No. 47868-1-I.The Court of Appeals of Washington, Division One.
Filed: July 22, 2002. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION.
Appeal from Superior Court of Snohomish County, No. 98-2-09621-5, Hon. Ellen J. Fair, November 30, 2000, Judgment or order under review.
Counsel for Appellant(s), Dennis W. Jordan, Attorney At Law, 4202 Hoyt Ave, Everett, WA 98203-2317.
Counsel for Respondent(s), Larry M. Trivett, Attorney At Law, 1802 Grove St, Marysville, WA 98270.
FAYE C. KENNEDY, J.
Darwin A. Burns appeals the allocation of property and debt at the end of a meretricious relationship, contending that the trial court erred in dividing the relationship property by giving Carolyn M. Cunningham credit for her separate monetary contribution toward the purchase of real property acquired in joint tenancy with right of survivorship and for half the amount she paid toward a credit card obligation. Burns also contends that the court erred by refusing to order Cunningham to refinance the debt on the real property so as to free him from liability for the debt. But contrary to Burns’s arguments, the trial court did not rely upon inadmissible or insufficient evidence in making the findings that support its conclusions of law, and the record does not establish that the court abused its investigative discretion in considering whether to require Cunningham to refinance the underlying debt on the real estate. Accordingly, we affirm.
FACTS
During their meretricious relationship, Cunningham and Burns purchased five acres of undeveloped land for $68,500 and obtained a construction loan for $152,000 in order to build their residence on the land. It is undisputed that Cunningham paid $40,000 toward the purchase of the property from her separate funds, and that Burns had no money of his own to contribute. Cunningham initially signed the real estate purchase and sale agreement alone, and then the parties signed an addendum stating: `Darwin A. Burns shall be added to this Agreement as Purchaser. Purchasers shall take title as joint tenants with 50% undivided interest to each Purchaser.’ Trial Exhibit 1. By the terms of the statutory warranty deed and the subsequent promissory note and deed of trust, the parties acquired the property and secured the debt as `joint tenants with right of survivorship, not as tenants in common or as community property.’ Trial Exhibits 8, 9, and 10.
Burns testified at trial that the parties verbally agreed ahead of time that Cunningham would furnish the money, and that Burns would furnish labor on the home construction and thereby acquire a 50 percent `sweat-equity’ interest in the property. Cunningham testified that although it was understood that she would provide the money because Burns had none, and although it was agreed that the property would belong to both of them, there was no discussion about Burns acquiring an equal interest in the property by reason of his labor, and no discussion about Cunningham making a gift of her separate monies. Cunningham testified that she had not understood the meaning of joint tenancy with right of survivorship until the title clerk explained the `survivorship’ aspects of such tenancies, at the time of the closing of the construction loan. She testified that upon learning this, she told Burns that if she died first, she wanted to make sure that her separate investment in the property went to her children, and that he said they could take care of that later. Cunningham raised the question again when the parties eventually separated, and asked Burns to sign a document agreeing that Cunningham had made a separate investment toward the purchase of the property, but Burns refused to sign the document.
The parties also disagreed at trial as to the value of Cunningham’s labor on the property, with Burns testifying that she was little more than a `gopher’ and Cunningham testifying that her contributions of labor and financial management during construction of the home were equal in value to Burns’s contribution of labor.
Before the parties separated in March 1997, they maintained a VISA account that was used for joint purchases, including an entertainment center, chain saw, and generator that were used on the property. The credit card balance due at separation was just over $4,000, and Cunningham paid it off without contribution from Burns. The balance due on the deed of trust was $146,800, and Cunningham, who remained on the property, serviced that debt after separation. The parties divided their personal property by mutual agreement. Cunningham kept possession of the entertainment center, chain saw, and generator. As of the date it was valued for purposes of trial, the real property had a market value of $245,000. On December 23, 1998, Cunningham filed a Petition for Equitable Distribution of Real Property.
