Opinion
No. 60341-8-I.
October 27, 2008.
Appeal from a judgment of the Superior Court for King County, No. 93-3-04550-0, Michael Hayden, J., entered June 26, 2007.
Reversed and remanded by unpublished opinion per Dwyer, A.C.J., concurred in by Cox and Lau, JJ.
This is an action for postdissolution distribution of community property, the existence of which was unknown to the parties at the time of the entry of the decree. During their twelve-year marriage, Robert Pat Waters and Cynthia Waters owned an Exxon service station operating lease, which was awarded to Cynthia in their 1994 dissolution decree. In 2004, they learned of and joined a class action brought by Exxon dealers against Exxon. Exxon offered them a settlement in 2006. We reverse the trial court's award of all settlement funds to Cynthia because the inchoate interest in the Exxon litigation was an omitted asset in the dissolution that was owned by the former spouses as tenants in common, thus it should have been partitioned equally. We also reverse the award of attorney fees to Cynthia.
In the interest of clarity, the parties are referred to by their first names. Consistent with his pleadings, we refer to Mr. Waters as Pat.
I
The parties were married in 1982 and divorced in 1994. During their marriage they purchased the operating leases of the Valley Exxon gas station in Kent and the Tyee Exxon gas station in Seattle. The Exxon leases required that a "dealer of record" be designated for each station. Pat was the dealer of record for the Valley station until the parties sold it in 1992. With respect to the Tyee station, Pat was the dealer of record from May 29, 1984, to July 1, 1988, and Cynthia was the dealer of record from July 1, 1988, to October 1, 1991. In 1991, the parties formed PC, Inc. and, beginning in October of that year, designated the corporation as the dealer of record for the Tyee station.
In the dissolution decree, the trial court awarded 50 percent of the total marital estate to each party. It awarded all interest in the stock of PC, Inc., which was doing business as the Tyee station and was valued at $410,000, to Cynthia.
Ten years later, in 2004, the parties first learned about a class action brought by Exxon dealers against Exxon alleging that the company underpaid its dealers for gas sold between March 1, 1983, and August 28, 1994. In June 2004, Pat and Cynthia each submitted a proof of claim form to the claims administrator stating their respective tenures as dealers of record. They also submitted a proof of claim form together on behalf of PC, Inc. The PC, Inc. claim form stated that the corporation was the dealer of record entitled to recover losses between 1991 and 1994. Lastly, Pat submitted a proof of claim form as the dealer of record for the Valley station.
The record shows that Exxon sold the Tyee station to British Petroleum in 1991, after which it operated as the "Tyee BP" station. The parties do not explain the relevance, if any, of the station's status as a BP station during a period for which PC, Inc. claimed damages from Exxon. Because the record is insufficient to explain the matter, we do not further address it.
In May 2006, the parties were notified that the class and Exxon had reached a settlement pursuant to which Exxon agreed to pay its dealers of record. Specifically, in relation to the Tyee station, Pat would receive a check for approximately $108,000, Cynthia would receive a check for approximately $105,000, and PC, Inc. would receive a check for $15,000. Also, Pat would receive a check for approximately $117,000 as the dealer of record for the Valley station.
The parties agreed that the settlement funds related to the Valley station should be distributed equally between them as an undistributed community asset of the marriage. However, they disagreed as to the distribution of the Tyee station settlement funds. Pat maintained that, as with the Valley station, the underlying claim against Exxon was an unknown, omitted asset of the marital community in which they were tenants in common. Cynthia, however, contended that the funds received in settlement of the claim were hers alone because she was awarded the station in the decree.
On January 17, 2007, Cynthia filed a motion asking the court both to find that she was entitled to all of the Tyee station settlement proceeds and to restrain Pat from asserting any interest in the settlement funds. The evidence submitted showed that, at the time of the dissolution trial, the parties had no knowledge of Exxon's underpayments to dealers, or of the existence of their inchoate causes of action. In the decree of dissolution, there is no mention of any claims that might arise as a result of the dealership contract with Exxon.
