Opinion
No. 57308-0-I.
April 16, 2007.
Appeal from a judgment of the Superior Court for King County, No. 93-3-05998-5, Sharon S. Armstrong, J., entered November 22, 2005.
Affirmed by unpublished opinion per Coleman, J., concurred in by Schindler, A.C.J., and Grosse, J.
This case is about whether a judgment enforcing a decree of dissolution is a judgment "founded on . . . tortious conduct" when the trial court applied a conversion measure of damages in order to provide a remedy for the violation of the decree of dissolution. Velle Kolde wrongfully exercised Microsoft stock options that were awarded to his former wife Margo Langham in their decree of dissolution. Later, he sold the stock. A trial court commissioner entered a judgment against him for violating the decree of dissolution, calculating damages based on the value of the stock on the date he exercised the options. While the case was being appealed, the legislature lowered the interest rate for "[j]udgments founded on the tortious conduct of individuals. . . ." to 2 percent above the average bill rate for 26-week treasury bills. RCW 4.56.110(3). Other judgments generally bear interest at 12 percent. On remand from the Washington Supreme Court, the superior court applied the 12 percent interest rate, explaining that "although this award resulted from the tortious conduct of conversion, it constitutes a violation of the dissolution decree, for which the interest rate is 12% on judgments[.]" Velle's principal argument in this appeal is that the judgment against him was founded on tortious conduct and should bear interest at the lower rate under RCW 4.56.110(3). We affirm the trial court.
The parties' first names will be used to be consistent with the Supreme Court's decision.
FACTS
The marriage of the parties was dissolved in 1994. Margo was awarded certain Microsoft stock options, but they had to remain in Velle's name because they were not transferable. The parties' 1994 dissolution decree prohibited Velle from exercising Margo's options unless instructed by her to do so. Beginning in 1999, however, Velle exercised her options without her permission. Eventually, he sold the shares at a substantial loss. In March 2001, Margo asked him to exercise her options. It was then that she discovered he had exercised her options and sold the stock.
Margo brought a motion in family court for entry of judgment against Velle for violating the decree of dissolution. She asked the court to order Velle to repay her the fair market value of the shares on the date Velle unlawfully exercised the options, plus interest and less taxes owed on the exercise. She requested that relief be measured from the date Velle violated the decree by exercising the options. Velle argued that Margo's damages should either be the net proceeds to him when he sold the stock or the value of the stock when Margo requested that he exercise the options. The court awarded Margo judgment for the value of the stock when Velle exercised her options, plus interest accrued from then until the trial. The court then reduced the award by the amount of taxes owed on the exercise.
Velle paid all of the taxes related to the stock because the options were in his name. The court ordered Margo to reimburse him at a predetermined rate of 32.45 percent for the taxes he paid related to her stock options.
The Court of Appeals affirmed the trial court's conclusion that Velle improperly exercised Margo's options, but held that "the trial court's measurement of damages was inaccurate because [Velle] converted the options when he sold the shares of stock, not when he exercised the options." In re Marriage of Langham, noted at 116 Wn. App. 1067 (2003). The Supreme Court reversed the Court of Appeals on the measure of damages. The Court held that stock options are converted when exercised and that damages are to be calculated from the date of exercise. It remanded the case "for a recalculation of damages, including interest, in light of the taxes actually paid." In re Marriage of Langham, 153 Wn.2d 553, 569, 106 P.3d 212 (2005).
On remand, Velle argued that interest on the original judgment should be calculated at the new interest rate for judgments "founded on . . . tortious conduct[.]" RCW 4.56.110(3). The new interest rate is 2 percent above the average bill rate for 26-week treasury bills. Velle also argued that prejudgment interest should not have been awarded or, in the alternative, should have been awarded starting from the date Margo requested that Velle exercise her stock options. The superior court awarded prejudgment interest and interest on the judgment at 12 percent and calculated prejudgment interest from the date Velle exercised Margo's options. The court denied Velle's motion for reconsideration. Velle appeals both the judgment and the order denying his motion for reconsideration. We affirm the trial court because the judgment in this case was founded on Velle's violation of the decree of dissolution and not on an action for conversion.
ANALYSIS
Velle contends that the trial court erred by awarding interest at 12 percent. He argues that it should have awarded interest at the lower rate in RCW 4.56.110(3) because the judgment against him was "founded on [his] tortious conduct." RCW 4.56.110(3). Margo argues that the court correctly applied the 12 percent interest rate set forth in RCW 4.56.110(4) because this was a family law proceeding, where the court was determining a remedy for a breach of the terms of the decree of dissolution.
RCW 4.56.110(3) sets forth the interest rates on judgments and provides that "[j]udgments founded on the tortious conduct of individuals . . . shall . . ." bear interest at 2 percent above 26-week treasury bills. In this case, according to Velle's briefing, that rate would be around 5 percent. The same statute sets interest rates in other judgments (besides judgments founded on written contracts) at 12 percent. RCW 4.56.110(4).
Superior courts have jurisdiction over family court proceedings. RCW 26.12.010. While acting as a family court, it may enforce the rights of parties regarding the distribution of property. Enforcement may take many forms, depending on the circumstances in the cases. See In re Marriage of Burrill, 113 Wn. App. 863, 56 P.3d 993 (2002) (upholding trial court's postdecree award to husband of damages for repairs to property awarded him and damaged by wife prior to transfer); In re Marriage of Crossland, 49 Wn. App. 874, 877-78, 746 P.2d 842 (1987) (court has the power to enforce its orders as necessary to make them effective). Here, the Supreme Court specifically upheld the trial court method of enforcement, stating that it had "the authority to use `any suitable process or mode of proceeding' to settle disputes over which it has jurisdiction[.]" Langham, 153 Wn.2d at 560 (quoting RCW 2.28.150).
