In re Marriage of Hodge
| Decision Date | 03 January 2023 |
| Docket Number | 82557-7-I |
| Parties | In the Matter of the Marriage of JANICE A. HODGE, Appellant, and MICHAEL R. HODGE, Respondent. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
In 2021, Janice and Michael Hodge dissolved their 40-year marriage after a 3-day dissolution trial. Janice[1] appeals, arguing the court abused its discretion by unfairly distributing property and calculating maintenance. We reverse and remand for further proceedings consistent with this opinion. We also award Janice attorney fees and costs on appeal.
Janice and Michael married in California in 1981. During the marriage, Janice worked in the insurance industry, and Michael worked in risk management for several cities in California. The parties have two children.
In 2001, the parties bought a small house in North Bend Washington, intending to retire in the area. They made extensive modifications over the years, eventually expanding the house to 5,023 square feet.
In 2003, Michael retired. He received a pension under the California Public Employees' Retirement System (CalPERS). On retirement, Michael elected to receive a lower monthly payment in exchange for a 100 percent survivor benefit under his pension. He named Janice the sole beneficiary of the survivor benefit so she would receive his monthly pension payments after his death. Michael also collected Social Security benefits and a monthly disability benefit from the United States Department of Veterans Affairs (VA) for injuries he sustained while serving in the United States Marine Corps.
In 2004, the parties and their children left California and moved to their property in North Bend.[2] Sometime in 2007 Janice's mother and sister, Terry Styka, also moved into the parties' North Bend home. Janice's mother lived with them until she passed away about seven years later. At the time of dissolution, both parties' adult children and Janice's sister Terry[3] still lived in the home.
The parties separated in August 2019, and Janice petitioned for dissolution in October 2019. In January 2020, Janice sought temporary dissolution orders. A commissioner entered a temporary financial order that allowed Janice to stay in the marital home and ordered Michael to pay the mortgage and home equity line of credit (HELOC) to "preserve the community asset." The court also ordered Michael to pay Janice monthly maintenance of $2,000.
In January 2021, the court held a three-day dissolution trial. One issue at trial was how to account for Michael's CalPERS survivor benefit. Undisputed testimony from Michael's financial expert valued the survivor benefit at $434,333. Both Michael's and Janice's financial experts testified that Janice could be removed as the beneficiary of the survivor benefit if the court awarded Michael 100 percent of the CalPERS pension. In that event Michael would receive a higher monthly payment from the pension.[4] In closing argument, Janice urged the court to award Michael all his pension with a lump-sum payout for her community share so she could be removed as the beneficiary of the survivor benefit.
On February 12, 2021, the court entered "Findings and Conclusions about a Marriage." The court valued the parties' North Bend home at $1.4 million, subject to a $59,818 mortgage and a $206,881 HELOC. The court also recognized that under the temporary order, Michael paid the parties' full mortgage and HELOC obligations during separation-$85,068 on the mortgage and $21,114 on the HELOC for a total of $106,182-from his separate VA and Social Security benefits.
The court valued Michael's CalPERS pension at $1,044,365 and designated $644,838[5] as community property. It found Michael receives a monthly income of $6,757 from that pension. The court also characterized the CalPERS survivor benefit as community property. It assigned the survivor benefit a "total present value" of $434,333. Finally, the court determined that Janice needs maintenance and Michael can pay. It ordered Michael to pay $1,750 per month in maintenance for the rest of Janice's life secured by a life insurance policy. The court e-mailed its findings to the parties and asked Michael's counsel to draft a final decree.
Before submitting a proposed decree to the court, Michael requested a hearing to clarify the court's findings. On February 18, 2021, the court held a telephone hearing. At the hearing, Michael asked about "the court's intention regarding the CalP[ERS] survivor benefit in light of the court's finding regarding life insurance." Michael argued that after his death, Janice would receive the survivor benefit providing monthly income until her death, rendering life insurance to secure maintenance unnecessary. Janice objected, arguing that the court had not yet awarded the pension or survivor benefit. She again requested that the court award Michael 100 percent of the CalPERS pension so she could be removed as beneficiary of the survivor benefit.
