In re Marriage of Nakamura

• Docket Number: 84133-5-I
• Decision Date: 28 August 2023
• Parties: In the Matter of the Marriage of SATOMI NAKAMURA, Respondent/Cross Appellant, and AKIHIRO NAKAMURA, Appellant/Cross Respondent.
• Court: Washington Court of Appeals

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In the Matter of the Marriage of SATOMI NAKAMURA, Respondent/Cross Appellant, and AKIHIRO NAKAMURA, Appellant/Cross Respondent.

No. 84133-5-I

Court of Appeals of Washington, Division 1

August 28, 2023

UNPUBLISHED OPINION

Coburn, J.

Satomi and Akihiro Nakamura challenge the trial court's categorization of property and enforcement of a separation agreement in the dissolution of their marriage. We agree with Satomi^[1] that the trial court properly characterized their Mercer Island home as community property and improperly enforced a Civil Rule (CR) 2A Agreement that provided Akihiro a condominium that otherwise would be community property. We also agree with Satomi that the trial court erred in characterizing a promissory note stemming from the sale of a commercial investment property as Akihiro's separate property when he expressly conceded at trial that any proceeds from that sale were community property. We affirm in part, reverse in part and remand for reconsideration of a dissolution order consistent with this opinion.

FACTS

In 1991, four years before Akihiro Nakamura met his future wife he purchased a commercial investment property on Maynard Way in Seattle. Akihiro met Satomi in Japan in 1995. Akihiro lived in the United States at the time. The two began a long-distance relationship before Satomi moved to the United States in 1999. The two married in September 2000. During their marriage, Akihiro made all the financial decisions in what the trial court described as "stereotypical marriage of, perhaps, yesteryear," including decisions regarding businesses, loans and bank accounts. ^[2] The couple moved into a condominium on Mercer Island shortly before having their first child in 2004.

The parties dispute whether the down payment for the condominium was a gift or a loan from Akihiro's parents. Akihiro's parents provided the couple $180,000 for the down payment and Akihiro and Satomi together obtained a mortgage for the remainder of the $284,000 purchase price. Akihiro testified that he borrowed the down payment from his parents, as reflected in a Japanese notarized promissory note between Akihiro and his parents. Satomi testified that Akihiro's father told her the money was a gift to the couple. Akihiro has never attempted to repay it in whole or in part.

Akihiro was not working at the time they purchased the condo. Satomi has largely stayed at home since their first child was born. Satomi had no control over the family's finances, as Akihiro made all financial and budgeting decisions for their family. Satomi had a credit card in her name which she used to pay for food, incidentals and the children's activities.

In 2007, Akihiro sold the Maynard Way property and used the funds to buy another commercial property on East Marginal Way, also in Seattle. The purchase was completed through a "1031 exchange."^[3] The warranty deed for the property listed the grantors as both Akihiro and Satomi as "husband and wife." Akihiro testified that he "had no choice" but to turn the Maynard Way property into "community property" in order to get a loan from the bank.

In 2009, around the time they had their second child, Akihiro decided to purchase Fuji Cake, later renamed Fuji Bakery, in Seattle. The bakery property is unrelated to the East Marginal Way property. Satomi helped out at the bakery for a short time after it opened. The bakery barely broke even. In 2012, Akihiro wanted to expand the bakery and open a second location. Akihiro testified that in July 2012, his parents sent over a total of $1.2 million to fund the expansion. To support his claim that the $1.2 million was a loan from his parents, he submitted two Japanese notarized promissory notes and one document titled "Loan" where Akihiro agreed to pay his parents back beginning in 2015.^[4] These loans totaled 107,774,200 yen.^[5] Whether this money was a loan or a gift was disputed at trial. Akihiro testified that this money was a loan to him from his parents that he had to pay back. According to Akihiro, the money was used for the expansion of Fuji Bakery through a $731,037.50 loan and a $500,000 loan from Akihiro to Show Tatsu, LLC, the food service restaurant business whose governors were Akihiro and Satomi.^[6]

Satomi testified that Akihiro's parents "often" gifted the family funds that they used to pay for living expenses. Satomi said Akihiro told her that his parents had gifted them 120 million yen that he never planned to repay. Satomi also said Akihiro's parents told Satomi the money was a gift and did not expect to be repaid.^[7] At the time of trial, Akihiro had made no payments to his parents for the loans and asserted that he and his parents had a verbal agreement to not repay the loans because of the pandemic and that he would repay it when various properties sold. The trial court did not find this testimony credible. The trial court found the "vast majority" of Satomi's testimony to be credible.

