In re Marriage of Wilcox

• Decision Date: 27 April 2023
• Docket Number: 38790-9-III
• Parties: In re the Marriage of MARINA P. WILCOX, Respondent, and MATTHEW EMERY WILCOX, Appellant.
• Court: Washington Court of Appeals

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In re the Marriage of MARINA P. WILCOX, Respondent, and MATTHEW EMERY WILCOX, Appellant.

No. 38790-9-III

Court of Appeals of Washington, Division 3

April 27, 2023

UNPUBLISHED OPINION

Fearing, C.J.

This marital dissolution case reaches our court for the second time. Previously, former wife Marina Palomarez appealed the superior court's award of spousal maintenance as being too thin. We concluded that the dissolution court miscalculated former husband Matthew Wilcox's income and remanded to reconsider the income and possibly adjust the maintenance amount and division of assets and liabilities. On remand, the superior court upheld the original division of assets and liabilities but added an equalization payment determined Wilcox's estimated income to be $156,000 per year, and reassessed the spousal maintenance award under RCW 26.09.090. The court ordered Wilcox to pay Palomarez maintenance of $4,000 per month for the duration of eleven years.

Matthew Wilcox now appeals. We affirm because the dissolution court did not abuse its wide discretion.

FACTS

Two Yakima County Superior Court judges have issued decisions in this marital dissolution. The first judge, Judge Doug Federspiel, conducted a trial in 2019, during which he entertained testimony of the parties and their witnesses and reviewed exhibits. On remand, Judge Elisabeth Tutsch did not entertain new evidence, but rather reviewed the transcript of the earlier trial testimony and the exhibits entered in the earlier trial. She then issued a 2022 order in light of this reviewing court's 2020 decision. When we refer to evidence in this opinion, we reference the testimony and exhibits presented to Judge Federspiel. When we refer to the dissolution court's findings of fact, we reference the second amended findings of fact entered by Judge Tutsch in February 2022. When we refer to the dissolution court's ruling or decision, we reference Judge Tutsch's ruling unless we specify otherwise.

Marina Palomarez and Matthew Wilcox, both now age 54, married in October 1994 and obtained a decree of dissolution in May 2019. Before marriage, Wilcox acquired a Bachelor's of Science degree from Washington State University with a minor in business. Palomarez graduated from high school and attended Heritage College for one year. The parties begat one child, purchased a family home, and purchased a business known as Premier Power Sports, LLC. The couple dined out two to three times a week and took a vacation once a year.

US Bank loaned money to Matthew Wilcox and Marina Palomarez to secure the purchase of their home. The mortgage debt was $20,086 at the time of the first trial. Matthew Wilcox has since retired the debt.

In 1995 and 1996, Marina Palomarez worked as a receptionist. She worked part-time for a dentist in 1997. She left employment in 1997 to give birth to the couple's child. Matthew Wilcox and Palomarez agreed Palomarez would not work and would raise their daughter. Palomarez returned to work in 2003. In 2009, she started working as a receptionist for a pediatric dentist. In 2017, during the pendency of this marital dissolution, the dentist terminated her employment. She has since gained employment at Costco.

Matthew Wilcox worked as production manager for Graham Packaging at the beginning of the parties' 1994 marriage. He left employment at Graham Packaging in 2008. Through his employment at Graham Packaging, he earned an annual salary of $75,000, held access to a 401(k) plan, and a accrued a deferred vested pension. As of July 4, 2015, the approximate date of the parties' separation, Wilcox's 401(k) plan was valued at $114,307.67. He was scheduled to receive monthly benefits of $734.45 from the deferred vested pension beginning December 1, 2022.

In 2008, the parties purchased Premier Power Sports, a retail and repair shop for motorcycles, watercraft, and ATVs. The purchase price was $400,000 with a small down payment. The couple financed the purchase with $300,000 loaned to them by Matthew Wilcox's mother, Kathryn Hosack, at 5 percent interest. The seller of the business financed the remaining debt, which the couple has since paid in full. As of January 2019, the parties owed $250,000 to Hosack.

Matthew Wilcox has managed Premier Power Sports since its purchase. In 2014, the couple converted Premier Power Sports to a S corporation.

Premier Power Sports suffered during the Great Recession, but rebounded thereafter. Premier Power Sports garnered net income of $16,329 in 2011, $75,787 in 2013, $52,917 in 2014 $195,522 in 2015, $227,454 in 2016, and $208,863 in 2017. By the time of trial in 2019, Premier Power Sports had netted $16,000 per month. Despite this increase, Matthew Wilcox's salary as manager increased only nominally.

