In the Matter of The Marriage of Perry S. Patterson

• Decision Date: 27 April 2011
• Docket Number: No. 150221638; A137597.
• Citation: 255 P.3d 634,242 Or.App. 452
• Parties: In the Matter of the MARRIAGE OF Perry S. PATTERSON, Petitioner–Respondent,andStephen C. KANAGA, Respondent–Appellant.
• Court: Oregon Court of Appeals

242 Or.App. 452

255 P.3d 634

In the Matter of the MARRIAGE OF Perry S. PATTERSON, Petitioner–Respondent,andStephen C. KANAGA, Respondent–Appellant.

No. 150221638; A137597.

Court of Appeals of Oregon.

Argued and Submitted March 5, 2010.Decided April 27, 2011.

George W. Kelly, Eugene, argued the cause and filed the briefs for appellant.Jeffrey E. Potter, Eugene, argued the cause for respondent. With him on the briefs was Gardner, Honsowetz, Potter, Budge & Ford.Before HASELTON, Presiding Judge, and ARMSTRONG, Judge, and DUNCAN, Judge.DUNCAN, J.

In this dissolution case, husband appeals the trial court's division of the parties' marital property.¹ Husband argues that the trial court erred by concluding that the parties' separation agreement controlled the division of their property at dissolution. Specifically, he argues: (1) the parties did not intend the separation agreement to control the division of their property at dissolution; (2) even if the parties intended the agreement to control the division of their property at dissolution, they rescinded the agreement by their conduct during their separation; and (3) even if the parties intended the agreement to control the division of their property at dissolution and did not rescind the agreement, the agreement is unenforceable because it violates the law and contravenes public policy. For the reasons explained below, we reject husband's arguments and therefore affirm.

We review the trial court's decision de novo; we “try the cause anew upon the record.” ORS 19.415(3) (2007).² That is, we “independently assess and evaluate the evidence,” State ex rel. Dept. of Human Services v. Shugars, 208 Or.App. 694, 712, 145 P.3d 354 (2006) (internal quotation marks omitted), although we defer to the trial court's credibility findings, Cook and Cook, 240 Or.App. 1, 9, 248 P.3d 420 (2010).

We begin with the relevant facts.³ The parties were married in 1981, when husband was in law school in Connecticut. After husband graduated, the parties moved to California, where husband worked for a large law firm. Husband was successful in his career; he earned between $100,000 and $200,000 a year and, after eight years, became a partner at the firm.

Wife's family is wealthy, and she is the beneficiary of several trusts. While husband worked at the firm, wife worked as a homemaker and cared for the parties' two children, who were born in 1982 and 1988. The parties lived off husband's income almost exclusively. Wife used the income from her trusts to pay for occasional gifts and personal purchases. She withdrew less than $7,000 in most years, and never more than $15,000.

Husband worked long hours at his firm, and the hours eventually took a toll on the parties' marriage. Around 1991, the parties began discussing the possibility of a career change for husband, which would allow him to spend more time with the family and work in public interest law. In 1993, the parties moved to Oregon, where husband took the state bar examination and began working for a legal aid office. The parties agreed that they would each contribute $3,000 a month to the family's expenses; husband's contribution would come from his legal aid salary and wife's would come from her trusts.

After the parties moved to Oregon, wife told husband that she wanted to separate and buy a house in her own name. She filed a separation action in July 1994. She subsequently bought a house, the Schnorenberg house, with money from one of her trusts and titled it in the name of the trust. The entire family moved into the house.

During the pendency of wife's separation action, husband represented himself, and wife was represented by an attorney, Platt. As detailed below, after months of negotiations, the parties executed a separation agreement in January 1995. The trial court incorporated the agreement into a separation judgment, which was entered in May 1995. The agreement included terms of settlement relating to spousal support and distribution of the parties' property. The agreement awarded wife all of her trusts, which were worth approximately $700,000. All property acquired after the effective date of the agreement was to be the sole and separate property of the party acquiring it, and each party waived “all rights in and to such future acquisitions of the other.”