At trial, Burns sought an order that Cunningham refinance the real property in order to relieve him from obligation on the loan so that he could qualify for a new loan to purchase a replacement home. Cunningham testified that she had contacted a lender to see if she could qualify to refinance the loan, and learned that she could not, due to the amount of her income and the prevailing mortgage interest rate.
The trial court awarded Cunningham the real property, and ordered her to pay and hold Burns harmless from the underlying debt. The court declined to order Cunningham to refinance the property. The court found Cunningham to be the more credible witness with respect to the alleged verbal agreement that Burns would have a 50 percent interest in the property in exchange for his labor, and with respect to whether Cunningham intended to gift to the relationship her $40,000 separate contribution toward the purchase of the property. The court also found the value of the parties’ respective labors toward construction of the home to be roughly equal.
Accordingly, the trial court awarded Cunningham her $40,000 contribution off the top of the equity in the home, and gave her credit for half the VISA card balance as of date of separation, as well. Thus, the court subtracted $42,000 from the parties’ equity in the real property and awarded that sum to Cunningham, before dividing the remaining equity equally between the parties. Cunningham was ordered to pay Burns $27,100 for his equitable share of the equity in the real estate. Burns appeals.
STANDARD OF REVIEW
A trial court’s classification of property as separate or community is a question of law. In re Marriage of Skarbek, 100 Wn. App. 444, 447, 997 P.2d 447 (2000), citing In re Marriage of Martin, 32 Wn. App. 92, 94, 645 P.2d 1148 (1982). We review the trial court’s property distribution at the end of a meretricious relationship for manifest abuse of discretion. Cf., In re Marriage of Konzen, 103 Wn.2d 470, 478, 693 P.2d 97 (1985). When a proposition must be proved by clear and convincing evidence, we review the record for substantial evidence, leaving to the trier of fact the weight that is to be accorded such evidence. Colonial Imports v. Carlton N.W., Inc., 83 Wn. App. 229, 238-39, 921 P.2d 575 (1996). Credibility determinations are entirely for the trier of fact. State v. Camarillo, 115 Wn.2d 60, 71, 794 P.2d 850
(1990).
DISCUSSION
Issue 1: Was Respondent’s contribution of $40,000 toward the purchase of the land converted into property owned by both parties?
While community property laws are not applied directly in characterizing property acquired during a meretricious relationship, Washington courts are guided by the statutory definitions of `separate’ and `community’ property. Connell v. Francisco, 127 Wn.2d 339, 351, 898 P.2d 831 (1995). Therefore, income and property acquired during either a meretricious relationship or a marriage are characterized in a similar manner. Connell, 127 Wn.2d at 351. Both parties are presumed to own the property they have acquired during a meretricious relationship, and such property is subject to a just and equitable distribution. Id. But unlike in a marriage situation, property that would be characterized as `separate’ if the parties were married is not subject to division by the trial court at the end of a meretricious relationship. Id. at 352.
Separate property will remain separate `through changes and transitions,’ so long as it can be traced and identified, and unless it’s changed by deed, agreement, operation of law, or some other means. In re Marriage of Pearson-Maines, 70 Wn. App. 860, 865-66, 855 P.2d 1210
(1993); Marriage of Skarbek, 100 Wn. App. at 447-48. The name under which property is held is not determinative of how it should be characterized. But a spouse’s use of separate funds to purchase property in the names of both spouses, absent any other explanation, permits a presumption that the purchase or transaction was intended as a gift to the community. In re Marriage of Hurd, 69 Wn. App. 38, 51, 848 P.2d 185
(1993). There must be clear and convincing proof to overcome that presumption. Id.