During all financial years, Matthew Wilcox only reported income from Premier Power Sports of $34,000 to $40,000 per year regardless of the actual net income of the business, because the corporation, at the direction of Wilcox, retained a substantial portion of its earnings. Under tax rules, the S corporation does not pay taxes, but the owner of the corporation must pay income taxes on retained earnings. In 2017, Wilcox reported $39,891 in personal income, but he paid $38,812 in personal income taxes because Premier Power Sports garnered $167,390 in profits.

Income from Premier Power Sports paid some of Matthew Wilcox's personal expenses and $4,000 per month of community expenses. Premier Power Sports paid for a Dodge Ram pickup truck Wilcox used for business, vehicle insurance, gasoline, and telephone. Once the parties separated, the business paid the spousal maintenance owed by Wilcox to Marina Palomarez and Wilcox's attorney fees and expert witness fees. Wilcox bartered with service providers for car repairs and dental care.

The parties separated in July 2015. At the time of the first trial, Marina Palomarez earned $2,160.00 in monthly income. At that time, she inconsistently reported totally monthly expenses as first $3,090.98 and $4,740.00. When arguing the lack of need for spousal maintenance, Matthew Wilcox relies on the $3,090.98 amount. We do not resolve this discrepancy.

PROCEDURE

In August 2015, Marina Palomarez filed to dissolve the parties' marriage. Matthew Wilcox paid $2,500 in temporary spousal maintenance and some child support until the child attended college.

The parties disputed the value of Premier Power Sports, and each party hired an expert to testify to its value. Scott Martin Marina Palomarez's expert, appraised the business at $522,000 in 2015. Sue Price-Scott, Matthew Wilcox's expert, valued the business at $335,000.

The parties' first divorce trial occurred in January 2019. After reviewing testimony and exhibits, the dissolution court valued Premier Power Sports at $500,000 as of June 2015. The court awarded the business to Matthew Wilcox. The court awarded Marina Palomarez the couple's residence valued at $225,000. The court also awarded Palomarez Wilcox's 401(k) plan valued, as of July 2015, at $114,307.67. In all, the court awarded Wilcox property valued at $506,250 and Palomarez property valued at $381,166. The court assigned the debt owed to Kathryn Hosak to Wilcox.

The trial court concluded that Matthew Wilcox could earn $100,000 annually as manager of Premier Power Sports, despite his reporting income of only $34,000 to $40,000 per year. The trial court did not wish, however, to overrule Wilcox's business judgment as to the amount of earnings to retain in the business. Thus, the court only assigned $40,000 to Wilcox as gross yearly income for purposes of evaluating spousal maintenance. The court ordered Wilcox to pay $1,000 per month in spousal maintenance through 2022. Beginning in December 2022, Wilcox's pension from Graham Packaging would then pay $734.45 in monthly benefits to Marina Palomarez. Thus, the court intended the $1,000 monthly maintenance to supplement Palomarez's income until she could live off the retirement income.

In its written findings of fact, the dissolution court, per Judge Federspiel, wrote in 2019:

4. The parties' marriage is, by agreement of the parties and as a factual finding of the Court, categorized as "long-term" marriage, in excess of twenty years.

. . . .

13. Marina Wilcox has generally been gainfully employed on a fulltime basis throughout the marriage (with the exception of a period after the birth of their daughter (1998-2003)). Marina Wilcox enjoyed a variety of occupations generally centered around positions of data entry and/or receptionist. She is bilingual (English and Spanish) which provides her with a highly marketable skill set in the Yakima Valley (although she has made no apparent effort to market that skill to her financial advantage). Her future earnings should be higher if she actively pursues job opportunities with that unique skill set.

14. From calendar year 2011 through calendar year 2017 Marina Wilcox earned, on average, just over $30,000. The financial information on the record regarding Mrs. Wilcox's earnings in 2018 coupled with testimony support that average. From the evidence, the Court finds that Mrs. Wilcox is currently employable at a salary $30,000 gross per year plus benefits, and with a nominal amount of effort can secure more lucrative employment.

. . . .

84. Regarding spousal maintenance, factoring in the duration of the marriage (long-term), the Petitioner's need, the Respondent's ability to pay, their former lifestyle (which by all accounts was modest eating out just periodically on only one short vacation per year), the nature and extent of the community property, and the physical and emotional condition of the Petitioner, I am awarding spousal maintenance to the Petitioner in the amount of $1,000.00 per month beginning

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