In 2014, Akihiro was diagnosed with cancer and returned to Japan for approximately one year to receive treatment. During that time Satomi remained in the United States with the couple's children and took over the administrative tasks at the bakery, while Akihiro managed the accounting and instructed employees through video calls. They each earned a modest salary during this time.^[8] After returning from treatment, Akihiro began to make unilateral decisions for the family.

In October and November 2017, Akihiro sold the East Marginal Way property and the bakery. The proceeds from both sales were deposited into the Nakamuras' joint account. Akihiro sold the East Marginal Way property for $1.2 million in October 2017. After closing, Akihiro received approximately $582,000 in cash and a later payment of $425,000 for the sale, along with a promissory note to pay the remaining $75,000.^[9]About $1.39 million in proceeds from the sale of Fuji Bakery were deposited into the joint account in November.^[10] After the bakery sold, the Nakamuras did not earn any income other than interest income.^[11]

The parties, during trial, stipulated on how the money from the sale of the bakery and the East Marginal Way property were distributed. The parties do not challenge the trial court's finding that

tracing shows that the money that was transferred from the respondent's parents to the respondent was used fairly quickly to fund business entities, then, when those entities were sold, whether they be real property or business entities, the money was then transferred back to the respondent, not to his parents, and was used for personal expenses.

The day after the proceeds from the sale of the bakery were deposited, Akihiro made four separate $400,000 withdrawals. The same day, Akihiro created one certificate of deposit (CD) for $400,000 in his name. He started another $400,000 CD in Satomi's name. Two days later, Akihiro used $328,000 from the joint bank account to pay off mortgages on the Mercer Island condominium. The parties agree that Akihiro also had created two more $400,000 CDs which, later in July 2019, he deposited back into the joint account as two separate deposits of $408,179. The next day, Akihiro wrote himself a check for $815,000 and, the same day, created an $800,000 CD in his name. The remainder of the proceeds were used to pay for the family's living expenses because Akihiro did not return to work after his cancer treatment. The parties stipulated that Akihiro's $400,000 and $800,000 CDs were proceeds that originated from the sale of the bakery and the $400,000 CD for Satomi originated from the sale of the East Marginal Way property.

According to Satomi, the parties first began talking about ending the marriage around November 2017. Satomi testified that it was in this context that Akihiro transferred $400,000 to Satomi and said, "I'm giving this to you." Satomi presented Akihiro with a "rikon todoke,"^[12] a Japanese divorce document, in 2018. Akihiro testified that he believed the first discussion of divorce was around the same time as Akihiro's purchase of a Mercer Island house in 2019. Both filled out the rikon todoke paperwork but never finalized it and decided to stay together.

Satomi first learned about Akihiro buying the Mercer Island house from their daughter and a call from the loan officer eight days prior to its closing. While still married, Akihiro had begun the purchase of a $1.2 million house on Mercer Island. Akihiro testified that he intended the purchase to be his as a separate estate. Satomi was very concerned about the couple's ability to pay for the purchase as neither were working at the time.

Akihiro's Japanese-speaking realtor, Munetsugu Yokobe, spoke to Satomi several times by phone and in person to discuss her concerns before the sale closed. Yokobe explained to Satomi that Akihiro requested she sign a quitclaim deed for the property to relieve her of any liability for the property or payment on the loan used to purchase the property. Yokobe explained that the quitclaim deed would make her not liable for the purchase and told her the house belonged to Akihiro because it was being paid for with his money. Eight days prior to closing Akihiro had Yokobe pick up Satomi and drive her to an office to sign a quitclaim deed. No translator was present at the signing and Yokobe did not translate the documents for Satomi before signing. Yokobe said he did not provide any legal advice and did not understand at that time that the quitclaim deed may prejudice her if the couple's marriage dissolved.

The trial court found Satomi credibly testified that she spoke limited English. She often used a dictionary to translate documents written in English and required time to translate and understand documents. Satomi testified that she was "shaki...