No. 61938-1-I.The Court of Appeals of Washington, Division One.
April 20, 2009.
Appeal from a judgment of the Superior Court for Snohomish County, No. 03-3-01125-0, Eric Z. Lucas, J., entered June 6, 2008.
Affirmed by unpublished opinion per Leach, J., concurred in by Cox and Lau, JJ.
UNPUBLISHED OPINION
LEACH, J.
A voluntary reduction in income does not constitute a substantial change of circumstances justifying modification of maintenance unless the moving party makes a substantial showing that the reduction was taken in good faith. Because the record supports a reasonable inference that Jack Zapara’s voluntary reduction in income, resulting from his decision to start a new company shortly after the dissolution, was not taken in good faith, the trial court did not abuse its discretion in determining that he failed to demonstrate a substantial change of circumstances. We therefore affirm the denial of Zapara’s petition to terminate maintenance.
FACTS
Jack Zapara and Priscilla Perry were married in 1988 and dissolved their marriage following an 11-day trial in November 2004. At the time of the dissolution, Zapara was general manager and sole shareholder of Edmonds Roofing Company, Inc. (ERCI), a business founded by Zapara’s father. ERCI was experiencing some financial difficulties, but the precise nature of the difficulties was not established. The court valued ERCI at $300,000 and awarded it to Zapara. The court awarded the family home, with equity of $320,000, to Perry.
Based on his imputed monthly income of $8,400, Zapara was obligated to pay monthly maintenance of $3,000 for two years, $2,000 per month for the third year, and $1,250 per month for the final 18 months. The decree directed Perry to pursue an education requiring at least 10 credits per quarter through the spring of 2006. The court also entered a judgment for attorney fees of $100,000 in Perry’s favor. The decree specified that maintenance was reviewable if Perry remarried, cohabited, or failed to pursue her education.
The dissolution decree was entered in February 2005. ERCI ceased operations in July 2005, and its assets were sold. At about the same time, Zapara started a new roofing business, Zee Roofing, Inc. (ZRI), which began operations in August 2005. Zapara stopped making maintenance payments in August 2005, and in October 2005, he filed for Chapter 7 bankruptcy. The bankruptcy court discharged Zapara’s debts in March 2006, including Perry’s $100,000 judgment for attorney fees.
Perry completed the fall 2005 quarter, but did not enroll in the spring 2006 quarter. She refinanced her home several times, using part of the proceeds to pay the judgment entered in favor of her attorney for $127,000.
In August 2006, Zapara petitioned to terminate his maintenance obligation, alleging that his monthly gross income had been drastically reduced from $8,400 at the time of the dissolution to $2,300. He further alleged that Perry had failed to pursue her education.
Following arbitration, Perry requested a trial de novo, which began on March 3, 2008. At the conclusion of the testimony, the trial court found that despite his reduced income, Zapara’s earning capacity had not changed significantly and that he was voluntarily underemployed. The court concluded that Zapara had failed to establish a substantial change of circumstances and denied the modification petition. The court awarded Perry $40,000 in attorney fees.
DECISION Substantial Change of Circumstances
Zapara contends the trial court erred in determining that his reduction in income was not a substantial change of circumstances justifying termination of maintenance. Generally, a court may modify maintenance provisions only if the moving party demonstrates a “substantial change of circumstances” that the parties did not contemplate at the time of the dissolution decree.[1] “`The phrase “change in circumstances” refers to the financial ability of the obligor spouse to pay vis-à-vis the necessities of the other spouse.”`[2] We will not reverse the trial court’s determination of whether a change in circumstances warrants modifying maintenance absent an abuse of discretion.[3]
Zapara argues that in making its determination, the court relied on nothing more than speculation that he was hiding or skimming assets. But the trial court’s decision rested primarily on the well-established rule that a “[v]oluntary reduction in income or self-imposed curtailment of earning capacity, absent a substantial showing of good faith, will not constitute such a change of circumstances as to warrant a modification.”[4]
The court expressly acknowledged that Zapara’s claim of a reduction in monthly income from $8,400 at the time of the dissolution to less than $3,000 could constitute a substantial change of circumstances. The court also noted that ZRI, the new business that Zapara started when dissolving ERCI, was a different type of business, focusing on residential rather than commercial work.
But the court then considered these circumstances in light of several “troubling facts,” including (1) Zapara’s reported drop in income, shortly after the dissolution, to about $12 per hour as the owner of ZRI, despite extensive experience in the roofing business in which he had earned almost $49 per hour as the owner of ERCI; (2) the careless accounting and incomplete documentation of the disposition of ERCI’s assets and liabilities and the financial relationship between Zapara and his father, who allegedly invested hundreds of thousands of dollars in ERCI, provided Zapara with certain assets from ERCI, and provided capital to start ZRI; (3) what the court found to be the unusual fact that Zapara’s reported income of $26,499 for 2006 was exactly the same as the yearly profit stated for ZRI; and (4) Perry’s claim, which the court found credible, that after the dissolution, Zapara had told her he would rather spend $200,000 in attorney fees than pay the $100,000 judgment for attorney fees.