Despite the separation judgment, the parties continued to live together with their children in the Schnorenberg house. Husband leased a cabin, which was intended to be his own residence, but it was 45 minutes away and the children did not like to go there except on weekends. As a result, husband and wife lived together at the Schnorenberg house in order to, as wife testified, “best parent our children.” The parties slept in separate rooms. After the lease on the cabin expired, husband paid wife $500 a month in rent to live in the Schnorenberg house.

In 1998, wife paid the first month's rent for an apartment, with the intent that husband move from the Schnorenberg house to the apartment. But the entire family moved into the apartment. As wife explained, “We wanted to parent our children together, and a lot of times that's easier under the same roof.” After the first month, each party paid $500 a month in rent for the apartment. Wife viewed the apartment as “our transition house until the children were raised[.]” Initially, the parties slept in separate beds in the same room, but after a short period of time, wife slept in a separate room. Wife stopped staying overnight at the apartment when the parties' oldest child left for college in 2001. Thus, the parties lived together for approximately seven years—from 1995 to 2001—after they legally separated.

When the parties lived together, they participated in family activities with their children. They ate family dinners and went to the movies, theater, and symphony together. They also took family trips, but generally stayed in separate rooms and paid their own expenses.

As mentioned, the separation agreement divided the parties' property. Wife testified that, in 1995, she told husband that “everything is separate.” Husband testified that, after 1995, the parties used their own separate accounts to pay “for almost everything.” The separation agreement awarded husband all of the parties' joint bank accounts, and—although husband did not take wife's name off the accounts—wife ceased using the accounts after the parties separated. She did not contribute to or make withdrawals from them. All of wife's trust distributions were deposited into her own separate accounts.

For approximately four years after entry of the separation judgment, the parties maintained two joint credit card accounts. During that time, wife did not use one of the accounts at all, and she paid all of her charges on the other (for which the parties received a single bill that identified charges by cardholder number).

Each of the parties contributed to daily household expenses, such as groceries. Each also contributed to their children's expenses, most notably medical expenses for their oldest son, who was diagnosed with a serious illness in 1997. Under the parties' coparenting plan, wife was responsible for paying 60 percent of the children's uninsured medical expenses and husband was responsible for paying 40 percent. In 1997, husband withdrew funds from his retirement account, which was worth more than $150,000 at the time, to help pay for the oldest son's unreimbursed medical expenses. Husband incurred penalties and taxes for withdrawing funds from the account. Ultimately, husband exhausted the account to pay for the medical expenses and what he characterizes as “other family-connected needs.”

In October 2002, wife filed a petition for dissolution. In the subsequent dissolution trial in July 2003, the parties disputed whether their separation agreement controlled the division of their property at dissolution. Wife argued that the division of property under the separation agreement was intended to be permanent and could not be revised at dissolution. Husband, on the other hand, argued that the division under the agreement was intended to be temporary—that is, it was intended to apply only during the separation—and could be revised at dissolution. The trial court held that the separation agreement was unambiguous; by its terms, it was intended to be a “full, binding and complete final property settlement.” Therefore, the court concluded, the agreement controlled the division of the parties' property at dissolution.

Husband appealed. We held that the separation agreement was ambiguous and remanded the case to the trial court to receive extrinsic evidence regarding whether the parties intended the agreement to apply at dissolution. Patterson and Kanaga, 206 Or.App. 341, 350, 136 P.3d 1177 (2006) ( Patterson I ). We explained:

“Wife relies on the presence of several provisions that express an intention ‘to settle the issues between them,’ and to ‘finally settle all the issues covered herein.’ In particular, she notes that the agreement covers spousal support, waiver of inheritance rights, tax allocation, maintenance of life insurance for the children, distribution of property, and the like—all issues normally negotiated in a dissolution agreement.

“Husband argues that each of those provisions does not necessarily imply an intention to govern dissolution, and each just as plausibly could pertain to the period of separation that the parties had contemplated at the time. Husband notes, in particular, the fact that the agreement itself is denominated a ‘Separation Agreement’ and that the word ‘dissolution’ appears only once in the entire eight-page document.

“We conclude that the construction proposed by each party is at least reasonable. Wife is correct that some of the provisions suggest that the parties intended the agreement to resolve their disputes with finality and that that at least implies that they contemplated that it was to...