Opinion
No. 52246-9-I
Filed: August 23, 2004 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 02-3-01949-1. Judgment or order under review. Date filed: 04/14/2003. Judge signing: Hon. Suzanne M Barnett.
Counsel for Appellant(s), Jeffrey Lynn Barth, Attorney at Law, 121 Lake St S Ste 101, Kirkland, WA 98033-9025.
James Elliot Lobsenz, Carney Badley Spellman, 700 5th Ave Ste 5800, Seattle, WA 98104-5017.
Counsel for Respondent(s), Delney North Hilen, Attorney at Law, 601 Union St Ste 2600, Seattle, WA 98101-2302.
Patricia S. Novotny, Attorney at Law, 3418 NE 65th St Ste a Seattle, WA 98115-7397.
In this appeal of a decree of dissolution, we hold that the trial court erred by using its civil contempt power to coerce the husband to pay a monetary judgment not related to familial support. That portion of the decree is vacated. But we affirm the trial court's property division because the question of whether marital property taken by the husband remained in the community was a question of credibility, and we defer to the trial court's credibility determinations. We also affirm the trial court's attorney fee award to the wife.
FACTS
Shalini and Anil Yadav were both born and raised in India. Anil came to the United States to work in the high tech field and returned to India to find a wife through a traditional arranged marriage. A few days after they met, Shalini and Anil married in India on December 18, 1991. Anil returned to the United States, and Shalini soon joined him. They eventually had two daughters.
From January 2001 until September 2001, Shalini and her daughters were in India. They had originally traveled there with Anil for a family wedding. Anil left India after one month to return to work. Shalini planned a three-month visit in India, but she and her children became stranded there without plane tickets or passports, and the trip was extended to allow time to arrange for replacements. How they came to be stranded there was disputed. The court did not make written findings, but the record indicates that the court believed Shalini's testimony that in April, when she and the children were due to leave, Anil unexpectedly returned to India, took her passport and tickets, and returned to the United States after telling her that his job was in jeopardy and that she needed to stay in India. She also testified that while she was in India, Anil cancelled her credit card and closed her bank account. Anil denied taking the travel documents, testifying instead that Shalini lost them. He did not remember canceling Shalini's credit card and closing her bank account.
Shalini testified that when Anil arrived in April, he instructed Shalini to visit him at his parents' house where he took her travel documents. She returned to her family's house, but did not hear from Anil. With her next door neighbor's help, she contacted Anil. He told her to contact his father for the travel documents. He also told her that he had cancelled her credit card. When Shalini phoned Anil's father, he denied having the travel documents. Anil returned to India in July, and he attended a meeting at Shalini's parents' house with his parents, Shalini's parents, and Shalini. At this meeting, Anil's parents demanded an additional `dowry' of 100,000 rupees for the return of the passports. Shalini's parents refused. There was testimony at trial that it is common for Indian husbands to `abandon' their wives by leaving them in India and taking their passports. United States permanent resident status can be lost if a green card holder stays outside the United States for more than one year. Anil testified that the July visit was intended to provide emotional support to Shalini and help her replace the lost passports by bringing copies of the daughters' birth certificates. Shalini testified that she never saw any birth certificates during the July visit with Anil, whom she saw only briefly during the meeting at her parents' house.
Shalini eventually replaced her and her children's travel documents without any assistance from Anil and returned to the United States on September 21, 2001, using funds borrowed from her family. When she arrived, she learned that Anil had sold her car in March 2001, leaving her without transportation when she arrived back in the United States. In addition to restricting her movement, Anil also limited her contact with others. He prevented her from collecting the family's mail and cancelled long distance phone service so she could not phone her parents. He also started spending less and less time at home. Soon thereafter, the marriage totally disintegrated. On February 4, 2002, they separated after Anil told Shalini during a phone call that he was leaving her. When she asked for some money for household necessities, he told her that she and the children were `on their own.' Shalini filed for dissolution on February 13, 2002. Shortly after that, Anil purchased a new Acura automobile worth over $40,000.
While Shalini and the children were in India, Anil converted the majority of the family's assets into cash. Before 2001, the parties' community property consisted largely of Microsoft stock options worth a little under $1 million and their home in Issaquah, which was valued at $360,000 in March 2003. During August 2001, Anil sold $699,000 worth of Microsoft stock. He transferred the cash to a Washington Mutual bank account held in his father's name and for which he held a power of attorney. Two deposits were made: $624,000 in August and $80,000 in September. After Shalini returned home, Anil had her sign a home equity loan document. From this home equity loan, Anil transferred $95,000 to a bank account in his mother's name on February 4, 2002, the date of their separation. Shalini testified that she did not discover the stock sale or bank transfers until dissolution proceedings began.
