Petelle v. Ersfeld-Petelle (In re Estate of Petelle)

• Decision Date: 14 May 2020
• Docket Number: No. 97463-2,97463-2
• Citation: 195 Wash.2d 661,462 P.3d 848
• Court: Washington Supreme Court
• Parties: In the MATTER OF the ESTATE OF Michael A. PETELLE, Deceased. Gloria Petelle, Respondent, v. Michelle Ersfeld-Petelle, Petitioner.

195 Wash.2d 661

462 P.3d 848

In the MATTER OF the ESTATE OF Michael A. PETELLE, Deceased.

Gloria Petelle, Respondent,

v.Michelle Ersfeld-Petelle, Petitioner.

No. 97463-2

Supreme Court of Washington.

Argued January 23, 2020

Filed May 14, 2020

Ann Terese Wilson, Law Offices of Ann T. Wilson, 1420 5th Ave. Ste. 3000, Seattle, WA, 98101-2393, Catherine Wright Smith, Smith Goodfriend PS, Valerie A. Villacin, 1619 8th Ave. N., Seattle, WA, 98109-3007, Michael L. Olver, Helsell Fetterman LLP, 1001 4th Ave. Ste. 4200, Seattle, WA, 98154-1154, for Petitioner.

Jason W. Burnett, Attorney at Law, 801 2nd Ave. Ste. 1415, Seattle, WA, 98104-1517, Jason Wayne Anderson, Sidney Charlotte Tribe, Carney Badley Spellman, 701 5th Ave. Ste. 3600, Seattle, WA, 98104-7010, for Respondent.

Karen Elizabeth Boxx, Keller Rohrback LLP, 1201 3rd Ave. Ste. 3200, Seattle, WA, 98101-3052, for Amicus Curiae on behalf of University of Washington School of Law.

JOHNSON, J.

¶1 This case involves an issue of contract interpretation, determining whether a surviving spouse agreed in a separation contract to give up her right to intestate succession under RCW 11.04.015. Petitioner Michelle Ersfeld-Petelle seeks reversal of a published Court of Appeals opinion reversing the trial court's denial of a motion to terminate her right to intestate succession in the estate of her late husband, Michael Petelle. We affirm the Court of Appeals and conclude that petitioner expressly waived her right to intestate succession under the terms of the contract.

FACTS AND PROCEDURAL HISTORY

¶2 After six years of marriage, Michael Petelle filed a petition to dissolve his marriage to petitioner, having separated on January 27, 2017. The parties, both represented by counsel, executed a separation contract and CR 2A agreement on February 14, 2017.¹ The contract divided assets and liabilities, contained an integration clause, and required all modifications to be in writing.

¶3 In the contract, the parties agreed "to make a complete and final settlement of all their marital and property rights and obligations on the following terms and conditions." Clerk's Papers (CP) at 43 (emphasis added). The contract also provides that the "contract shall be final and binding upon the execution of both parties, whether or not a legal separation or decree of dissolution is obtained[,]" and, by its terms, the contract remained valid and enforceable against the estate of either party if either party died after the execution of the contract. CP at 43-44, 48. Though the contract contains a "Full Satisfaction of All Claims" section, the right to intestate succession is not mentioned. CP at 46.

¶4 Petitioner claims that she and Michael, the decedent, were contemplating reconciliation, citing an e-mail the decedent sent to his attorney requesting an extension to the "closing date" of the divorce. CP at 17. Before any reconciliation or dissolution occurred, the decedent died intestate on May 1, 2017.

¶5 Petitioner filed, and was granted, a petition for letters of administration, appointment of an administrator, an order of solvency, and nonintervention powers for probate of the decedent's estate. Petitioner did not disclose the existence of the dissolution action or the separation contract and did not give notice to any of the decedent's heirs of her intent to petition for nonintervention powers pursuant to RCW 11.68.041(2).

¶6 Respondent Gloria Petelle, the decedent's mother, filed in the trial court a motion contesting the grant of powers. The trial court revoked petitioner's nonintervention powers but allowed petitioner to continue to serve as personal representative and required the posting of a $100,000 bond. Respondent petitioned the trial court to terminate petitioner's right to intestate succession, which the trial court denied. Respondent appealed, and the Court of Appeals reversed, holding that petitioner waived her right to intestate succession under the language in the separation contract.² In re Estate of Petelle , 8 Wash. App. 2d 714, 721, 440 P.3d 1026, review granted , 194 Wash.2d 1001, 451 P.3d 334 (2019).