We agree with Burns that (absent any other explanation) the fact that a party to a meretricious relationship uses separate funds to purchase property in the names of both parties permits a presumption that the purchase or transaction was intended as a gift to the relationship, and that such a presumption, once created, can only be overcome by clear and convincing proof to the contrary. Id.; see Connell, 127 Wn.2d at 351
(property acquired during meretricious relationship should be characterized in a similar manner as income and property acquired during marriage; all property acquired during a meretricious relationship is presumed to be owned by both parties, but this is a rebuttable presumption). But here, there is another explanation Cunningham testified that she had not understood the legal meaning of joint tenancy with right of survivorship and that she told Burns, just before closing the construction loan when the survivorship aspects of joint tenancy were explained to her by the title clerk, that she wanted her $40,000 contribution toward the purchase of the property to go to her children, if she should die before Burns. She also testified that Burns told her they could take care of that problem later.
The trial court found Cunningham to be the most credible witness with respect to her lack of donative intent. Burns nevertheless argues that Cunningham’s testimony cannot be considered clear and convincing evidence because it was not even admissible. He relies for this proposition upon Hollis v. Garwall, Inc., 137 Wn.2d 683, 974 P.2d 836 (1999) (holding that the `context rule’ articulated in Berg v. Hudesman, 115 Wn.2d 657, 801 P.2d 222 (1990) applies to judicial interpretation of restrictive covenants set forth in subdivision plats). Under Berg and Hollis, extrinsic evidence is admissible to illuminate what was written in a contract, not what was intended to be written; that is, admissible extrinsic evidence does not include evidence of a party’s subjective intent as to the meaning of a contract word or term, evidence that would show an intention independent of the instrument, or evidence that would vary, contradict or modify the written word. Berg, 115 Wn.2d at 669; Hollis, 137 Wn.2d at 695-96.
Burns equates Cunningham’s testimony that she had not understood the meaning of joint tenancy with right of survivorship, and that she did not intend to gift her separate funds to the meretricious relationship, with the kind of extrinsic evidence that is not admissible under the `context rule’ when courts are required to judicially interpret contracts. But here, Cunningham did not attempt to place some different meaning upon the term joint tenancy with right of survivorship from that prescribed by law, and did not ask the trial court to vary, contradict or modify the language in the instruments by which the parties purchased the real estate, based on her own subjective understanding, or lack of understanding, of the meaning of the tenancy by which the property was acquired. She did not ask the court to judicially interpret the property instruments at all. She merely asked the court to recall that in the case of In re Marriage of Lindsey, 101 Wn.2d 299, 304, 678 P.2d 328 (1984) our Supreme Court overruled the Creasman presumption. In Creasman v. Boyle, 31 Wn.2d 345, 356, 196 P.2d 835 (1948) the court had written:
`[W]e think that, under these circumstances [death of the party to a meretricious relationship in whose name the property was held] and in the absence of any evidence to the contrary, it should be presumed as a matter of law that the parties intended to dispose of the property exactly as they did dispose of it.’ In abandoning the Creasman presumption, the Lindsey court said: `In its place we adopt the rule that courts must `examine the [meretricious] relationship and the property accumulations and make a just and equitable disposition of the property.”
Lindsey, 101 Wn.2d at 304 (citations omitted).
Burns’s argument is tantamount to saying that the Creasman presumption not only is still the law, but also that it has somehow become a conclusive presumption instead of the rebuttable presumption that it once was, i.e., that Cunningham, as a party to a meretricious relationship, cannot be heard to testify that she did not intend to dispose of the property exactly as she did dispose of it in signing the addendum to the purchase and sale agreement and the promissory note and deed of trust for the construction loan. We reject this notion.
