DIVORCE / PROPERTY DIVISION AND SPOUSAL SUPPORT
One can read between the
lines that neither
side presented adequate evidence to value all
of the marital assets and liabilities. This is a very dangerous
approach to an arbitration because without evidence, the arbitrator is left
to guess. One would think that a good result would be important enough
to the parties that they would be fully prepared for the hearing. Lack
of preparation only saves money during the preparation stage, but likely
will lead to much larger losses in the outcome.
This is not a criticism of the lawyer presenting the case
- as the arbitrator, I am unable to know whether the presentation was limited
by the client's payments to the lawyer, or by the client's failure to provide
the information to the lawyer, or whether the failure to provide evidence
was a strategic decision.
I was appointed
arbitrator for this case pursuant to ORS chapter 36. After pre-hearing
submissions, the case came before me for hearing at 1300 SW Fifth Avenue,
Suite 2750, Portland, Oregon 97201. Petitioner Husband
appeared in person and with his attorney. Respondent Wife appeared
I have reviewed the petition and the response.
It appears that wife wishes her name to be restored to . . . .
If this is not correct, that is, if there is a middle name or otherwise,
I should be told in writing immediately, because the judgment will otherwise
incorporate this information.
Testimony was taken from Husband, Wife, and Husband’s
mother, and the hearing was closed. It falls to me to sort this
There was ample proof of the jurisdictional facts.
The marriage will be terminated effective the date the judgment is signed
by a circuit court judge.
I will deal with matters in the following general
order: real property (little house, big house), personal property, liabilities,
spousal support, equalizing judgment, attorney fees and costs.
There are no children of this marriage and wife
is not pregnant. There are no issues of parenting or child support.
The parties met in 199-. Husband invited
wife to come to Portland, and agreed to ‘take care of her.’ I don’t
make much of the ‘take care of’ agreement; they simply agreed to cohabit
which led to marriage. Wife accepted. They started living
together. Wife attended junior college. After she took certain
courses, she began to work as a certified nurse’s assistant, and later
as a lab technician assistant. She did not get a degree before she
stopped attending school. Prior to their marriage, wife got financial
aid. If there were any loans, they have been paid off. After
their marriage in 200-, wife’s school was paid for by the parties, as a
Husband is presently an operator or similar skilled
tradesperson and the impression I am left with is that he worked at his
employer from before 199-.
The little house
Prior to meeting wife, husband owned and lived
in “the little house.” I find that after wife moved
to Portland (either immediately or shortly thereafter), she lived there
with husband, and from time to time, other people. Some improvements
were made to that house. From my perspective, it does not matter
exactly who did the work or the value of the improvements. The point
is that the house appreciated in value from the date of marriage (or some
earlier time when the parties cast their economic lot together). The
sweat equity is compensated to everybody by the increase in equity.
The little house is encumbered by a first mortgage
which had a balance in November 200- of $83,421 (Ex 3), and a second
mortgage with a balance in February 200- of $15,914 (Ex 6). I conclude,
however, that the mortgage or some mortgage was on the house prior to Wife’s
appearance on the scene, and in all probability, the mortgages were partly
paid down during the marriage which actually increases the equity in
the house beyond the appreciation in property values discussed below.
However, there was no evidence of the mortgage debt as of earlier dates.
There is some legal question as to whether the
relevant valuation dates for the real property are, at the front end,
when the parties began to cohabit, or when they were married, and at the
back end, when the parties moved out of the little house, when the parties
separated, or the date of trial. The shortest period I could take
is from 200- to 200-, the longest from 199- to 200-. The appreciation
of the house between the front end and the back end is a marital asset
and subject to division. The proof tendered as to valuation was party
opinion and tax assessment documentation, and not particularly definite.
For starters, even if the little house was separate
property prior to the marriage, I reject the contention that I should
not consider appreciation during the marriage after the parties moved into
the big house. There was testimony that wife helped out with the
management of the little house and no attempt to prove that wife did not
help out. The presumption of equal contribution is not rebutted.
I cannot entirely leave my knowledge at the door.
I have lived in Portland for 29 years, and in Northeast Portland since
2000 and at other times in the past. I have owned property in Portland
for most of the 29 years. I have bought and sold single family residences
to live in and for resale. In the last year I have presented expert
testimony about trends in increases in property values of residences in
dissolutions over the same period of time this couple was married, within
two or three miles of these properties. And I read the newspapers.