On February 27, 2007, the court found that the decree's award of the Tyee station to Cynthia included any proceeds from the class action claim against Exxon and ordered Pat to instruct the claims administrator to direct all Tyee station settlement funds to Cynthia.
Pat appeals.
II
The dispositive issue is whether an asset of the community, the existence of which was unknown to the parties and to the court entering a dissolution decree, was nonetheless accounted for and disposed of in the decree. The parties do not dispute the facts, the trial court relied solely on documentary evidence, and credibility is not an issue; therefore we engage in a de novo review of the trial court's award of the entire omitted asset to Cynthia. In re Marriage of Langham and Kolde, 153 Wn.2d 553, 559, 106 P.3d 212 (2005).
Community property that has not been mentioned specifically in a dissolution decree is held by the parties as tenants in common. Olsen v. Roberts, 42 Wn.2d 862, 864-66, 259 P.2d 418 (1953); In re Marriage of Bishop, 46 Wn. App. 198, 201, 729 P.2d 647 (1986); Devine v. Devine, 42 Wn. App. 740, 742-43, 711 P.2d 1034 (1985). If a former spouse wants to adjudicate rights regarding such property, he or she may sue for partition, or for declaratory relief, in an action independent of the original dissolution. Devine, 42 Wn. App. at 743.
The parties agree that, with respect to both the Valley station and the Tyee station, their marital community held, unbeknownst to them, choses in action against Exxon for unpaid profits during the years that they operated the gas stations. The parties also agree that during the marriage, the assets of each station were community assets, irrespective of who was named the dealer of record. On appeal, Cynthia is unclear on these matters. However, she made her position very clear to the trial court, to which she argued, "whether the dealer of record was Mr. Waters, Mrs. Waters, or their corporation makes no difference. . . . There has never been any dispute that the gas station was community property." Clerk's Papers at 277.
Moreover, Pat and Cynthia agreed that the right to the settlement funds associated with the community's operation of the Valley station was not transferred to the third party to whom they sold that operating lease in 1992; rather, it was an omitted asset in the dissolution that they owned as tenants in common and which was properly divided equally between them.
Nonetheless, Cynthia argues that the dissolution court's award to her of "all interest" in the Tyee station transferred all interest in the Tyee Exxon settlement to her. However, she fails to explain how there could be such a discrepancy between the parties' ability to transfer unknown assets in the case of one station but not the other. We discern no principled basis to characterize this asset as transferable as to one station but not as to the other.
We are unpersuaded by Cynthia's reliance on In re Marriage of Knight, 75 Wn. App. 721, 880 P.2d 71 (1994). There, the trial court found that the dissolution court overlooked the asset of business goodwill and awarded the former husband a judgment for half of its assessed value. This court reversed, finding that there was insufficient evidence to show that the asset was overlooked; rather, the parties "possessed and considered the information necessary to value all the component parts of the business." Knight, 75 Wn. App. at 728. As such, the lack of an award reflecting the value of that asset reflected a miscalculation by the parties, not an omission by the court. Knight, 75 Wn. App. at 728.
Conversely, in this case, the parties did not possess, let alone consider, any information regarding the then-unknown chose in the Exxon litigation at the time of their dissolution trial. Accordingly, the dissolution court could neither recognize nor quantify the value of the asset and it was not included in the court's award of the Tyee station to Cynthia.
The causes of action against Exxon were the property of the marital community. They were not addressed in the decree. Thus, after entry of the decree, the former spouses owned the causes of action as tenants in common.
Therefore, we reverse the trial court's order to the contrary and remand this matter to the trial court for entry of an order equally partitioning the settlement funds. Moreover, because Cynthia is no longer the prevailing party, we reverse the trial court's award of attorney fees to her. No attorney fees on appeal are awarded to either party under this cause number.
Reversed and remanded.
WE CONCUR: