Larson v. Calhoun

• Decision Date: 25 November 2013
• Docket Number: No. 69833–8–I.,69833–8–I.
• Citation: 313 P.3d 1228
• Parties: In re MARRIAGE OF Christopher Ross LARSON, Appellant, and Julia Larson CALHOUN, Respondent.
• Court: Washington Court of Appeals

313 P.3d 1228

In re MARRIAGE OF Christopher Ross LARSON, Appellant,

and

Julia Larson CALHOUN, Respondent.

No. 69833–8–I.

Court of Appeals of Washington,

Division 1.

Nov. 25, 2013.

Catherine Wright Smith, Valerie A. Villacin, Smith Goodfriend PS, Seattle, WA, Thomas Gerard Hamerlinck, Thomas G. Hamerlinck PS, Bellevue, WA, for Appellants.

Janet A. George, Janet A. George Inc P.S, Seattle, WA, Philip Albert Talmadge, Emmelyn Hart, Talmadge/Fitzpatrick, Tukwila, WA, for Respondents.

LAU, J.

¶ 1 This case requires us to determine whether a trial court's authority to award one spouse's separate property to the other spouse in a dissolution action is limited to circumstances where a spouse cannot be amply provided for from community property alone. We conclude that RCW 26.09.080 does not single out the property's character or any other factor to be given more weight. This statute and controlling case authority direct the trial court to make a fair and equitable property division after weighing all relevant factors within the context of the parties' specific circumstances. Because the trial court properly exercised its discretion when it applied this rule to determine a fair and equitable property division, we affirm.

FACTS

¶ 2 Before marrying Julia Calhoun in 1986, Christopher Larson acquired an equity interest in a young company called Microsoft.¹ This interest developed into a colossal fortune, which Larson held principally as his separate property. The marital community also amassed considerable wealth, traceable largely to Microsoft stock options exercised by Larson during the marriage. Larson treated all purchased stock as a community asset, thereby relinquishing any claim to the separate property portion of the asset.²

¶ 3 During this long-term marriage, Calhoun “made a major contribution to all that the community accomplished, measured in terms of their children, their foster children, their impact in the broad community and their more narrow business interests.” The trial court found that “the marital community benefitted greatly from [Calhoun] serving as, in her phrase, the ‘approachable face’ of the couple.”

¶ 4 Following a three-week trial, the court entered detailed findings of fact and conclusions of law, identified the couple's assets and liabilities, determined their value, characterized each as separate or community, and directed a fair and equitable division. The court awarded Calhoun various community assets worth approximately $139 million. Larson assumed a net community obligation of approximately $29.5 million. Calhoun retained separate property worth $669,000. She assumed no community debt.

¶ 5 Citing its “broad equitable powers” to “make a lopsided division of community assets and also invade a separate estate to the extent necessary to achieve a just result,” the court also awarded Calhoun more than $40 million dollars of Larson's separate property. To effectuate this award, it ordered Larson to transfer shares of Microsoft stock, valued at approximately $14 million,³ and to make three cash installment payments totaling $27 million.

¶ 6 Larson ultimately retained separate assets worth approximately $357 million. His combined award totaled approximately $327 million dollars. Calhoun's combined award totaled approximately $181 million. Larson appeals the award of a portion of his separate property to Calhoun.

ANALYSIS

¶ 7 Larson challenges the trial court's decision to award approximately $40 million of his separate property to Calhoun. He asserts no challenge to the court's decision to award Calhoun 100 percent of the net community estate or to the court's valuation or characterization of the parties' property. He acknowledges, “[T]his is not a factual appeal.” Br. of Appellant at 4.

¶ 8 Larson contends that the trial court “applied an improper legal standard and consequently abused its discretion in awarding Calhoun a significant share of [his] separate estate in addition to the net value of all the community property, because more than ample provision could have been made for Calhoun from the parties' $109 million net community estate.” Br. of Appellant at 4–5. He argues that we should “reverse the trial court's distribution of the marital estate and direct the trial court on remand to limit its award to the wife to the net value of the community estate.” Br. of Appellant at 42.

¶ 9 In a dissolution action, the trial court must order a “just and equitable” distribution of the parties' property and liabilities, whether community or separate. RCW 26.09.080. All property is before the court for distribution. Farmer v. Farmer, 172 Wash.2d 616, 625, 259 P.3d 256 (2011). When fashioning just and equitable relief, the court must consider (1) the nature and extent of the community property, (2) the nature and extent of the separate property, (3) the duration of the marriage, and (4) the economic circumstances of each spouse at the time the property distribution is to become effective. RCW 26.09.080. These factors are not exclusive. The statute requires the court to consider all “relevant factors.” RCW 26.09.080.