During pretrial proceedings, Anil explained the sale of community assets as part of a plan he and Shalini had to buy property in India for retirement. Anil produced three documents titled `Agreements to Sell,' each of which purported to provide for the purchase of real property by Anil from his relatives with his father serving as an intermediary. Two agreements were dated July 2001, and a third was dated December 2001. The terms of all three agreements provided for a 90 percent forfeitable deposit, with the balance due in December 2002. Anil testified that he and Shalini had discussed buying property in India and that he and Shalini looked at some parcels of property while in India together. He also testified that he had arranged, as is customary, for his father, Banwari Yadav, to purchase the property on his behalf. He explained that the funds transferred to his parents went toward the purchase price.
Shalini denied having any knowledge of the plan to purchase property in India, and she denied looking at property while in India. On numerous occasions, Shalini sought court assistance to compel Anil to account for the assets that he had liquidated. Anil asserted that he had complied with all discovery orders by producing all bank records in his name and for his father's Washington Mutual account. From these records, it was discovered that on March 11 and 12, 2002, Banwari Yadav appeared personally at Washington Mutual to transfer $650,000 from his account to a Swiss bank account in his name. The court ordered Anil to obtain bank records from Banwari to trace the funds to the property sellers, but Banwari, who was back in India by this time, refused to reveal any financial information, even when the court threatened to incarcerate Anil for contempt of court. Anil's mother was deposed in August 2002, but disavowed knowledge of any financial matters involving her son and her husband, and she claimed to know nothing about her account into which Anil deposited the $95,000 proceeds of the home equity loan.
Shalini alleges that there is a connection between this transfer and her service of discovery requests on Anil on March 5, 2002, because it shows an attempt to place the money out of her reach before she could learn of its existence.
The court ordered Anil to return the marital assets by depositing $650,000 into the court registry or, alternatively, to demonstrate that the properties had been purchased. It later ordered Anil to demonstrate that the purchase price for the properties was fair. Both parties hired Indian law specialists and property appraisers. Neither party could show that a purchase had occurred, since Anil claimed that the transaction would not be completed until the final payment was made in December 2002. In November 2002, Anil submitted a letter from his father stating that the agreements were valid, that they could not be rescinded or extended, and that he had made advance payments under the terms of the agreement. But Anil's father flatly refused to provide financial documents to account for the payment of funds to the property sellers.
Anil also claimed that he was unable to make the final payment because his remaining assets were tied up in the dissolution. He explained that he was in disgrace with his family because of the shame associated with divorce. Therefore, they would not assist him with satisfying the court orders, nor would they provide him with funds to complete the real estate purchase. After the deadline for making the final payments passed in December 2002, Anil claimed that the advance payments were forfeited under the terms of the sale agreements. The trial court ultimately did not conclude whether the properties had been purchased, but it did conclude, based upon appraiser testimony, that the value of the properties was $220,000, which was well below the amount of money that had been transferred for the purchase of the property.
After trial, the court noted orally that notwithstanding Anil's claim that he was in disgrace and not able to communicate with his parents and siblings, his mother and sister stayed with him for several months after the divorce had commenced, and his father had been in Washington and personally visited Washington Mutual bank in March 2002 to transfer the community funds to Switzerland
The parties proceeded to trial and presented evidence regarding the status of the marital property. After trial, the court entered findings of fact and conclusions of law in which the court identified the following assets as community assets for distribution:
Cash in the amount of $704,601, which the husband obtained fraudulently, without the wife's knowledge or consent while the Wife and the children were stranded in India without passports and travel documents allowing them to return to the United States. Husband obtained these monies by systematically liquidating the family's community assets, brokerage accounts, stock and stock options, savings accounts and IRA accounts. This money was placed by the Husband in a bank account at Washington Mutual Bank established in the name of Husband's father with the purpose of placing the funds beyond the reach of the Wife and of the Court.
$95,000 of the equity in the community residence, which the Husband obtained fraudulently after the Wife and children returned to the United States after being stranded in India, and which sum the Husband placed in a bank account in the name of his mother with the purpose of placing the funds beyond the reach of the Wife and of the Court.
Of the $799,000, $650,000 of these funds was later transferred by Banwari Yadav to UBS AG bank in Zurich, Switzerland in an account in the name of Husband's father, Banwari Lal Yadav.
