In re Marriage of Carlson
| Decision Date | 30 May 2019 |
| Docket Number | 34443-6-III |
| Citation | 9 Wn.App.2d 1007 |
| Court | Washington Court of Appeals |
| Parties | IN THE MATTER OF THE MARRIAGE OF MARY ALICE CARLSON, Respondent, and HUGH DAVID CARLSON, Appellant. |
UNPUBLISHED OPINION
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 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.
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.
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 Maria 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 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 Maria 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 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 Maria 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 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 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...
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