Kelly-Hansen v. Kelly-Hansen

Decision Date15 August 1997
Docket NumberKELLY-HANSE,R,KELLY-HANSEN,No. 19528-3-II,19528-3-II
Citation87 Wn.App. 320,941 P.2d 1108
CourtWashington Court of Appeals
PartiesSteven Rayespondent, v. Kimberly Clairaka Kimberly Kelly, and any persons, known or unknown, having an interest herein, and the unknown heirs, successors, and assigns of the above mentioned defendants, Appellant.

Margaret K. Dore, Seattle, for Appellant.

Charles Kenneth Wiggins, Bainbridge Island, Keith Allen Beebe, Kingston, for Respondent.

MORGAN, Judge.

Kimberly Claire Kelly-Hansen (hereafter Kelly) and Steven Ray Kelly-Hansen (hereafter Hansen) formed two property-related separation agreements, in August 1988 and January 1989 respectively. Their marriage was dissolved on May 24, 1989. The decree, even though it purported to distribute all their property and debts, did not mention either agreement. Relying on the 1988 agreement, Kelly now claims that Hansen, after dissolution, owed her more than the amount stated in the decree. Relying on the 1989 agreement, Hansen now claims that he owed Kelly less than the amount stated in the decree. Holding that the decree is res judicata as to each party, we reverse and remand for further proceedings.

Kelly and Hansen were married on September 27, 1980. At the times material here, she was employed full-time, he was unemployed or employed part-time, and they had no children.

In the spring of 1986, Kelly and Hansen bought a parcel of land near Kingston, Kitsap County, Washington (hereafter, the Kingston property). They soon began building--but never finished--a house. He supplied the labor, and she supplied, from her earnings, the money needed for building materials. According to her, she furnished about $30,000 between the summer of 1986 and the end of 1988.

In September 1987, they separated when she began to reside in Seattle, and he continued to reside in Kitsap County. According to her, her purpose in leaving was "not to get a divorce, but to get some space." 1 She "continued to see [Hansen] and contribute to his financial support." During this period of time, she "loaned him approximately $3,000.00 for a trailer and other miscellaneous expenses." 2

In August 1988, Kelly and Hansen "met in [her] apartment in Seattle, to determine a settlement." 3 According to her, they orally agreed:

that he would reimburse [her] for half of the cost of the building materials--whatever that number was. [They] also agreed that he would repay [her] for the loan for the trailer and miscellaneous expenses. 4

At the time, they "were both aware that [she] had spent some $30,000 on [building] materials," 5 but they lacked an exact number because he had failed to produce receipts. Hereafter, we refer to this transaction as the 1988 separation agreement, and we assume, without so holding, that its oral nature did not cause it to be unenforceable at its inception. 6

On January 31, 1989, Kelly and Hansen agreed, according to Kelly, that she would receive $8,000 for her interest in the Kingston property. He was to remit the $8,000 before they divorced, by obtaining a bank loan and using the property as security. To memorialize this agreement, Kelly executed a quitclaim deed to Hansen, and he executed a promissory note and deed of trust to her. The promissory note required him to pay $8,000 at $200 per month, starting March 1, 1989, without interest. Hereafter, we refer to this transaction as the 1989 separation agreement.

On May 24, 1989, Kelly obtained a default decree of dissolution. She was present but Hansen was not, even though he had received proper notice. The decree purported to distribute all their property, both community and separate. 7 It awarded the Kingston property to Hansen; stated that Hansen owed Kelly a debt of $8,000, payable at $200 per month with interest of 12 percent per year; and secured Hansen's debt by giving Kelly a lien against the Kingston property. It did not mention either separation agreement, and it was not appealed.