Real property, or the contracts to purchase that real property, which Husband alleges his father purchased on behalf of the community in India, which property was appraised at $220,000.
Anil challenges the portions of the findings that state that he fraudulently transferred funds with the intent of placing them beyond the reach of the wife and of the court. He alleges that there is not clear, cogent, and convincing evidence of fraud. He also challenges the court's conclusion that he is in continuing contempt for which his passport must be confiscated until he pays the $395,867 judgment entered against him as a part of its distribution. Lastly, he challenges the court's property distribution. We first address the court's finding of contempt.
ANALYSIS
Anil's challenge to the contempt order is two-fold: he argues that it is punitive because it seeks to punish him for prior deeds and that using civil contempt to compel him to pay a judgment is improper because (1) he lacks the ability to pay, (2) trial has concluded and discovery compliance is a moot issue, and (3) contempt sanctions may not be used to compel payment of a judgment not related to support.
The dissolution decree states:
Husband is in continuing contempt of court for failing to comply with court orders requiring the Husband to provide discovery information and return community funds converted from the community. Husband shall immediately surrender his passport to Lasher Holzapfel Sperry and Ebberson. Husband's passport shall not be returned to him until he purges himself of contempt by paying the full amount of the judgment plus attorney's fees and costs to wife including interest to the date of payment.
The primary purpose of the civil contempt power is to coerce a party to comply with an order or judgment. Smith v. Whatcom County Dist. Court, 147 Wn.2d 98, 105, 51 P.3d 485 (2002) (quoting State v. Breazeale, 144 Wn.2d 829, 842, 31 P.3d 1155 (2001)). If the contempt sanction punishes a person for past violations that are no longer continuing, it is punitive and therefore is a criminal contempt which must be initiated by criminal information filed by the State. In re Interest of Rebecca K., 101 Wn. App. 309, 317, 2 P.3d 501 (2000). A contempt sanction is civil if the defendant has the ability to remove the contempt sanction through compliance with the court order. Smith, 147 Wn.2d at 105. Imposition of contempt sanctions is subject to the sound discretion of the trial court. In re Pers. Restraint of King, 110 Wn.2d 793, 798, 756 P.2d 1303 (1988). But the court's contempt power is to be used with great restraint. State ex rel. Daly v. Snyder, 117 Wn. App. 602, 606, 72 P.3d 780 (2003), review denied, 151 Wn.2d 1005 (2004).
Despite the broad authority of the court's contempt powers, it is well established that only those provisions of a property division which are reasonably related to a support obligation may be enforced by contempt proceedings. Decker v. Decker, 52 Wn.2d 456, 465, 326 P.2d 332 (1958); In re Marriage of Young, 26 Wn. App. 843, 845, 615 P.2d 508 (1980).
The court may utilize its contempt powers to enforce the payment of child support and/or spousal maintenance, and the court may use its contempt powers in respect to enforcement of the parenting plan. On the other hand, as noted elsewhere in this work, as a general rule a court may not exercise contempt powers to enforce a property award or a duty to pay a debt. The exceptions to this rule concern the obligation or award being related to the support of the family, or the violation of a direct order by the court for the performance of an act.
20 Kenneth W. Weber, 20 Washington Practice: Family and Community Property Law sec. 31.49, at 94 (1997) (footnotes omitted). Neither party here argues that the judgment amount is related to support.
Shalini acknowledges this rule, but distinguishes this situation from enforcement of a property division by characterizing it as a failure to comply with the court order directing Anil to deposit $650,000 to the court registry. We reject this argument because the purge provision reveals the true purpose of the trial court's order payment of the property distribution judgment.
We need not address the precise reason for imposing the contempt sanction because regardless of whether the contemptuous conduct was the removal of the funds, the failure to account for them, or Anil's failure to deposit them with the court registry, the purge provision provides that the contempt will be purged only when Anil pays the full amount of the judgment. There can be no doubt that the contempt order is directed at enforcing the judgment, which is an impermissible use of the court's contempt power. Furthermore, once the court converted the property division into a judgment, the failure to deposit funds with the court was no longer at issue. We therefore reverse and vacate the contempt portion of the dissolution decree. We next address the trial court's exercise of discretion in fashioning a property distribution. The trial court has broad discretion in fashioning an equitable distribution of separate and community property. In re Marriage of White, 105 Wn. App. 545, 548, 20 P.3d 481 (2001). `When exercising this broad discretion, a trial court focuses on the assets then before it i.e., on the parties' assets at the time of trial. If one or both parties disposed of an asset before trial, the court simply has no ability to distribute that asset at trial.' White, 105 Wn. App. at 549 (footnote omitted). It can also consider each party's responsibility for creating or dissipating those assets. White, 105 Wn. App. at 550. In White, the trial court abused its discretion by awarding to the wife her separate property of $30,511, which had already been spent on acquiring community assets subsequently distributed during the dissolution proceedings.
