In re Marriage of Johnson, 83231-0-I

CourtCourt of Appeals of Washington
Writing for the CourtBowman, J.
PartiesIn the Matter of the Marriage of SARAH D. JOHNSON, Respondent, and WAYNE M. JOHNSON, Appellant.
Decision Date13 June 2022
Docket Number83231-0-I

In the Matter of the Marriage of SARAH D. JOHNSON, Respondent, and WAYNE M. JOHNSON, Appellant.

No. 83231-0-I

Court of Appeals of Washington, Division 1

June 13, 2022


UNPUBLISHED OPINION

Bowman, J.

Wayne Johnson argues the trial court erred when it determined collateral estoppel barred him from arguing for a reduction in spousal maintenance and other payments under a property settlement agreement (PSA). We affirm.

FACTS

Sarah Johnson and Wayne[1] married in 1998. During the marriage, Sarah built a successful business as a high-tier distributor of "wellness products" for AdvoCare. At the time, AdvoCare was a multilevel marketer that used a "pyramid" sales force. Representatives earned nominal fees from direct product sales but generated high levels of income by receiving a percentage of the sales made by the "downline" distributors they recruited into the company.

Wayne eventually quit his job and joined Sarah working for AdvoCare. The two became an upper-tier sales team, routinely earning an income exceeding $85, 000 per month. But Sarah grew disillusioned with AdvoCare's

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culture and work demands and wanted to step back from the business. Wayne dismissed her concerns. Over time, their relationship deteriorated, and Sarah petitioned for dissolution in 2011.

As part of the dissolution proceedings, Sarah and Wayne executed a PSA in which Wayne would make monthly payments to purchase Sarah's interest in AdvoCare and to pay her spousal maintenance. The PSA states:

Maintenance: The calculation of Spousal Maintenance payable by husband to wife will remain based upon the husband's gross annual income received via his AdvoCare business and verified by the annual, business [tax form] 1099. As long as his income does not decrease (as verified by 1099's for each year) lower than $700, 000.00 per year the amount committed to herein shall be paid. If, in fact the ensuing AdvoCare 1099 verifies a decrease in income below $700, 000.00 for a given year, then the amount to be paid herein shall decrease by that same percentage of decrease for the following year and shall then be re-evaluated annually thereafter
Beginning March 1, 2013 (whether or not the Decree of Dissolution has actually been filed herein) husband shall pay to the wife on the first day of each ensuing month, for a period of eight years, $10, 000.00 per month in Spousal Maintenance.
Furthermore, Husband shall pay to the wife on the first of each ensuing month for an additional five years, $5, 000.00 per month in Spousal Maintenance, based upon the same terms and conditions.
. . . .
BUSINESS: ADVOCARE COMMIT2FIT LLC:
One hundred percent (100%) interest ownership in AdvoCare, Commit2FitNow LLC, subject to payment to wife of her equitable interest as follows: the calculation of the wife's equitable interest in the AdvoCare Commit2FitNow LLC, and payable to wife by husband, will be based upon the husband's gross annual income received via his AdvoCare business and verified by the annual, business 1099. As long as his income does not decrease (as verified by 1099's for each year) lower than $700, 000.00 per year and the amount committed to herein shall be paid. If, in fact, the ensuing AdvoCare [1099] verifies a decrease in income below
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$700, 000.00 for a given year then the amount to be paid herein shall decrease by that same percentage of decrease for the following year and then shall be reevaluated annually thereafter.
Beginning March 1, 2013 (whether or not the Decree of Dissolution has actually been filed herein) husband shall pay to the wife on the first day of each ensuing month thereafter, for a period of eight years, $10, 000.00 per month.
Furthermore, husband shall pay to the wife on the first day of each ensuing month for an additional five years, $5, 000.00 per month, again based upon the same terms and conditions.

Sarah agreed to the terms of the PSA because Wayne assured her, "There is no way I could or would ever try to get the AdvoCare income reduced," and, "There is no way for me to manipulate the AdvoCare income." The court entered a final dissolution decree on April 10, 2013 and incorporated the PSA.

Wayne made the payments as agreed for six years. But in summer 2019, the Federal Trade Commission disbanded AdvoCare's multilevel sales structure. This resulted in substantially reduced income for Wayne from AdvoCare beginning July 2019. From that date forward, he received a commission from only his own direct sales, a negligible figure.

On June 27, 2019, Wayne petitioned the court to terminate his spousal maintenance and buyout payments under the PSA. He argued that both payments "are solely based on [his] earnings at AdvoCare" and that as of July 2019, his "income from AdvoCare is effectively zero."

Sarah objected to Wayne's petition and claimed that "there has been [no] transparency regarding the sale or transfer of the business interest from the AdvoCare business." She insisted Wayne simply moved the AdvoCare downline distributor network to a different multilevel marketing company called Modere.

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Sarah submitted portions of Wayne's social media postings that he made to the same distribution network she developed at AdvoCare to show that "recruits from our AdvoCare business followed Wayne to Modere . . . and continue to be a part of his 'downline.'" From this, Sarah argued, "Since the goodwill from the AdvoCare business is still profitable for [Wayne], he should comply with his obligations to pay spousal support and property division payments" under the PSA.

Wayne admitted to relying on his reputation and contacts at AdvoCare in launching Modere. He also agreed that some prior AdvoCare downline distributors joined him at Modere, telling the court that the" 'business opportunity' that we used to market as AdvoCare distributors . . . is still a viable option for anyone who chooses to join us in the Modere business." But Wayne claimed Modere had a "completely different identity and product line than AdvoCare."[2] Wayne also argued that his Modere income "should not be relevant at this point. The obligation to pay Sarah for her 'equity' in AdvoCare is solely based on the income received from AdvoCare."

After considering financial affidavits and declarations from both parties, the court entered a final order on September 20, 2019. The commissioner agreed with Sarah and imputed Wayne's income from Modere in applying the terms of the PSA.[3] The court denied Wayne's petition to terminate maintenance

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and buyout payments and ordered that he continue to pay $10, 000 per month for each obligation. The parties...

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