In re Brush

319 Or.App. 1

509 P.3d 124

In the MATTER OF the MARRIAGE OF Theresa Marie BRUSH, Petitioner-Appellant, and Patrick Jay Brush, Respondent-Respondent, and Melissa Ann Brush, Adult Child.

A169333

Court of Appeals of Oregon.

Argued and submitted February 10, 2020.

April 13, 2022

George W. Kelly, Eugene, argued the cause and filed the briefs for appellant.

Kevin L. Kelly argued the cause and filed the brief for respondent.

Before Ortega, Presiding Judge, and Shorr, Judge, and James, Judge.

ORTEGA, P. J.

In this domestic relations case, wife appeals from a general judgment of dissolution, arguing that the trial court erred in awarding to husband $125,000 of wife's inheritance as an equalizing payment. This case is before us again following our remand of the original property division on grounds that the trial court had not applied to the presumption of equal contribution the statutory exception for gifted property in ORS 107.105(1)(f)(D). Brush and Brush , 279 Or. App. 25, 377 P.3d 620 (2016). On remand, the trial court made the same property division of wife's inheritance that it had made in the original dissolution judgment. We now conclude that the trial court abused its discretion by misapplying the statutory and equitable factors in its division of the property. We further conclude that, under a proper application of those factors, the law requires awarding to wife her entire separate inheritance. Accordingly, we modify the judgment to remove the equalizing judgment to husband and otherwise affirm.

We decline wife's request that we take de novo review, because this is not an exceptional case warranting such review. ORAP 5.40(8)(c) - (d). Because we decline to review the facts de novo , we "review the trial court's determination of a ‘just and proper’ property division for an abuse of discretion. In doing so, we are bound by the trial court's express and implicit factual findings if they are supported by any evidence in the record." Morgan and Morgan , 269 Or. App. 156, 161, 344 P.3d 81, rev. den. , 357 Or. 595, 358 P.3d 1001 (2015).

We begin with the background facts, which we summarized in our prior decision:

"The parties married in 1982, had six children during the marriage, and separated in September 2009. At the time of the dissolution trial, wife was 47 years old and husband was 50 years old. In 2007, wife inherited from her father assets that were worth about $450,000 at the time of the dissolution trial. As relevant to this appeal, her father's will devised ‘the residue of my estate in equal shares to my two daughters.’ Accordingly, the will did not mention husband. Wife kept the inheritance property separate from the marital estate, in part to protect it from husband's creditors. At the time of trial, wife was earning $2,284 per month and husband was earning between $5,000 and $6,000 per month. During the course of the marriage, however, husband had engaged in a number of failed business ventures."

Brush , 279 Or. App. at 27-28, 377 P.3d 620.

As relevant in this appeal, we also provide the following facts from the record. Husband filed for bankruptcy in January 2009, which was dismissed in 2011 when he did not meet his repayment plan. Husband and wife separated in September 2009, and wife moved out of the family home. Since that time, the parties have not provided any financial assistance to each other. Wife petitioned for dissolution in October 2009, and the dissolution trial took place on four days between January and December 2011. Husband stopped paying the mortgage on the family home sometime in 2009, which was in his name only, and wife made no financial contributions. Ultimately the home was lost to foreclosure in 2011, during the pendency of the dissolution. The home was in fair to poor condition when it was appraised in the fall of 2010—including not having a working well—and, as such, would not have qualified for a loan. The parties’ respective appraisals of the home were $230,000 and $255,000, which resulted in a negative equity of between $36,000 and $61,000 from two mortgages and a tax lien for unpaid real property taxes. After foreclosure of the home in 2011, husband still had an outstanding loan related to the house of $74,652. Wife did not use any money from her inheritance to assist husband in his bankruptcy or to prevent foreclosure on the home.