The trial court was also entitled to consider the timing of the events occurring shortly after the dissolution, including Zapara’s decision to liquidate ERCI and start ZRI, Zapara’s failure to submit evidence establishing any meaningful reduction in his earning capacity, and Zapara’s declaration of personal bankruptcy, an action that resulted in the discharge of the $100,000 judgment owed to Perry, an obligation that Perry later had to pay.[5] Finally, the court found that much of Zapara’s testimony was not credible, an assessment that is not subject to appellate review.[6]
Under the circumstances, the record supports the trial court’s determination that Zapara’s earning capacity had remained essentially the same since the dissolution and that his current salary was the result of self-imposed restrictions. The trial court did not abuse its discretion in determining that Zapara had failed to demonstrate a substantial change of circumstances.[7]
Zapara cites In re Marriage of Ochsner[8] for the proposition that he cannot be voluntarily underemployed merely because his business failed and he chose to build a new business rather than work as a day laborer. But the sole issue in Ochsner was whether the modification court properly considered a tax return filed after entry of the dissolution decree. Unlike this case, there was no dispute about the circumstances surrounding the petitioning spouse’s current income or earning capacity, and the Ochsner court did not even address the issue of voluntary underemployment. Ochsner therefore provides no support for Zapara’s contentions.
Zapara maintains that the trial court applied the wrong standard in determining that he was voluntarily underemployed because it failed to enter a finding that he did not act in good faith in reducing his income. But Zapara cites no relevant authority requiring such a finding. Moreover, it is apparent from the trial court’s written and oral decisions that it necessarily found that Zapara had not acted in good faith when it determined he deliberately chose to reduce his income in order to avoid the maintenance obligation. For the reasons already indicated, the record amply supports that determination.
ER 404(b)
Zapara contends that the trial court erred in relying heavily on the dissolution court’s findings that he had manipulated ERCI’s assets prior to the dissolution. He argues that the trial court admitted evidence of “prior wrongful acts” without complying with the requirements of ER 404(b). We review the trial court’s evidentiary rulings for an abuse of discretion.[9]
At trial, Perry testified about the dissolution court’s findings regarding Zapara’s fraudulent stock transfer and “skimming” of ERCI profits. Zapara’s counsel then raised the following objection:
Your Honor, I object to this line of questioning. They are relitigating the dissolution, all facts that the Judge is dealing with by way of Findings of Fact relating to events that occurred prior to the decree, obviously.
As the trial court noted, the precise nature of this objection is unclear. At best, counsel appeared to challenge the testimony’s relevance. The objection was therefore insufficient to preserve the ER 404(b) argument raised on appeal.[10]
Trial Court Award of Attorney Fees
Zapara contends that the trial court erred in awarding attorney fees to Perry under RCW 26.09.140. He claims the trial court failed to consider the undisputed evidence that he lacked the ability to pay.[11]
Contrary to Zapara’s assertion, nothing in RCW 26.09.140
requires the trial court to enter formal findings of fact reciting consideration of the appropriate statutory factors.[12] Moreover, Zapara raised identical contentions at the presentation hearing on June 6, 2008. In response, the court reiterated the basis for its determination of Zapara’s ability to pay, including his failure to demonstrate a substantial change of circumstances and his voluntary reduction of income. The court also had before it evidence that Perry had no significant income and had been required to remortgage her house in order to pay current expenses, including the $100,000 attorney fee award that Zapara was supposed to pay.
Because the trial court had before it ample evidence of the parties’ financial resources and obligations and carried out the requisite balancing of need and ability to pay, we find no abuse of discretion.[13]
Reasonableness of Attorney Fees
Zapara contends that the attorney fee award of $40,000 was unreasonable because Perry stood to gain no more than $30,000 in the trial de novo over the amount of maintenance set at the arbitration. But the primary considerations of a fee award under RCW 26.09.140 are equitable.[14] Consequently, in calculating a reasonable award, the court considers the parties’ financial need and ability to pay in light of the equities, as well as additional factors, such as the nature of the issues raised and the time needed to prepare and present the case.[15]
The trial court in this case considered several factors in making its award, including the parties’ financial need and ability, the complexity of the issues, the time needed to review the voluminous financial documentation, and the preparation time for trial. On appeal, Zapara refers to only a single factor. He has not addressed, much less challenged, any of the considerations that the trial court identified in making its decision. Nor has he alleged any deficiency in the documentation before the trial court. Accordingly, he has failed to demonstrate any error or abuse of discretion.
Failure to Attend School
Finally, Zapara contends the trial court should have entered findings addressing the effect of Perry’s failure to attend classes on its modification decision. The dissolution decree provided that Perry would attend college through the spring quarter of 2006 and that maintenance was reviewable if she did not pursue her education through the spring 2006 quarter.
The trial court stated that it would consider Perry’s failure to attend the spring 2006 quarter “if necessary.” Implicit in the court’s decision was a determination that such consideration was not necessary. Zapara’s reliance on In re Marriage of Thach[16] and Turner v. Turner[17] is misplaced, as both cases involve a party’s complete failure to pursue the training contemplated by the maintenance award. The evidence here was undisputed that Perry attended college from September 2003 through December 2005, even though Zapara had stopped paying maintenance in August 2005. Zapara has not identified any rationale supporting modification of maintenance under these circumstances based on Perry’s failure to attend the spring 2006 quarter.
Attorney Fees on Appeal
Zapara and Perry have both requested an award of attorney fees on appeal under RCW 26.09.140. Because neither party has complied with RAP 18.1(b) and (c), we deny both requests.
Affirmed.
WE CONCUR:
(1987)).
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