Cunningham’s testimony was admissible to show that, notwithstanding the language in the property instruments, she did not intend to make a gift to the meretricious relationship of her $40,000 contribution toward the purchase of the property, and she did not agree that Burns would obtain ownership of that contribution in exchange for his labor. We hold that in a meretricious relationship, as in a marriage, the name or names in which property is held is not determinative of how it should be characterized for purposes of equitable distribution at the time a court is asked to intervene and this is equally so whether the property is held in the name of only one of the parties or whether it is held by them as tenants in common with right of survivorship. Burns also contends that even if Cunningham’s testimony was admissible, it was not `clear and convincing’ evidence such as is required to overcome the rebuttable presumption that she did, indeed, intend to make a gift to the meretricious relationship. He contends that something more than tracing and self-serving testimony is required to raise evidence to the level of `clear and convincing.’ We have examined this question before, in a different context:
We next consider the standard of appellate review. Our only function is to ascertain whether or not there is substantial evidence supporting the facts as found. Bland v. Mentor, 63 Wn.2d 150, 154, 385 P.2d 727 (1963). It is for the trial court, and not this reviewing court, to determine whether the evidence in a given case meets the standard of persuasion designated as `clear, cogent and convincing’. See Bland, 63 Wn.2d at 154:
What constitutes clear, cogent and convincing proof necessarily depends upon the character and extent of the evidence considered, viewed in connection with the surrounding facts and circumstances. Whether the evidence in a given case meets the standard of persuasion, designated as clear, cogent, and convincing, necessarily requires a process of weighing, comparing, testing and evaluating a function best performed by the trier of the fact, who usually has the advantage of actually hearing and seeing the parties and the witnesses, and whose right and duty it is to observe their attitude and demeanor.
The appellate function should, and does, begin and end with ascertaining whether or not there is substantial evidence supporting the facts as found.
Colonial Imports, 83 Wn. App. at 238. Thus, it is the trial court and not the appellate court that must be persuaded that the fact in issue is `highly probable,’ and the appellate court looks only for that amount of evidence that is a prerequisite to submitting the question to the trier of fact, namely, substantial evidence. Colonial Imports, 83 Wn. App. at 239, citing Colonial Imports v. Carlton N.W., Inc., 121 Wn.2d 726, 734-35, 853 P.2d 913 (1993). Cunningham’s testimony, self-serving though it was, constituted substantial evidence that the trial court had the right and duty to weigh, test, compare and evaluate in light of all the other evidence at trial, including Burns’s equally self-serving testimony, and including the fact that the parties held the property of record as joint tenants with right of survivorship.
In many cases, including this one, credibility determinations are key to the trial court’s process of weighing, comparing, testing and evaluating evidence. Tracing was not at issue the parties agree that Cunningham’s $40,000 contribution came from her separate funds. Both parties gave self-serving testimony as to the ultimate issues of verbal agreement and donative intent, and the trial court simply found Cunningham to be the most credible witness in regard to this. We are bound by that determination.
The challenged findings are supported by substantial evidence. They are, therefore, verities for this appeal. In re Marriage of Thomas, 63 Wn. App. 658, 660, 821 P.2d 1227 (1991).
The trial court properly found the real estate itself to be relationship property; indeed, that the property was relationship property was undisputed at trial. Just as in the case of community property, relationship property can be subject to an equitable lien in favor of a party who has invested separate funds into the purchase of such property.
In a marital dissolution proceeding, the trial court may, in the exercise of discretion, award separate property of one spouse to the other spouse, whereas the court has no such authority in a relationship dissolution proceeding. Connell, 127 Wn.2d at 352. But this does not change the overall analysis. We affirm the trial court’s award to Cunningham of her separate property contribution toward the purchase of the relationship real estate.
Issue 2: Did the trial court err in its allocation of the credit card debt?
When they separated, the parties owed just over $4,000 on a VISA credit card that had been used to make purchases for the benefit of the relationship, including the purchase of an entertainment center, chain saw and generator. Following separation, Cunningham paid the balance without any contribution from Burns. She also retained possession of the entertainment center, chain saw and generator. The trial court was required to make a just and equitable disposition of the credit card debt. Connell, 127 Wn.2d at 347-48. Cunningham sought to document the amount that was due at separation by offering Exhibit 27, the statement that arrived shortly after separation that showed the balance due as a carry-forward.
At trial, Burns’s attorney objected to admission of the exhibit:
[O]ther than generalities, there’s no itemization here in terms of what this $4,034.19 amounts to, or when the charges were even incurred. . . . [W]e’ve only got $75 of charges to Viking Rentals that are shown on this.
There is no basis for me to even determine or even allocate any responsibility for the $4,034.’
Report of Proceedings at 72.
The trial court responded:
`I’ll admit [Exhibit] 27, but I’m certainly not, by admitting it, indicating to any party that I take that to mean that anyone owes any money off of it.’
Id. at 72-73. In its oral decision, the trial court found that the VISA debt was a relationship debt paid wholly by Cunningham with her separate funds, and thus that she should be credited $2,000 in the overall property allocation.
Burns argues that the trial court should be reversed because Cunningham failed to provide itemized billings so that he could argue a just and equitable distribution of the debt based on which party retained possession of the items that were purchased on the account. Burns cites no authority for the proposition that is implicit in this argument, i.e., that the court must allocate relationship credit card debt in accord with which party retains possession, following separation, of items that were purchased on the account. For this reason alone, Burns’s argument fails. See RAP 10.3(a)(5) (appellate brief should contain argument supporting issues presented for review, citations to legal authority, and references to relevant parts of the record); State v. Dennison, 115 Wn.2d 609, 629, 801 P.2d 193 (1990) (appellate court need not consider arguments for which a party has not cited authority).
Moreover, it is undisputed that the credit card was used to purchase items that the parties used during their relationship, and the record indicates that the parties divided their personal property by agreement at the time of separation seemingly without reference to the credit card balance that was due. Finally, Burns points to no evidence in the record that he sought any discovery with respect to itemization of the credit card charges. The trial court did not abuse its discretion by admitting Exhibit 27 or by giving Cunningham credit for paying half of the balance that was due on the account at the time of separation.
Issue 3: Did the trial court’s decision not to require Cunningham to refinance the mortgage, so as to remove Burns from liability, rest upon inadmissible evidence?
The trial court decided that it would not be `fair and equitable to require Ms. Cunningham to refinance’ the underlying mortgage debt, and thus that Cunningham did not have to obtain a release of Burns from his liability on the underlying debt. Report of Proceedings at 286. Burns argues that the trial court abused its discretion by relying upon inadmissible hearsay evidence in rendering its ruling, and by going outside the evidence presented at trial rather than considering only the record in rendering its decision. Burns asks this court for a remand, with directions requiring Cunningham to obtain a release of Burns from liability on the loan, either by sale of the property or by refinancing the loan.
With respect to the hearsay question, Cunningham’s counsel asked her whether she had the ability to refinance the loan and she responded that she did not. Burns’s counsel objected based on foundation and that the answer was based upon hearsay. The court asked Cunningham’s counsel to ask some clarifying follow-up questions, and counsel then asked Cunningham whether she had contacted individual lenders, whether she had explained to them her financial status, whether she explained to them her hourly rate of pay and how much she earned, and whether she discussed with them the value of the property, the amount of the underlying mortgage, and the fact that she would need to borrow more than the mortgage balance in order to pay Burns for his share of the equity in the property. To each of these questions, Cunningham answered yes, she had explained all of that. Her counsel then asked her what response she had received to her inquiries about refinancing, and Burns’s counsel objected based on hearsay. The court allowed Cunningham to answer, not for the truth of the matter asserted but in terms of the basis for her belief that she could not afford to refinance, and Cunningham responded that she had been told `[t]hat I do not have enough income at this time to refinance. And the interest rate is at 8 percent; it would not be feasible for me to refinance unless it was down to 6 per cent.’ Report of Proceedings at 94.
In its oral ruling, the court balanced the equities as between the parties, determined that so long as Cunningham held Burns harmless from the underlying debt, the hardship to her of requiring a refinance, in terms of points and increased interest she would have to pay if she refinanced, outweighed the hardship to him of remaining legally liable for the loan, and decided that `it is not fair and equitable to require Ms. Cunningham to refinance, if she would otherwise not need to do so. So I am not going to mandate that.’ Id. at 286. And in the written findings, the court stated that it was not persuaded that Burns would be unable to obtain another mortgage loan in the future so long as he remained obligated on the existing loan, whereas requiring Cunningham to refinance would result in a forced sale of the property.
Based on this, Burns argues that, despite the trial court’s ruling that Cunningham’s response would be admitted only to show the basis for her belief regarding her ability to refinance, rather than for the truth of the matter asserted, the trial court actually considered the response for the truth of the matter asserted. Burns also argues, for the first time on appeal, that Cunningham’s belief as to her ability to refinance was irrelevant in any event. If Cunningham’s response to the question about what she learned when she made inquiries about refinancing were the only evidence at the trial that had a bearing upon whether she should be ordered to refinance the property, we might agree with Burns that the trial court can only have relied, at least in part, upon the response for the truth of the matter asserted. But there is other evidence to which the court may have been alluding. Burns, himself, presented testimony from the mortgage lender who arranged the parties’ construction loan that neither of them could have qualified for the loan as an individual borrower; the incomes and credit standing of both was required for them to qualify. Burns points to no evidence in the record of any significant change in Cunningham’s income at the time of trial by which a trier of fact could infer that she could qualify to refinance the property on her own at the time of trial. Thus, the court could properly infer that requiring Cunningham to refinance would be tantamount to forcing a sale of the property. We are not willing to assume, based on the record before us, that the trial court failed to properly apply its own evidentiary ruling.
We decline to consider Burns’s argument that Cunningham’s belief as to her own ability to refinance was irrelevant in any event, as the issue was not preserved for this appeal. Burns’s objections at trial went to foundation and hearsay, not relevance. See RAP 2.5(a); Cf., State v. Wixon, 30 Wn. App. 63, 78, 631 P.2d 1033 (1981) (objection to relevancy insufficient to preserve hearsay objection for appeal).
Finally, Burns contends that the trial court improperly based its ruling with respect to refinancing the property on evidence outside the record that it obtained on its own. This argument is based upon the following remarks by the trial court during the oral ruling:
The last item is whether or not Ms. Cunningham would be required to refinance so that Mr. Burns’ name is taken off the documents. In doing this, I tried to do a little bit of research and make some inquiries. It appears that, again, the court has discretion in this matter. What I attempted to do was balance the cost to the parties, take into consideration the award made to Mr. Burns — and I believe that the award to Mr. Burns is more than fair, considering all the facts and circumstances of this case — and that in balancing the costs and liabilities to the parties that it is not fair and equitable to require Ms. Cunningham to refinance, if she would not otherwise need to do so. So I am not going to mandate that.
Report of Proceedings at 286 (emphasis provided by Burns, Appellant’s Opening Brief at 20).
It is unclear from the record what the court meant by having made `some inquiries.’ Burns asks us to assume the worst, and conclude that the court performed some sort of independent investigation into factual matters totally outside the record and not subject to cross-examination. We decline to make that assumption. A number of explanations are possible, most of which are innocuous such as asking another trial judge whether he or she had ever been asked to order a novation[1] in a marital dissolution or relationship dissolution proceeding, or knew of any case law on the subject. We observe that Burns has provided no case law on the subject of court-ordered novation (below or on appeal) so that such an inquiry of one’s fellow trial judges would seem to be a logical possibility, and certainly not inappropriate, if that is what happened.
In any event, the time for clarification of what the court meant by having made `some inquiries’ has passed. As a condition of seeking appellate review of the question, Burns’s counsel should have asked the trial court to clarify the statement, on the record, either at the time of the oral ruling or, at the latest, at the time of presentation of the court’s findings, conclusion, and decree. As it is, the record is so ambiguous that we cannot review the claimed error.
Affirmed.
WE CONCUR: GROSSE, J., AGID, J.