The remedies in this case were limited because the property at issue — stock options — could not be restored to Margo. Accordingly, the trial court had to find a way to enforce the decree. As a family court, it had broad authority to enforce the decree because "`[w]hen the equitable jurisdiction of the court is invoked . . . whatever relief the facts warrant will be granted.'" Langham, 153 Wn.2d at 560 (quoting Ronken v. Bd. of County Comm'rs, 89 Wn.2d 304, 313, 572 P.2d 1 (1977)). The first superior court judgment measured Margo's relief as damages for conversion would be measured and the Court of Appeals and Supreme Court approved that approach. This does not mean, however, that this is a conversion action. In fact, the Supreme Court recognized that the conversion measure of damages was an analogy. Langham, 153 Wn.2d at 559 ("Analogizing to Conversion Was Proper to Enforce the Dissolution Decree in a Motion on the Family Law Calendar"). The judgment in this case was founded on Velle's exercise of Margo's stock options in violation of the terms of the decree of dissolution. In providing a remedy, the court analogized to conversion. This does not result in a judgment founded on tortious conduct, but rather a judgment founded on a violation of the decree of dissolution.
This approach is consistent with the definition of a tort. A tort is "[a] civil wrong, other than a breach of contract. . . ." Black's Law Dictionary 1527 (8th ed. 2004). This case is analogous to a breach of contract because the decree of dissolution set out the rights of the parties. Velle breached the decree by exercising Margo's stock options. Based on that breach, the court applied a remedy that would make Margo whole.
Crafting a remedy in a family law proceeding by analogizing to tort law does not transform a judgment enforcing a decree of dissolution into a judgment founded on tortious conduct. Family law matters encompass all kinds of conduct: tortious, contractual, criminal. A family law case involving allegations and proof of criminal conduct does not become a criminal case. Margo brought this action to enforce the decree of dissolution; she did not file a summons and complaint alleging conversion. The court had to determine a remedy, and in doing so, it measured damages as damages for conversion would be measured. It did not err in calculating interest at 12 percent under RCW 4.56.110(4).
The legislative history for House Bill 2485, which changed the interest rate in RCW 4.56.110, supports the trial court's decision. The house bill report, senate bill report, final bill report, and the bill itself all describe the bill as relating to the interest rate on "tort judgments." H.B. Rep. on H.B. 2485, 58th Leg., Reg. Sess., at 1, 2 (Wash. 2004); S.B. Rep. on H.B. 2485, 58th Leg., Reg. Sess., at 1 (Wash. 2004); Final H.B. Rep. on 2485, 58th Leg., Reg. Sess., at 1, 2 (Wash. 2004). This supports the argument that the legislature's focus was on tort judgments, not judgments founded on the violation of a decree of dissolution.
Velle next contends that the trial court erred by awarding prejudgment interest or, in the alternative, calculated it from the wrong start date. Specifically, he argues that prejudgment interest should not have been awarded, or should have been awarded starting at a later date, because Margo's damages were either not liquidated until judgment was entered against him or liquidated only when Margo requested that he exercise her stock options. Margo responds by arguing that her damages were liquidated on the date that Velle wrongfully exercised her options because they were based on the easily ascertainable value of Microsoft stock. We agree.
Prejudgment interest can only be awarded upon a liquidated claim, i.e., "one where the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion." Prier v. Refrigeration Eng'g Co., 74 Wn.2d 25, 32, 442 P.2d 621 (1968). The interest on Margo's damages could be computed with exactness because it was based on the easily ascertained value of Microsoft stock on the day Velle exercised her options. Velle argues that Margo's damages were not liquidated because the various courts that have considered this case have disagreed on the date from which to measure damages. However, once the correct legal standard is applied, the value of Margo's stock options can be computed "with exactness, without reliance on opinion or discretion." Prier, 74 Wn.2d at 32. Thus, her damages were liquidated on the date that Velle wrongfully exercised her stock options.
Finally, Margo argues that the court should award her attorney fees because Velle's appeal is frivolous and because with this appeal, he crosses the line into intransigence. We do not award Margo attorney fees because Velle's argument about the correct interest rate is not frivolous.
RAP 18.9 allows an appellate court to sanction a party who files a frivolous appeal. "An appeal is frivolous when there are no debatable issues upon which reasonable minds could differ and when the appeal is so totally devoid of merit that there was no reasonable possibility of reversal." Mahoney v. Shinpoch, 107 Wn.2d 679, 691, 732 P.2d 510 (1987). Intransigence will also support an award of attorney fees. Fleckenstein v. Fleckenstein, 59 Wn.2d 131, 366 P.2d 688 (1961); In re Marriage of Crosetto, 82 Wn. App. 545, 918 P.2d 954 (1996); In re Marriage of Morrow, 53 Wn. App. 579, 770 P.2d 197 (1989). Such awards are justified where the conduct of one of the parties causes the other "to incur unnecessary and significant attorney fees." Burrill, 113 Wn. App. at 873.
Velle's appeal is not frivolous because his argument about the 2004 statute regarding interest rates on judgments is not "so totally devoid of merit that there is no reasonable possibility of reversal." Mahoney, 107 Wn.2d at 691. Margo's intransigence argument, which is based on Velle bringing this appeal, fails for the same reason.
For the foregoing reasons, we affirm.
WE CONCUR: