In re Marriage of Cooney

• Docket Number: 84720-1-I
• Decision Date: 27 November 2023
• Parties: IN THE MATTER OF THE MARRIAGE OF ROBERT W. COONEY, Respondent, and HILLARY A. BROOKS, Appellant.
• Court: Washington Court of Appeals

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IN THE MATTER OF THE MARRIAGE OF ROBERT W. COONEY, Respondent, and HILLARY A. BROOKS, Appellant.

No. 84720-1-I

Court of Appeals of Washington, Division 1

November 27, 2023

UNPUBLISHED OPINION

Smith C.J.

Robert Cooney and Hillary Brooks were married in 1991 and separated in 2016. In June 2020, Cooney petitioned for dissolution. During discovery, Brooks requested that Cooney produce documents relating to any trusts that Cooney had established or of which he was a beneficiary. Cooney did not produce any documents. Soon thereafter, Cooney revealed in a deposition that he was trustee of his grandmother's trust and Brooks moved to compel production of the trust documents. But just days before the deadline for Cooney to produce the documents the parties settled, waiving their rights to additional discovery. The court entered final orders a month later.

Over a year later, Cooney's grandmother passed away and Brooks discovered the trust and Cooney's interest in it as a beneficiary via the probate court filings. She subsequently moved to vacate the settlement agreement and dissolution decree on the grounds that Cooney had misrepresented his assets which the trial court denied. Brooks appeals, asserting that Cooney breached his fiduciary duty to disclose all assets and arguing that the trial court abused its discretion in denying her motion to vacate on those grounds. We disagree that Cooney breached his fiduciary duty and affirm.

FACTS

Hillary Brooks and Robert Cooney were married in December 1991 and separated in October 2016. In June 2020, Cooney petitioned for dissolution.

During dissolution proceedings, Brooks sought discovery from Cooney including a request for "[a]ll trusts [Cooney had] established and all documents showing contributions [Cooney had] made to the trust, all trusts in which [Cooney was] a beneficiary, and all documents showing any distributions [Cooney] received . . . from January 1, 2016 to the present." Cooney did not produce any documents in response to this request.

Then at his deposition in March 2021, Cooney disclosed that he was the trustee for his grandmother's trust, that he held her power of attorney for finances, and that he was listed on his grandmother's accounts. He denied receiving any compensation as trustee.

In April 2021, Brooks moved to compel discovery, claiming that Cooney's discovery responses were evasive and nonresponsive. In her motion, Brooks states that Cooney "testified trust documents exist but has not responded to the request relating to the same or produced responsive documents. . . . Such amounts potentially go to property distribution." And in her reply on that motion, Brooks claimed that Cooney was "a beneficiary of a trust involving Carmelina Cooney and he needs to produce the trust documents immediately, and any others that might exist for other individuals."

On April 30, 2021, the trial court granted Brooks's motion to compel and ordered Cooney to produce responsive documents within 30 days. But on May 25, just days before Cooney was required to produce documents, the parties settled and signed a Civil Rule (CR) 2A separation contract and property settlement agreement. The agreement awarded 93 percent of the parties' community property to Brooks, totaling approximately $1.8 million. Under the terms of the agreement, both parties "warrant[ed] and agree[d]" that the agreement at the time of execution was "fair, just and equitable and that they [were] affixing their signatures hereto freely, knowingly, and voluntarily without duress or coercion of anyone." Both parties also "acknowledge[d] that each has an understanding of the nature and extent of their property and the benefits that are derived from said property" and "that no reliance whatsoever [was] placed upon representation[s] other than those expressly set forth" in the agreement. Further, each party attested that they had been advised by counsel "of the right to conduct legal discovery, obtain asset appraisals, and take other action to determine the nature and extent of the assets, liabilities, income and expenses of the Parties related to the awards" in the agreement. And they warranted that to "the extent that a Party has not taken steps to determine the nature and extent of the assets, liabilities, income and expenses of the Parties, that Party has willingly chosen not to do so to avoid the expense and acrimony of litigation." After they signed the settlement agreement, Brooks and Cooney submitted a notice of settlement of all claims to the court in early June 2021.