Suffice it to say that I know that all properties in this area have increased
in value over the period of time in question.
The low appreciation would be the change in RMV
[RMV is the value of the property on January 1 prior to the tax year.
As such, for instance, Exhibit 9 is the value on January 1, 200-] from
1/1/200- of $*,000 (Ex 10) to 1/1/200- of $*,000 (Ex 9), that is, $*,000
[I take judicial notice, from www.portlandmaps.com, that the RMV in January
199- and January 200- was $*,000, and the RMV in January 200- is $*,000].
I think the rate that RMV increased is probably close to accurate.
However, I distrust RMV as an absolute measure of value because Husband
stated he bought the house in 199- [www.portlandmaps.com indicates it was
1/1/199-] for $*,000 and RMV for 1/1/199- was $*,000 and for 1/1/199- it
was $*,000. He testified it was worth $110,000 in 200- and $125,000
in 200-. The trouble is that I don’t have other evidence to base my
opinion on. So, I am going to say the little house appreciated in value
$36,000 between the beginning valuation date and the ending valuation date,
whatever they are, and that $36,000 is a marital asset.
The big house
At the beginning of the marriage, neither Husband
nor Wife had an interest in this house. During the marriage,
Mother acquired the house, ultimately free and clear. Because of
her health and the relationship between her and her son, Husband agreed
to and convinced Wife to move in with Mother.
Essentially as an inducement, Mother agreed with
Husband and Wife that the house would be gifted to Husband and Wife so
that they could borrow money to repair the house, buy cars, attempt in
vitro fertilization, and purchase consumer goods. There was an oral
condition that Mother could live in the house for the rest of her life
and Husband and Wife would assist Mother.
While the transaction was not documented the
same way it was formulated, this is a court of equity and I will treat
the transaction the way it was intended. Mother conveyed the big
house to Husband and Wife, retaining a life estate. Mother is 65
and has chronic diseases but she could live for many years especially
if she gets to stay in the house and has the assistance of Husband.
I find that Mother’s donative intent was to both Husband and Wife.
While undoubtedly there was friction at all times between Husband and Wife,
and between Mother and Wife, the facts that all witnesses agreed that there
were discussions about transaction prior to the gift, that the loan was
in part to pay for attempts at in vitro fertilization so that Mother could
become a grandmother, and everybody shared access to the loan funds, all
indicate to me that at the time of the gift transaction it was intended
to be a gift to the married couple in substance as well as form.
The question remains: What was the gift? and:
What was it worth? The gift was a fee simple title to Husband and
Wife, subject to a life estate in common with Mother, who has a reasonable
life expectancy. While such a title has value to a family member
who is willing to live with Mother, there is also the quid pro quo of taking
care of Mother if she needs that care. Frankly, the title held by
Husband and Wife has little market value.
In any event, Husband and Wife then liquidated
the value of the gift by borrowing $107,000. While part of that
borrowing was for the furnace, roof, air conditioning and materials for
a fence, and after other parts were spent Mother still had access to it
until it was gone, the impression that I get is that $90,000 was spent on
marital expenses of Husband and Wife.
At the same time, the evidence from tax statements
was that the RMV of the house appreciated from $*,000 on 1/1/200- (Ex
8) to $*,000 for 1/1/200- (Ex 7) [I take judicial notice that the RMV
was $*,000 in 200-]. Mother said she thought it was worth $250,000
in 200-. The new roof, furnace, air conditioning and fence increase
the value of the property and typically are not taken into account in establishment
of RMV, which is done by trending. Obviously, the present value of
Mother’s life estate (at least as a proportion of the total value) has
declined over that same period, because she has gotten older. Thus,
the value of Husband’s and Wife’s restricted interest has increased and
that increase is a marital asset.
My conclusion is: having in mind the other provisions
of this award and particularly how I have resolved other uncertainty,
I award the interest of Wife and Husband, whatever it is, subject to the
balance of the loan, still around $103,000 (Ex 2), to Husband, and order
him to pay the loan and hold Wife harmless from it. My award and the
judgment will specifically refer to this property by its legal description
and I also order Wife to execute a bargain and sale deed of her interest
to Husband, if such a deed is prepared by and at the expense of Husband;
however, I will not sanction Wife if she does not execute the deed; rather
pursuant to ORCP 78, the judgment will have the effect of a transfer.
Personal property and debts
The parties spent a lot of money during the marriage.
This reflects the fact that the parties had a reasonably large income
and only modest debt. The large debts for the mortgages on the little
house and the big house were mostly covered by payments from renters and
There was very little, if any, documentary evidence
presented about the details of spending; just that there was a lot of
it. Everybody agreed that Mother, Wife, and Husband had access to
most of the money from the refinancing of the big house. Mother’s
social security checks went into the pot, which was often overdrawn.
The complaints about Wife’s spending were known and aired over eight to
ten months before the separation. In my opinion, if Mother and Husband
had wanted to pull the plug on Wife’s alleged excessive spending, if there
was excessive spending, the could have done so if they had tried harder.
Many of these complaints are easy to make and
hard to defend. It was undisputed that Wife gambled but there was
no proof that the magnitudes were excessive, given the tensions in the marriage.
I understand the Wolhaupter case, and more recently, Garza and Garza
201 Or App 318, 118 P3d 824 (2005), and I don’t find the facts of this
case to be like, for instance, Garza
The State of Oregon advertises that the lottery
should be played for entertainment. I conclude that there was not
much money management going on by anybody and some if not all of the mismanagement
was tolerated (or even contributed to) by the other parties.
There were tensions in this marriage, and on
this record, the amounts of money dissipated were not proved nor do they
appear to be disproportionate or such as require me to treat as anything
other than a marital expense made by one party without the express consent
of the other party.
Nor should we forget that Wife was working regularly
throughout the marriage at an appropriate job for a reasonable income.
The two trucks
I award the two trucks to Husband. I find
the equity value of those two vehicles to be $4,700, in the aggregate.
Husband testified that in October 200- he borrowed $12,500 at 4.9% interest
to buy the truck and he pays for 66 months at $247 per month (plus paid
$5,000 from the family borrowing). I believe he knows the percentage
rate, the monthly payment and the amount of the purchase price that he financed,
but when I amortized these the numbers for 66 months, they “don’t compute.”
If you try to figure out the initial balance using 66 months, it is over
$14,000, and I don’t think there were this much in junk charges.
So, I conclude that the term of the loan was 60 months and the initial
amount financed was $13,120, and I assume that some $600 in junk charges
from the auto dealer were financed.
I have to figure out the equity in the truck.
The trouble that I have here is that the valuation of the truck provided
by husband (Husband’s Exhibit 5) is a January 200- Kelly Blue Book trade
in value. Obviously, the truck declines in value every day and the
principal due on the loan declines every month. If I use a 200-
value for the debt and a 200- value for the truck, that substantially understates
the equity in the truck. On the other hand, I don’t have access to
other dates for valuation. So, I assume that the value of the truck
declined in proportion to the decline in principal amount of the loan.
The $8,390 value for the truck is offset by the $4,374 debt on the truck
that I calculate, for an equity of $4,000 in round numbers.
The parties borrowed $10,000 against Wife’s car
to purchase the candle business. As a practical matter, Wife had
to have known about it. Thus, this loan was a marital debt. When
the car was totaled, the loan was paid, thus reducing marital debt, but with
the result that Wife ended up without a car. The effect is that $11,882
of Wife’s car was traded for something which is now worth $500.
The candle business
I award the candle business (including all the
racks and candles) to Wife, but at a value of $500. I doubt that
the materials have anything more than Craigslist liquidation value.
Other personal property
I award to Wife the bedroom set and all of her
other goods that are in storage with Husband. I order Wife to remove
the candles and all of those goods by June 1, 200- (sooner is better),
and if she does not do so, that she be deemed to have abandoned them to
Husband. Husband and Wife are to cooperate. Wife must provide
a U-Haul or similar vehicle and labor to load the van. Husband is
to provide unimpeded access.
The remainder of tangible personal property is
awarded to the person in possession, except as specifically otherwise
provided for herein.
I award to Wife one half of the appreciation
in value of Husband’s 401(k) Retirement Savings Plan for the period from
the date of marriage to the date when Husband filed for divorce, i.e., August
200-. The evidence presented to me was that the market value of
the plan as of 6/30/200- was $19,160.24 (Ex 4). There was no proof
of the value as of around June 200-. Without information about the
value then, I will assume that the entire amount is a marital asset.
I will allow Husband ten days from the date of this letter to provide to
my office a statement of the value of his plan for the period ending June
30, 200-. The appreciation is the difference. Reduce the difference
by 24% (15% for federal taxes and 9% for state taxes) to get the after
tax value of the appreciation. As stated, for present purposes, that
is $14,561. If I get the requested evidence then I will modify the
I award the dog to Husband. I award the
bird along with any cages and related stuff to Wife.
If, and I don’t know where they are, Wife has
any wedding or engagement rings, I award them to her. In my opinion,
they are the memorabilia of a failed marriage and whoever has them should
sell them and spend the money. Having in mind this distribution of
the rings, I award the fish tank to Husband. Again, my thinking is
that a fish tank is replaceable.
I am making no requirement that Wife return the
game systems. I assume that if Husband really wanted them, he could
replace them for much less on Craigslist or other used markets.
Debts of the parties
Husband proved that he owes $9,476 to the Credit
Union Visa as of 11/1/200-, which was 13 months after the date of separation
(Ex 1). There is no proof when this debt was incurred. I have
trouble ordering payment by one party of a debt owed by the other
party, as part of an equitable allocation process, without evidence that
debt was incurred during a period of cohabitation or for the benefit of
the marriage or to purchase some tangible thing that is the subject of equitable
distribution. It is not obvious to me from the mere fact of a credit
card debt owing by one party thirteen months after separation that such
a debt falls in the one of those categories.
Having in mind that I have found no equity in
the big house, I resolve this uncertainty by ordering this debt be paid
by Husband, either because it is not a marital debt or even if it is I
choose to do so as part of an equitable division.
There is apparently a debt payable to Multnomah
County for taxes related to the candle business. Husband said it
was $1,800 but no document was produced. I direct that be paid by
Husband. He can contest it. It seems to me that there should
be a way to have it educed or eliminated if approached correctly.
I understand that it is associated with the candle business that has been
awarded to wife, and have taken this into consideration.
The debt in favor of collection agency A in the
amount of $405 (Ex 107) appears to be dated 9/24/200- and is a marital
debt. Wife shall pay it.
The debt in favor of Collection agency B in the
amount of $613.60 (Ex 106) or whatever amount was conceded to have been
incurred by Wife during the marriage, is a marital debt. Wife shall
The debt of $1,181 in favor of Municipal Court
(Ex 105) was incurred from a reckless driving charge where Wife’s car
was totaled, after the separation of the parties. It is not a marital
debt and wife shall pay it.
The debt of $341 in favor of Collection Agency
C (Ex 104) was incurred from wife’s auto accident and is not a marital
debt and wife shall pay it.
The parties should file separate tax returns
for 200- and 200-. Husband should take the mortgage interest and
other deductions associated with the big house. If the parties
can cooperate, they can file joint returns after filing their separate
returns. If they do, then, any additional refunds after payment of
all taxes, interest and penalties due on the original returns, should
be split 50/50 after payment of the accountant.
[Note: These parties agreed that the arbitrator could decide spousal
I can award spousal support only under ORS 107.105(1)(d)(
C). I find ORS 107.105(1)(d)(A) and (B) to be inapplicable.
ORS 107.105(1)(d)( C) provides:
(1) Whenever the court renders a judgment of
marital annulment, dissolution or separation, the court may provide in
* * *
(d) For spousal support,
an amount of money for a period of time as may be just and equitable for
one party to contribute to the other, in gross or in installments or both.
* * * The court may order:
* * *
maintenance as a contribution by one spouse to the support of the other
for either a specified or an indefinite period. The factors to be considered
by the court in awarding spousal maintenance include but are not limited
(i) The duration of the marriage;
duration of this marriage suggests that support should not be for a long
period of time
(ii) The age of the parties;
parties are young so they cannot expect social security or other pensions
to provide for their income, but on the other hand their relative youth
allows them choices
(iii) The health of the parties, including their physical, mental and
parties are healthy and to the extent Wife has emotional issues they are
situational and will or need to resolve
(iv) The standard of living established during the marriage;
parties lived at the standard of living provided by $75,000 or more combined
annual income coupled with only modest debt and the injection of close
to $100,000 of gifts from Mother. Their expenditure pattern during
the marriage could not be replicated on a sustainable ongoing basis
(v) The relative income and earning capacity of the parties, recognizing
that the wage earner’s continuing income may be a basis for support distinct
from the income that the supported spouse may receive from the distribution
of marital property;
has higher earning capacity than wife. It may be that wife’s skills
in the medical industry were created during the marriage, but they are
not so unique nor do they create such a high level of income that I consider
them anything other than the product of an appropriate community college
education. Husband brought his earning capacity into the marriage.