¶ 10 The court has “broad discretion” to determine what is just and equitable based on the circumstances of each case. In re Marriage of Rockwell, 141 Wash.App. 235, 242, 170 P.3d 572 (2007). A just and equitable division “does not require mathematical precision, but rather fairness, based upon a consideration of all the circumstances of the marriage, both past and present, and an evaluation of the future needs of parties.” In re Marriage of Crosetto, 82 Wash.App. 545, 556, 918 P.2d 954 (1996). “Fairness is attained by considering all circumstances of the marriage and by exercising discretion, not by utilizing inflexible rules.” In re Marriage of Tower, 55 Wash.App. 697, 700, 780 P.2d 863 (1989). “Just and equitable distribution does not mean that the court must make an equal distribution.” In re Marriage of DewBerry, 115 Wash.App. 351, 366, 62 P.3d 525 (2003). “Under appropriate circumstances ... [the trial court] need not award separate property to its owner.” In re Marriage of White, 105 Wash.App. 545, 549, 20 P.3d 481 (2001).

¶ 11 The trial court is in the best position to decide issues of fairness. Brewer v. Brewer, 137 Wash.2d 756, 769, 976 P.2d 102 (1999). Accordingly, “[a] property division made during the dissolution of a marriage will be reversed on appeal only if there is a manifest abuse of discretion.” In re Marriage of Muhammad, 153 Wash.2d 795, 803, 108 P.3d 779 (2005).

A trial court abuses its discretion if its decision is manifestly unreasonable or based on untenable grounds or untenable reasons.

A court's decision is manifestly unreasonable if it is outside the range of acceptable choices, given the facts and the applicable legal standard; it is based on untenable grounds if the factual findings are unsupported by the record; it is based on untenable reasons if it is based on an incorrect standard or the facts do not meet the requirements of the correct standard.

In re Marriage of Littlefield, 133 Wash.2d 39, 46–47, 940 P.2d 1362 (1997) (citation omitted). “Trial court decisions in dissolution proceedings will seldom be changed on appeal.” In re Marriage of Stenshoel, 72 Wash.App. 800, 803, 866 P.2d 635 (1993).

¶ 12 Larson contends that while the trial court generally has broad discretion to order a just and equitable distribution under RCW 26.09.080, Washington law prohibits the award of separate property to the nonowning spouse if “ample provision for the [nonowning] spouse can be made from the community estate alone.” ⁴ Br. of Appellant at 21. As discussed below, controlling Washington law imposes no such restriction on the trial court's broad discretion to make a fair and equitable property distribution.

¶ 13 Larson relies on several cases but principally on Holm v. Holm, 27 Wash.2d 456, 178 P.2d 725 (1947), to support his contention. In Holm, the trial court awarded the wife half of the parties' community property (worth $269,397.66) and half of the husband's separate assets (worth $72,836.01). On appeal, the husband argued the distribution was inequitable because it failed to account for the character of the property. The Supreme Court reversed the separate property award, reasoning in part that the wife could be “amply provided for out of the community property, without invading the separate property of the appellant.” Holm, 27 Wash.2d at 466, 178 P.2d 725. It explained, “This is not a case where, in order to make adequate provision for the necessitous condition of the wife, the court is constrained to take from the husband his separate property.” Holm, 27 Wash.2d at 465, 178 P.2d 725. It then concluded, “We consider the division made by the trial court unjust and inequitable in so far as it awarded to the respondent a portion of what was appellant's separate property.” Holm, 27 Wash.2d at 466, 178 P.2d 725.

¶ 14 Larson thus argues, “[A]n award to the wife [Calhoun] of more than $100 million in community property meets the threshold of ‘ample provision’ that prohibits invasion of the husband's separate estate.” ⁵ Br. of Appellant at 42. Holm is unpersuasive. To the extent the above quoted language in Holm constitutes a holding, this approach was rejected in Konzen v. Konzen, 103 Wash.2d 470, 693 P.2d 97 (1985).

¶ 15 In Konzen, the trial court awarded 30 percent of the husband's separate military pension to the wife to help maintain liquidity. Konzen, 103 Wash.2d at 472, 693 P.2d 97. It also ordered an equal division of the parties' community property. On appeal, the husband challenged the award of his separate property. He relied on Bodine v. Bodine, 34 Wash.2d 33, 207 P.2d 1213 (1949), a case predating the enactment of RCW 26.09.080. In Bodine, the court stated, “[W]hile the superior court may, under certain circumstances, award part or all of one spouse's separate property to the other, the situations which warrant such action are exceptional.” B...