The court did not recall whether the evidence at trial showed that the beneficiary of the survivor benefit was revocable or whether the court had yet awarded the benefit to either party. Michael's attorney argued the evidence showed the beneficiary was not revocable. Janice's attorney argued it was. The court expressed concern that requiring Michael to buy life insurance "at his age with all of his preexisting, very extensive and difficult medical condition[s]" would be very expensive. In response, Janice's attorney agreed to forgo her request for life insurance or any guarantee of the lifetime maintenance if the court awarded Michael 100 percent of the pension and removed her as beneficiary of the survivor benefit. The court did not rule on the issue, but told Michael's attorney to submit proposed orders, and said that Janice could address any objections through post-trial motions.
The court issued a final dissolution decree on March 2, 2021. In the final decree, the court awarded Janice the marital home subject to a lump-sum payout to Michael for his half interest. It valued Michael's interest in the family home at $566,651[6] and stated it would order a judgment in that amount in "section 6" of the decree. But in section 6 of the decree, the court ordered that Janice "must pay [Michael] the amount of $886,709."[7]
The court awarded half the community portion of Michael's CalPERS pension-$345,206-to Janice and ordered that she receive a monthly benefit of $1,750 from the pension. The court also ordered Michael pay Janice $1,750 per month in maintenance for the rest of her life. But it relieved Michael of the obligation to purchase life insurance to secure the maintenance as required in the court's findings. Instead, it awarded Janice the CalPERS survivor benefit as separate property and noted that when Michael dies, in place of maintenance, Janice will receive payments from the CalPERS survivor benefit:
[Michael]'s maintenance payment shall be replaced by monthly payments from the C[al]PERS Survivor benefit which will pay a monthly payment equal to the amount of [Michael]'s monthly benefit upon his demise and shall continue until [Janice]'s demise.
In the decree, the court referenced and attached as "Exhibit A" an asset spreadsheet reflecting the court's property distribution and showing a payment from Janice to Michael in the amount of $566,651, "equal to 50 [percent] value of [the] home.
Both parties moved for reconsideration in March 2021. Janice expressed concern that the court's order required her to pay Michael two money judgments-$566,651 and $886,709-which would result in an unfair division of community property. Janice also argued the order for maintenance was inadequate to balance the economic circumstances of the parties and to meet her need to pay monthly expenses. Michael argued that the court's $566,651 judgment was inadequate to fully equalize the court's distribution of property because it accounted for only his community share of the family home. According to Michael, the court should have entered a total judgment in his favor for $875,195 because "[s]everal assets were not included, several assets were incorrectly valued, debt was incorrectly valued[,] and [Michael]'s post-separation payments were not accounted for in the overall property distribution," resulting in "an unequal distribution of the estate."
On April 5, 2021, the court issued an amended final dissolution decree and attached an amended Exhibit A asset spreadsheet. The court ordered Janice to pay Michael a total money judgment of $875,195.[8] Exhibit A showed that the $875,195 judgment equalizes the division of assets to reach a 50/50 split after accounting for the court's assignment to Janice of the family home, half the community portion of the CalPERS pension, and the survivor benefit. The asset spreadsheet also shows a $106,182 lien against the community in favor of Michael for his predissolution payments of $85,068 for the mortgage and $21,114 for the HELOC to maintain the family home. Finally, the court explained that its maintenance award to Janice was fair "in consideration of all the factors," including Janice's needs, the other gainfully employed adults (the parties' two children and Janice's sister Terry) residing in her home, Michael's ability to pay, and the parties' standard of living during the marriage.
On November 30, 2021, Michael moved to clarify the court's amended final dissolution decree, asking whether the court intended to award Janice both $1,750 from the CalPERS pension and $1,750 in maintenance for a total monthly payment of $3,500, or just one monthly payment of $1,750. On January 19 2022, the court ordered that Michael "pay a total of $1,750 to [Janice] from the C[al]PERS pension as and for spousal...
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