Anil points out that this occurred before dissolution proceedings had begun.
Consequently, we decline to address Anil's argument that his right to travel was improperly restricted.
Anil challenges the court's property distribution because it assumes that he retains possession of or access to those funds or their equivalent in real property or legal claims against his father. He asserts that the court's 65/35 division only `works' if one assumes that the funds still exist. He then argues that that assumption is unfounded because the evidence shows that the money had been `spent' on the forfeited deposit and that the court's distribution of funds no longer in the community was improper. Because the money was `spent,' he argues that the court lacked clear, cogent, and convincing evidence of fraud, and it failed to make a finding to that effect.
Generally, common law fraud must be proven by clear, cogent, and convincing evidence. N. Pac. Plywood Access v. Road Builders, Inc., 29 Wn. App. 228, 232, 628 P.2d 482 (1981). Whether fraud has occurred is a question of fact. Road Builders, 29 Wn. App. at 232. According to Shalini, Anil perpetrated actual and constructive fraud based upon his violation of his statutory provisions and of his fiduciary duties related to the community property. She cites an Arizona case demonstrating application of actual fraud principles in a dissolution matter. In Gerow v. Covill, 960 P.2d 55, 64 (1998), the Arizona Court of Appeals found by clear and satisfactory evidence that the husband had fraudulently conveyed intangible assets, including goodwill, to a business started by his brother and sister-in-law in an attempt to prevent the wife from obtaining a share of that business. The court upheld the trial court's division of one-half of the value of that business to the wife after evaluating circumstantial evidence showing the husband's intent to defraud. Gerow is on point.
Despite Anil's arguments to the contrary, the trial court here had substantial evidence from which it could have found a similar intent to defraud under the clear, cogent, and convincing standard. Although it did not enter specific findings, the circumstantial evidence surrounding Anil's alleged real estate purchase strongly supports an inference of intent to defraud the community. The court, in entering the final dissolution decree, stated that Anil bore responsibility for his actions of surreptitiously removing the property from the community while his wife was stranded in India. The court stated,
I will put in the language regarding the fraud. I think that that is precisely what happened here.
To Mr. Yadav, if, in fact, the fraud happened in his extended family, I extend you an apology. But all that I have in front of me leads me to believe that this was knowing and intentional action on your part. You are the one that has to answer for it.
Report of Proceedings (RP) (February 6, 2003) at 550.
Anil argues that the court's offer of an apology suggests equivocation regarding the evidence of fraud, but we disagree. Rather, the court's statements upon entering the finding of fraudulent transfer suggest that there were two acts of fraud: one actual fraud by Anil against Shalini and a second possible fraud perpetrated by Anil's family against Anil. There is no express finding that the evidence of fraud was clear, cogent, and convincing, but the lack of a specific finding does not defeat the court's conclusion. The trial court's oral decision demonstrates it was convinced that Anil's conduct was fraudulent. The trial court stated in its oral decision at the end of trial:
The pieces simply do not line up. The husband's testimony is not consistently credible. Or more accurately, maybe the pieces line up too well.
The husband returned to the U.S. in 2001 and he set about laying claim to everything of value owned by this marital community and attempting to place it beyond the reach of his wife and children and the courts of this country.
Maybe, as his attorney alleges, he, too, is now a victim of his father's ire. If so, one cannot help but feel regret for the dissolution of the exten[d]ed Hindu family. But it was the initial actions of Mr. Anil Kumar Yadav that put him in the position that he now finds himself.
He attempted to cheat his immediate family of its U.S. cultural entitlement. In attempting to conspire with his extended family, to rob his wife and children of economic security and dignity, he ended up being caught up in a larger storm, without the protection of those hard earned assets, even for himself.
RP (February 6, 2003) at 530-31.