Although Hansen never obtained a bank loan, he paid Kelly, before and after the decree, as follows:

                 Date                                        Amount
                08/18/88                                  $     100.00
                10/13/88                                  $     100.00
                11/14/88                                  $     307.08
                12/08/88                                  $     500.00
                12/29/88                                  $     500.00
                01/06/89                                  $     500.00
                01/25/89                                  $     500.00
                02/03/89                                  $     500.00
                04/19/89                                  $   1,000.00
                04/27/89                                  $   1,000.00
                05/18/89                                  $   1,500.00
                05/27/89                                  $   1,000.00
                06/22/89                                  $     500.00
                07/21/89                                  $     500.00
                09/06/89                                  $   2,500.00
                                                             ---------
                Total                                     $  11,007.08
                

More than five years passed. Then, on February 23, 1995, Hansen sued to cancel Kelly's lien. Relying on RCW 61.16.030, 8 he alleged that the decree of dissolution had ordered him to pay $8,000; that "[i]n satisfaction thereof" he had executed the promissory note and deed of trust; and that since then he had paid more than $8,000. 9 Thus, he said, he was entitled to cancel the lien.

On April 14, 1995, Hansen presented a motion for summary judgment. The parties agreed that the lien created by the deed of trust and the lien created by the decree of dissolution were intended to secure the same $8,000 obligation. 10 The problem was whether Hansen had paid that obligation.

Arguing that he had not, Kelly espoused two theories. Her first theory was that the 1988 separation agreement required Hansen to reimburse her for half the money she had spent on building materials (about $15,000), and for the money she had loaned for the trailer and living expenses (about $3,000). The 1989 agreement required Hansen to pay $8,000 for her interest in the Kingston property. Hansen owed both obligations, for a total of about $26,000, and she had applied all his payments, both pre-decree and post-decree, to the larger of the two. 11 Hence, he had not paid any part of the $8,000 obligation, and he was not entitled to cancel the lien.

Kelly's second theory was that even if Hansen owed only the secured obligation, he owed under the terms of the decree, as opposed to the terms of the promissory note and deed of trust. According to the terms of the decree, he owed $8,000 as of May 24, 1989, and he had, since then, paid only $4,500. Hence, he still owed at least $3,500, and again he was not entitled to cancel the lien.

Hansen's response was that he owed $8,000 as of January 1989, and that he had paid more than that amount between January and September. Thus, he said, he was entitled to cancel the lien.

The trial court granted Hansen's motion for summary judgment, ruling "that there is no genuine issue of material fact, [that] the $8,000 ... was paid, and that this judgment was satisfied." 12 Kelly then filed this appeal.

I

Our task is to ascertain what Hansen owed, and compare it to what he paid. In essence, Kelly uses the 1988 separation agreement as a basis for contending that Hansen owed about $26,000, less his post-decree payments, with interest at 12 percent per year. In essence, Hansen uses the 1989 separation agreement as a basis for contending that he owed $8,000, less the total of his pre-decree and post-decree payments, without interest. Hansen expressly asserts that Kelly's position is barred by res judicata, and Kelly impliedly asserts, insofar as her second theory is concerned, that Hansen's position is barred by res judicata. 13

"Res judicata" is not a precise term. 14 As one commentator states:

At times the term "res judicata" is used in the cases and literature to refer to the entire subject of the preclusive effect of judgments, including the relitigation of claims and issues that were litigated, or might have been litigated, in a prior action. In other instances, the term refers only to limitations on the relitigation of a claim, or cause of action. When used in this sense, res judicata is usually further subdivided into "merger" and "bar." The principles of merger apply when the prior judgment was for the claimant; those of bar apply when the judgment was for the party defending the claim.

While res judicata refers only to preclusion of the same claim, the term "collateral estoppel" denotes the preclusive principles that apply when the subsequent suit involves a different claim but the same issue....

Modernly, the principles of merger and bar have been encompassed within the term "claim preclusion." The principles of collateral estoppel have been encompassed within the term "issue preclusion." ... 15

As a second commentator states:

Former adjudication may be broken into two basic concepts, often called "res judicata" and "estoppel by judgment." ... As used presently, the two terms refer to two ways that a judgment may preclude a future action. Res judicata prevents a plaintiff from suing on a claim that already has been decided and also prevents a defendant from raising any new defense to defeat the enforcement of an earlier judgment. Estoppel by judgment precludes relitigation of any issue, regardless of whether the second action is on the same claim as the first one, if that particular issue actually was contested and decided in the first action....

Both res judicata and estoppel by judgment may be subdivided. Res judicata traditionally is divided into two closely related doctrines, "merger" and "bar." They differ only in that merger applies when a claimant has prevailed in the earlier action and bar applies when he has lost. When a claimant wins a judgment, all possible...

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