The parties had limited assets, apart from wife's inheritance, but husband had significant debts, primarily from his failed business ventures and the outstanding debt from the family home. The court determined that the debts were marital debts and divided them equally, making each party responsible for one half of the total listed debts of over $160,000 in the judgment. In its ruling, the court found that wife had kept her inheritance separate—specifically taking steps, such as keeping the accounts and tax returns separate, to protect it from the foreclosure, husband's bankruptcy, and any additional business ventures of husband—and that wife's father's donative intent was that his inheritance would be shared by his two daughters. However, the court found that wife had not rebutted the presumption of equal contribution, because "it [was] not clear that the [daughters’] husbands would be precluded from the benefits" of the inheritance. The court further determined that it would not impose spousal support and instead would "order that the lion's share of the retirement¹ remain with [w]ife so that she can continue to have the ability to make income to support herself, given that [h]usband does definitely have a higher ability to earn income." The court also ordered wife to pay an equalizing judgment of $125,000 from the inheritance to husband.

In the first appeal, wife asserted that the trial court incorrectly awarded husband part of her inheritance, because the trial court improperly applied a presumption of equal contribution to her inheritance, which she held separately. Brush , 279 Or. App. at 28, 377 P.3d 620. We agreed with that contention, concluding that the trial court should have applied the version of ORS 107.105(1)(f) that became effective January 1, 2012, which removed separately held property acquired by inheritance from the presumption of equal contribution. Id. at 33-34, 377 P.3d 620. We vacated and remanded the property division for the trial court to reconsider it in light of the amended version of ORS 107.105(1)(f) and "to adjust the property division appropriately." Id. at 34, 377 P.3d 620.

On remand, the parties did not present any new evidence, but made arguments to the court about the property division. Both parties explicitly asked the court to reconsider only the equalizing judgment and to not disturb anything else in the prior property division. The court also specifically clarified with the parties that they did not want the court to go back through the property division and assign any missing values to determine if the division was approximately 50/50.

After taking the matter under advisement, the court issued a letter opinion that reinstated the prior property division with the equalizing judgment. The court stated:

"The evidence was clear that Wife acquired her inheritance and held it separately continuously from the time it was received. Wife's inheritance is not subject to the presumption of equal contribution—the legal presumption is that Wife will keep the entire inheritance. The resulting question is whether it is just and proper in the property distribution for the court to award the asset in its entirety to Wife as her separate property, or whether other considerations require a different result.

"The parties were fraught with financial struggles throughout their marriage, and Husband's poor financial decisions consistently brought debt upon the family. Husband believed that the inheritance would be an asset for the parties’ retirement—a benefit that they would both be able to enjoy.

"Upon receipt of the inheritance, Wife refused to use any portion for the benefit of the family. The family's financial situation continued to worsen, resulting in Husband filing for bankruptcy and foreclosure proceedings on the family home. This was in part due to Husband's history of financial mistakes, and in part due to Wife's decision not to use any portion of her inheritance to ‘bail out’ this large asset. The home was eventually lost through foreclosure through the combined action of Husband and inaction of Wife.

"It is just and proper for both of the parties to share in the ups and downs of their finances throughout their marriage. Wife's choice to hold her inheritance completely separate had direct negative ramifications on the marital estate, and caused substantial harm to the family's finances. For Wife to leave the marriage with the entirety of her retirement as her separate asset would result in an unfair and disparate property distribution and would not be just and proper.

"The court's previous property division will remain."

The court entered a general judgment of dissolution that included the findings from the letter opinion and awarded husband an equalizing judgment of $125,000.²

On appeal, wife argues that the trial court erred in its application of the "just and proper" considerations, as set out in Kunze and Kunze , 337 Or. 122, 135, 92 P.3d 100 (2004). She argues that the court, instead of applying the correct equitable considerations, imposed the equalizing judgment because wife chose to keep separate from the marital estate her separately acquired inheritance. The circular logic employed by the trial court, wife asserts, was an abuse of discretion as was its decision to not change its prior decision, although the presumptions about how the court was required to treat wife's inheritance had been reversed.

Husband argues that we cannot disturb the trial court's discretionary division because the court adhered to the correct methodology under Kunze and reached a decision within the range of legally permissible outcomes....