On the other hand, husband’s high earnings are dependent on continuation
of work at his employer and to some degree on the continuation of the
availability of overtime.
(vi) A party’s training and employment skills;
parties have appropriate training and education for their work and I
am not providing spousal for the purpose of Wife obtaining new skills.
(vii) A party’s work experience;
parties have appropriate work experience and wife’s work experience is
an appropriate platform for her to return to work if she gets going.
(viii) The financial needs and resources of each party;
and after the separation, Husband remained employed and in possession
of most of the assets of the parties. Wife resigned her work in
January 200- and has not worked for a year. She may felt that was
an appropriate decision but my view is that for purpose of economic evaluation
of this family, she should have found some other work, even if at a lower
wage rate. However, fundamentally, Husband’s lifestyle has continued
without much change since the separation. He has both houses; his
truck, his job and income of approaching $6,000 per month in 200-.
He has a place to live. It does not appear that he has transferred
any assets to Wife during this time. Wife left the marriage with little,
and has had nothing to build on. She lived on unemployment (Ex 112
and 113) and other handouts and probably by her wits for the last year.
(ix) The tax consequences to each party;
support is deductible to the payer and taxable to the payee. The
closer spousal support gets to equalizing the total income of each party,
the less tax benefit there is.
(x) A party’s custodial and child support responsibilities;
(xi) Any other factors the court deems just and equitable.
“The purpose of an award [of spousal support]
under the statute [former ORS 107.105(d) which is similar to ORS 107.105(1)(d)(
C)] is to provide a reasonable amount of income to the recipient spouse
that will enable that party to enjoy a standard of living, to the extent
practicable, that will not be overly disproportionate to what was enjoyed
during the marriage”), Waterman and Waterman
, 158 Or App 267, 270-71,
974 P2d 256 (1998); Garza and Garza
, 201 Or App 318, 118 P3d 824
, Taylor and Taylor,
136 Or App 416, 420,
902 P2d 120 (1995) (“[a]lthough we are mindful of the goal of ending the
support-dependency relationship within a reasonable time, we cannot do so
if the result works undue hardship”).
The parties cohabited for six years (from 1999
to 2005) and were married for five and one half (from 2001 until now).[Duration
of marriage is only one of the factors to be considered, and, a five year
marriage is not a ‘short’ marriage anyway, in Olinger and Olinger
75 Or App 351, 707 P2d 64 (1985); Frank and Frank
, 86 Or App 727,
732 (1987); Seefeld and Seefeld
, 294 Or 345, 359 n 2, 657 P2d 201
(1982); Frishkoff and Frishkoff
, 45 Or App 1033, 610 P2d 831 (1980).]
At the end of the marriage, wife’s potential income was $15 per hour times
2000 hours per year or $30,000 per year. Her pay stub (Ex 114)
indicates that she earned $15.61 per hour at the end of the marriage.
Thus she has the capacity for self sufficiency over the long term.
Husband testified that he earned $71,000 in 200-,
that his base salary is $45,000, and that he has overtime though the circumstances
for overtime are convoluted.
There is anecdotal evidence that some Multnomah
County domestic relations judges award spousal support on the basis of
one half the duration of the marriage, at a figure sufficient to equalize
the income disparity at the beginning and stepping down, but there is no
statute or case providing for this.
I have authority under ORS 107.105(1)(d) to award
support either in gross or in payments.
The question is how husband should pay.
Here, I refer to Husband’s UTCR 8.010 Statement, page 2, which states
“Husband proposes Wife should be entitled to a portion of the equity in
the home in an amount to be determined at the hearing, to be accomplished
by either selling the Little House or by refinance.”
Taking into consideration all of the above, I
award an equalizing judgment in favor of Wife and against Husband in the
amount of $27,684 and spousal support in favor of Wife and against Husband
of $1,250 per month from March 1, 200- to February 1, 200-, and $750 per
month from March 1, 200- to February 1, 200-.
It appears to me that there is sufficient equity
in the little house to pay this judgment if the house is sold or by refinancing
the second mortgage or by refinancing the first and second mortgages; however,
that is up to Husband.
The equalizing judgment has to be paid in one
year and bears interest at the rate of 8 per cent, but can be prepaid.
If husband wants to pay the judgment for spousal
support off by refinancing or sale, then it can (but need not) be paid
in a lump sum with each monthly payment reduced at a discount rate of 9%
Thank you for your consideration.