A few weeks later, in late June 2021, Cooney moved to enforce the CR 2A agreement, claiming that Brooks had made material changes to the parties' final orders not agreed to by Cooney. Cooney claimed that Brooks added the following additional reliances in violation of the CR 2A agreement:

9. Community Personal Property

Respondent entered the Agreement in reliance on Petitioner's statements, including those made under oath in the proceedings, that he is no longer employed by any Sound Physicians entity and has no financial interest in any Sound Physicians entity.

Respondent entered the Agreement in further reliance on Petitioner's statements that he will no longer work as a hospitalist physician and will work instead at 50% of his historical income as a primary care physician.

The court granted Cooney's motion to enforce the CR 2A agreement, finding that "[n]either party raised an issue with regard to execution of the Agreement or its material terms" and that the additional findings proposed by Brooks "did not form the basis of the Agreement as written and signed by the parties." The court also found that Brooks "specifically agreed in Section 2.3 of the Agreement that she was not relying on any other representations that were not contained within the Agreement." The court then adopted Cooney's proposed findings of fact and entered final orders contemporaneously with the order to enforce.

Over a year after the court entered final orders, Brooks moved to vacate the dissolution decree under CR 60(b)(4) and (b)(11), alleging that it was procured by fraud, misrepresentation, or other misconduct because Cooney hid that he was the "sole beneficiary" of his grandmother's trust.^[1] Brooks asserted that Cooney's failure to divulge information about the trust was a violation of his fiduciary duty to disclose all assets to her during dissolution proceedings. She sought attorney fees, spousal support, and requested that the court compel production of the trust documents. In her declaration in support of the motion, Brooks claimed that she only signed the CR 2A agreement because Cooney sent her an e-mail stating, "I will make $260, 000 for the next four years and then have to bust my a** to make that after." Brooks did not provide a copy of the e-mail. She also claimed that "[h]ad [she] known about the Joint Trust, the bank accounts, and Robert's status as sole beneficiary to the estates of his grandmother and her companion, [she] would not have entered into the Agreement."

After a hearing, the court denied Brooks's motion. It found that Brooks failed to prove by clear, cogent, and convincing evidence that fraud, misrepresentation, or other misconduct occurred. It then found that the record clearly established that Brooks knew about the trust and Cooney's status as beneficiary before she signed the CR 2A agreement. The court also agreed with Cooney that his contingent interest in a revocable trust was not an asset and found that the fact that Cooney was a possible beneficiary to the trust was not material to the outcome of the parties' agreement. The court ordered Brooks to pay Cooney's attorney fees. Brooks appeals.

ANALYSIS

CR 60(b) Motion to Vacate

Brooks asserts that the court made two legal errors when it denied her CR 60(b)(4) motion to vacate that necessitate reversal. First, she contends the court erroneously concluded that Cooney's interest in the trust was not a "property" interest. And second, she maintains that even if the interest was not a property interest, the court erred in not considering it because it affected Cooney's economic circumstances. We disagree. Contrary to Brooks's contention, the trust created a "mere expectancy" rather than a property interest, and therefore, Cooney did not breach his fiduciary duty by failing to disclose it. Although Cooney should have disclosed the trust in the spirit of transparency- and was required to disclose it in response to Brooks's initial discovery requests-Brooks's knowledge of Cooney's beneficiary status and her subsequent signing of the CR 2A agreement days before Cooney's deadline to produce the trust documents eliminated the requirement that Cooney disclose his interest in the trust. Moreover, the court did not err by not explicitly considering whether the trust interest affected Cooney's economic circumstances because the court found that the interest was immaterial to the parties' settlement agreement.

1. Duty of Disclosure

Spouses owe each other the highest fiduciary duty. Peters v Skalman, 27 Wn.App. 247, 251, 617 P.2d 448 (1980). This duty does not cease during dissolution. Seals v. Seals, 22 Wn.App. 652, 655, 590 P.2d 1301 (1979). "The full disclosure mandated by the fiduciary relationship assumes that one party has information which the other needs to know to protect [their] interests." In re Marriage of Burkey, 36 Wn.App. 487, 490, 675 P.2d 619 (1984). Thus, spouses have a specific fiduciary duty to disclose all community and separate property before dissolution. Seals, 22 Wn.App. at 656. This duty to disclose does not require spouses to make use of formal discovery or "resort to subpoenas to discover these assets." Seals, 22 Wn.App. at 655; see also In...