ANALYSIS

¶7 Absent disputed material facts, the construction or legal effect of a contract is reviewed de novo. Yeats v. Estate of Yeats , 90 Wash.2d 201, 204, 580 P.2d 617 (1978). When interpreting contracts, we attempt "to determine the parties' intent by focusing on the objective manifestations of the agreement, rather than on the unexpressed subjective intent of the parties," imputing an intention corresponding to the reasonable meaning of the words used. Hearst Commc'ns, Inc. v. Seattle Times Co. , 154 Wash.2d 493, 503, 115 P.3d 262 (2005). The dispute in this case centers on whether the separation agreement waived statutory intestate rights.

¶8 Generally, waiver may be either express or implied; an express waiver is governed by its own terms, while implied waiver may be found based on conduct conclusively establishing intent to waive a right. Reynolds v. Travelers' Ins. Co. , 176 Wash. 36, 45, 28 P.2d 310 (1934). Both express and implied waiver are asserted in this case.

¶9 The doctrine of waiver ordinarily applies to all rights or privileges, and the party alleged to have waived a right must generally have actual or constructive knowledge of the existence of the right. Bowman v. Webster , 44 Wash.2d 667, 669, 269 P.2d 960 (1954). In this case, the effect of the separation contract is determined based on the provisions in the agreement and the agreement as a whole.

¶10 The statutory right at issue in this case is created under chapter 11.04 RCW, which controls intestate distribution and intestate rights. Under RCW 11.04.015(1)(c), a surviving spouse is entitled to receive three-quarters of a decedent's estate when the decedent is survived by no children but is survived by a parent or sibling. The parties seem to agree that this statutory directive can be waived and dispute whether the terms of the separation agreement establish waiver and how waiver can be accomplished.

¶11 Although none of our cases address this exact situation, we have previously decided cases touching on whether similar spousal statutory rights were waived by contract or conduct. The most analogous case cited by respondent and relied on by the Court of Appeals is In re Estate of Brown , 28 Wash.2d 436, 440, 183 P.2d 768 (1947). In Brown , we found that the language in a separation contract waived a surviving spouse's statutorily created homestead right. There, a husband and wife had entered into a separation contract. Before the parties were divorced, the husband died, leaving behind a will that did not mention his wife. This court found that the wife expressly waived her homestead rights based on the following three provisions in the separation contract: (1) the agreement indicated it was to be a final and conclusive agreement between the parties regardless of whether either party died before a decree of divorce was entered, (2) the agreement divided the assets free of all claims of the other party, and (3) the agreement was intended to be binding on each spouse's "heirs and assigns forever." Brown , 28 Wash.2d at 441, 183 P.2d 768. We reasoned that the language indicating the agreement was final and conclusive even if a party died before a divorce was obtained showed an intent to waive and further evidenced contemplation of any rights that might accrue upon death, such as the homestead right at issue. We also noted the postcontract conduct of the parties further supported this interpretation, with the parties having sold their separate interest in real estate to a third party after signing the separation contract. Brown , 28 Wash.2d at 440-41, 183 P.2d 768. Similar reasoning applies here. Much like the statutory homestead right at issue in Brown , the right to intestate succession arises from statute.

¶12 In the present case, the separation contract contains more explicit language regarding the resolution of all marital rights than that in Brown . Here, the agreement provides, "[T]he parties hereby stipulate and agree to make a complete and final settlement of all their marital and property rights and obligations on the following terms and conditions." CP at 43 (emphasis added). The Court of Appeals reasoned that "[t]his language is, arguably, sufficient to constitute waiver of all marital and property rights flowing from the marital relationship, including the right to intestate succession." Petelle , 8 Wash. App. 2d at 721. We agree. This provision is an express declaration to resolve "all marital and property rights," leaving no ambiguity that some or any marital or property rights remain unresolved. Our conclusion is further supported by a general purpose of separation contracts—to divide assets and liabilities in preparation for divorce.

¶13 Petitioner argues that this provision does not effectively waive all marital and property rights because the settlement is on the following terms and conditions and the right to intestate succession is not specifically mentioned. Petitioner also cites to Estate of Lundy v. Lundy , 187 Wash. App. 948, 959-60, 352 P.3d 209 (2015) for the rule that "[d]isclaiming an ownership interest [is] not the same as disclaiming future rights as a beneficiary." But petitioner's argument based on this rule is premised on the assertion that the right to intestate succession is not included in the words "all their marital and property rights ." Respondent, on the other hand, asserts that "all" means all , including the right to intestate succession.

¶14 Again, the analysis applied in Brown aids us in resolving this issue. In Brown , the homestead right was not specifically enumerated in the separation agreement, but we found waiver based on the broad language indicating the agreement was intended to be "final and conclusive" regardless of death and also based on the broad language to release all claims with respect to property. Brown , 28 Wash.2d at 441, 183 P.2d 768. Here, the...