Anil acknowledged his financial actions, but claimed that they were done with Shalini's consent. Shalini denied this, testifying that she learned of the stock transactions and the real estate purchase during discovery only after she filed for dissolution. In order to find fraud, the court would have necessarily had to have found Shalini credible. The trial court's oral decision demonstrates that this was the case. Indeed, Anil acknowledges that the trial court clearly did make a credibility finding against him as to why he put the money into his father's bank account. Furthermore, there are numerous references in the record to statements by Anil that he would attempt to deprive Shalini of any portion of their community property. Anil told the parenting evaluator that marital tensions started to rise around July 2000 when Shalini asserted a claim to one-half of his earnings. Ex. 49 (Parenting Evaluation, at 6). He did not deny that he sold her car and cancelled her credit card and bank accounts while she was in India. Shalini testified that Anil called her on February 4, 2002, and said that he was leaving her and the children. When Shalini asked him for money, he said that she was on her own and that he was not going to help her. A few days later, he purchased a new Acura automobile.
Evidence of fraud can also be found in the alleged real estate purchase agreements. Anil contended that they were binding and that a 90 percent forfeitable deposit was customary. Shalini presented evidence that they were not enforceable, that the land allegedly purchased was worth considerably less than the purchase price, and that the deposit forfeiture provision was highly unusual.
It is the trial court's role to resolve any conflicts in testimony, to weigh the persuasiveness of evidence, and to assess the credibility of witnesses. State v. Camarillo, 115 Wn.2d 60, 71, 794 P.2d 850 (1990). Circumstantial and direct evidence are afforded equal weight. State v. Delmarter, 94 Wn.2d 634, 638, 618 P.2d 99 (1980). Because we defer to the trial court's credibility determinations, we reject Anil's argument that the record contains insufficient evidence of fraudulent conduct. Although Anil denied fraudulent intent, the evidence provided clear, cogent, and convincing evidence that he intended to defraud the community.
Shalini also argues that there is substantial evidence of constructive fraud, for which a lower standard of proof applies. But the trial court never made a finding of constructive fraud, and the record does not show that constructive fraud is a claim that was raised or argued to the trial court. Since there is no finding of constructive fraud, it would not be appropriate to review the trial court's finding under the substantial evidence test.
Furthermore, although the cash could not be located at the time of entry of the dissolution decree, the trial court allocated it in a manner that was within its discretion. White is distinguishable. There, the separate property awarded to the wife was traceable to expenditures on community assets that formed part of the property division. Anil contends that the funds have been forfeited under the real estate agreements; but the trial court was entitled to consider the husband's responsibility for dissipating these funds in its dissolution decree. See White, 105 Wn. App. at 550. Also, the trial court was not convinced that the funds were gone, as the only proof of this was Anil's testimony and the disputed property purchase and sale agreements. Lastly, Anil claimed to have filed legal action against his father to account for the allegedly missing funds; thus, there was a contingency that even if he was correct about his family's fraudulent conduct, he retained that cause of action as a substitute for those funds. Considering the husband's conduct and the lack of evidence proving that the funds were disbursed, we find no abuse of discretion in including the funds in the property distribution. That portion of the dissolution decree is affirmed.
Anil lastly contends that the trial court's award of attorney fees to Shalini based upon his intransigence is not supported by substantial evidence, but he ignores the full text of the findings of facts and conclusions and law, which state that the award was based on intransigence and on his ability to pay: `The Wife has the need for payment of fees and costs and the Husband has the ability to pay these fees and costs. In addition the court finds that the Husband's intransigence has caused the Wife to incur substantial attorney's fees and costs. . . .'
Even assuming that he was not intransigent, he does not challenge the finding that he had the ability to pay those fees and that his wife had the need for payment. This is a valid ground for awarding fees in a dissolution action. See RCW 26.09.140. We therefore deny Anil's request to reverse the attorney fee award.
Shalini requests fees on appeal on three grounds: Anil's intransigence, her financial need, and having to respond to a frivolous appeal. We must deny her request.
First, while intransigence may be a factor in affirming a trial court's award of attorney fees, there is no evidence in record showing that Anil has been intransigent on appeal. Second, taking into consideration the merits and the complexity of the contempt and property distribution issues, Anil's appeal is not frivolous. As to her financial need, the record does not show that Shalini has submitted an affidavit of financial need that can be reviewed to determine whether an award would be warranted. Accordingly, we cannot grant her fee request.
RAP 18.1(c) provides: In any action where applicable law mandates consideration of the financial resources of one or more parties regarding an award of attorney fees and expenses, each party must serve upon the other and file a financial affidavit no later than 10 days prior to the date the case is set for hearing or submitted for consideration; however, in a motion on the merits pursuant to rule 18.4, each party must serve and file a financial affidavit along with its motion or response.
We vacate the order of contempt, but affirm the property distribution and award of attorney fees.
COX and BAKER, JJ., concur.