Marriage of Monaghan, In re

• Decision Date: 09 August 1995
• Docket Number: No. 16508-2-II
• Citation: Marriage of Monaghan, In re, 899 P.2d 841, 78 Wn.App. 918 (Wash. App. 1995)
• Parties: In re the MARRIAGE OF Delores A. MONAGHAN, Appellant, and Robert D. Monaghan, Respondent.
• Court: Washington Court of Appeals

Page 918

78 Wn.App. 918

899 P.2d 841

In re the MARRIAGE OF Delores A. MONAGHAN, Appellant and Robert D. Monaghan, Respondent.

No. 16508-2-II.

Court of Appeals of Washington Division 2.

Aug. 9, 1995.

Michael Joseph Turner, Tacoma, for appellant.

Patrick Karl Daly, Daly and Macfie, Tacoma, for respondent.

HOUGHTON, Acting Chief Judge.

Dolores Monaghan appeals from a denial of her motions for imposition of judgment and clarification of her 1987 decree of dissolution of marriage. We reverse and remand.

I. FACTS

Dolores Monaghan and Robert Monaghan were married in 1956. ¹ The marriage was dissolved by decree of dissolution (Decree) on September 1, 1987.

The decree divided the parties' community property equally, designated by two separate property schedules. The property schedule awarded to Robert, among other items not at issue:

12. His dental practice, subject to [an] interest in favor of the petitioner, Dolores Monaghan, in an amount computed as 50% of the gross funds received in excess of $80,000.00, from the sale of the dental practice.

Both parties were required to pay all encumbrances, liens or debts associated with the property each received and to hold the other harmless from liabilities regarding that property. Each party was further responsible for any income tax liability arising out of the sale of any divided property and debts and obligations accrued since the date of the separation.

On December 24, 1991, Robert executed a contract to sell his dental practice to Alison Polwarth, D.D.S. Dolores did not take part in the negotiations for the sale. That sale consisted of [the] entire practice, together with all equipment, improvements, apparatus, furniture and fixtures, leasehold improvements, patients' files/charts, supplies, and all other items located in Monaghan's office and which were used in the practice (except cash and personal effects of Monaghan)....

In the contract of sale, the purchase price, $160,000, was apportioned as follows:

Equipment and Leasehold Improvements  $        0
                Inventory and Supplies                $   20,000
                Covenant Not to Compete               $  109,000
                Patient List                          $   15,000
                Goodwill                              $   16,000  [ 2]
                

The sale documents did not identify any accounts receivable or other monies owed to Robert before the closing date, January 3, 1992. Likewise, accounts payable, obligations incurred or claims against Robert were to be his responsibility. Pursuant to the covenant not to compete, Robert agreed not to practice within Pierce County for five years, subject to specific exceptions. The sale of the practice included a 10% sales commission, payable by the seller. ³

Dolores and Robert dispute the value of the dental practice and what the sale of the practice included. Dolores claims the practice sold for $160,000--the contract-stated price. Robert claims it sold for $31,000. He arrived at this figure based upon a value of $7.50 per active patient and inclusion of only the patient list and goodwill in the sales price. His calculation excludes the inventory and supplies, and the covenant not to compete. Because, by Robert's calculation, the practice sold for less than his allotted $80,000, he believed he owed Dolores nothing and therefore did not share any of the proceeds with her.

On July 17, 1992, Dolores moved for imposition of judgment against Robert. In an accompanying affidavit, Dolores requested an entry of judgment against Robert for 50% of the gross funds received in excess of $80,000 from the sale of the practice. By separate motion, Dolores also requested the trial court to clarify the content of the decree regarding the accounts receivable for Robert's dental practice. In an accompanying affidavit, Dolores sought an accounting of the amounts of the accounts receivable that Robert received from the practice. ⁴

The matter was submitted to the trial court on affidavits, the contract for the sale of the practice, the decree of dissolution and the property settlement agreement. The trial court granted Robert's motion to strike portions of Dolores' accountant's affidavit to the extent it contained legal conclusions. The trial court did not rule on Robert's other motions to strike portions of Dolores' affidavits and the letter of compromise sent to her counsel.

After the trial court reviewed submitted material, it issued a document entitled "Findings of Fact and Conclusions of Law Re: Petitioner's Motion for Summary Judgment." The trial court denied both of Dolores' motions. At oral argument on this appeal, counsel for both parties conceded that the order below was improperly characterized as summary judgment. The parties agree that on appeal the court should review the record for substantial evidence.

