their individual estate planning purposes.

¶ 15 Moreover, a dissolution court's mischaracterization of property is rarely a proper basis to reverse the court's property distribution. Gillespie, 89 Wash.App. at 399, 948 P.2d 1338. This is because the dispositive inquiry of the court's property distribution is that the court's decision "is just and equitable under all the circumstances." Kraft, 119 Wash.2d at 450, 832 P.2d 871; see also In re Marriage of Davison, 112 Wash. App. 251, 259, 48 P.3d 358 (2002) ("the court is required to make an equitable distribution, not an equal one."). Further, although a court may characterize one or another asset as separate versus community, all property before the court is capable of division to reach a just and equitable result.

¶ 16 Here, the court divided the community shares in a manner that each party received an equal share of the Telect stock. The court expressed its intent in its conclusions of law to divide the community estate equally. Given all, the court's treatment of the Telect stock does not warrant reversal of the court's property distribution. The court made a fair and equitable disposition based upon consideration of all the circumstances of the marriage.

¶ 17 Next, Ms. Zier contends the stock gifts failed for lack of delivery. The elements of a completed gift are (1) an intention of the donor to give; (2) a subject matter capable of delivery; (3) a delivery; and (4) acceptance by the donee. Sinclair v. Fleischman, 54 Wash.App. 204, 207, 773 P.2d 101 (1989).

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