II. ANALYSIS

On review, we therefore determine whether the findings are supported by substantial evidence, and in turn, whether the findings support the conclusions of law and judgment. State v. Halstien, 122 Wash.2d 109, 128-29, 857 P.2d 270 (1993). Substantial evidence is evidence sufficient to persuade a fair-minded person of the truth of the declared premise. Robinson v. PEMCO Ins. Co., 71 Wash.App. 746, 753, 862 P.2d 614 (1993).

A. Motion for Clarification of Decree

Dolores contends the trial court erred in denying her motion for clarification of the decree's terms regarding Robert's dental practice. ⁵ She asserts that she is entitled to one-half of the gross funds in excess of $80,000. According to Dolores, she is entitled to $40,000 and requests a judgment accordingly.

A clarification of a dissolution decree explicitly defines the rights and obligations that were previously granted. In re Marriage of Jarvis, 58 Wash.App. 342, 345, 792 P.2d 1259 (1990). Construction of a decree is a question of law to be determined by examining the document itself to find out its intended effect. In re Marriage of Bocanegra, 58 Wash.App. 271, 275, 792 P.2d 1263 (1990), review denied, 116 Wash.2d 1008, 805 P.2d 813 (1991). The court uses general rules of construction applicable to statutes, contracts and other writings to ascertain the meaning of the decree. In re Marriage of Sager, 71 Wash.App. 855, 862, 863 P.2d 106 (1993).

Dolores contends that the trial court erred in ascribing a $31,000 value to the dental practice because it did not interpret the contract of sale as a whole pursuant to Berg v. Hudesman, 115 Wash.2d 657, 801 P.2d 222 (1990). Dolores asserts that when engaging in such an interpretation, the court must " 'declare the meaning of what is written, and not what was intended to be written.' " Berg v. Hudesman, at 669, 801 P.2d 222 (quoting J.W. Seavey Hop Corp. v. Pollock, 20 Wash.2d 337, 348-49, 147 P.2d 310 (1944)). "Unilateral and subjective" beliefs about the impact should not be considered as representing the intent of the parties. Olympia Police Guild v. City of Olympia, 60 Wash.App. 556, 559, 805 P.2d 245 (1991). Dolores asserts that applying these stated principles to the sales contract for the dental practice compels a finding that Robert sold his practice for $160,000. She further asserts that there is substantial evidence that at the time of dissolution, the parties placed a much higher value on the sale than $31,000. Furthermore, she argues that the $31,000 figure is at odds with the decree itself in which she says the court assigned a minimum value of $80,000.

The basis for the trial court's conclusion that the dental practice sold for less than $80,000 is not evident from the record. Findings of fact and conclusions of law should be sufficient to suggest the factual basis for the ultimate conclusions. Groff v. Dept. of Labor and Industries, 65 Wash.2d 35, 40, 395 P.2d 633 (1964); see also In re Marriage of Berg, 47 Wash.App. 754, 756, 737 P.2d 680 (1987) (A trial court is required to create an adequate record of the proceedings for appellate review); In re LaBelle, 107 Wash.2d 196, 219, 728 P.2d 138 (1986), citing, Maehren v. Seattle, 92 Wash.2d 480, 487-88, 599 P.2d 1255 (1979), cert. denied, 452 U.S. 938, 101 S.Ct. 3079, 69 L.Ed.2d 951 (1981) (trial court must establish and set forth the existence or nonexistence of determinative factual matters). Inadequate written findings may be supplemented by the trial court's oral decision or statements in the record. LaBelle, 107 Wash.2d at 219, 728 P.2d 138 (citations omitted). Supplementing the trial court record with the court's oral ruling here, however, is not helpful because the trial court did not explain how it reached its conclusion. In its oral ruling, the trial court said:

I don't think anything other than the goodwill was contemplated here. I don't think anything as far as the fixtures, furniture, equipment is contemplated here. The covenant not to compete I don't believe is contemplated here.

In valuing a closely-held business or a business largely dependent upon intangible assets associated with a professional practice, the trial court " 'must set forth on the record which factors and methods were used in reaching its finding' of value". Berg, 47 Wash.App. at 757, 737 P.2d 680, quoting, In re Marriage of Hall, 103 Wash.2d 236, 247, 692 P.2d 175 (1984). In Berg, the trial court simply accepted the husband's (the managing spouse's) value of a closely-held corporation in contravention to the expert's testimony. On appeal, the court found nothing in the record to rebut the expert's testimony, and thus remanded for redetermination of book value of the corporation. The circumstances in Berg are similar to those here. The trial court agreed with Robert's valuation of the practice without explaining how it reached its conclusion and despite Dolores providing an accountant's affidavit as to what the "value" of a business typically includes.

From our review of the record, there was not substantial evidence to support the trial court's finding that Robert sold his dental practice for the sum of $31,000. Furthermore, not only is...