In re Marriage of Hill

In the Matter of the Marriage of MICHAEL JAMES HILL, Respondent, and MARY LISA HILL, Appellant.

No. 54526-8-II

Court of Appeals of Washington, Division 2

August 10, 2021

UNPUBLISHED OPINION

GLASGOW, A.C.J.

Michael James Hill and Mary Lisa Hill^[1] separated in 2009 and signed a separation agreement in 2010, but they did not finalize their divorce until 2019. In the meantime, their initial dissolution proceedings were dismissed for want of prosecution. When the trial court entered the order dissolving their marriage in 2019, it incorporated the 2010 separation agreement. Lisa now argues that intervening circumstances render the original separation agreement unenforceable, and she asks this court to remand for the trial court to redivide the parties' property.

RCW 26.09.070(3) provides that when parties petition for a decree of dissolution after signing a separation agreement, the agreement remains binding so long as it was fair when it was executed. Lisa presents no evidence that this agreement was unfair when it was executed. We therefore affirm the trial court's final order of dissolution incorporating the 2010 separation agreement. We also award Michael costs and attorney fees on appeal.

FACTS

Michael and Lisa separated in 2009, and Lisa petitioned the court for a decree of dissolution. At the time, the parties had one minor son together. He is now an adult.

A. The Separation Agreement

In December 2010, Michael and Lisa signed a separation agreement. The agreement provided that it was "a full final and complete settlement of all [Michael and Lisa's] property rights and obligations." Suppl. Clerk's Papers (SCP) at 75. Each party fully disclosed their properties, assets, and income, and each party was represented by independent counsel. The parties intended for the court to "approve this Separation Contract as fair and equitable at the time it was entered into," making it "enforceable." SCP at 76.

Under the terms of the agreement, "Either party may apply to the Superior Court of the State of Washington for a decree dissolving the marriage and granting all relief[] provided for in this Agreement." Id. (emphasis added). If either party applied for a dissolution decree then the "Decree to be entered shall incorporate all the rights and obligations of the parties as set forth in this Agreement." Id. (emphasis added). "Although the terms and provisions of this agreement may be incorporated by reference into a decree of dissolution and become a part thereof, the agreement itself shall survive entry of any decree of dissolution, and shall be enforceable as any other contract." SCP at 75 (emphasis added).

The agreement also provided, "In the event of any proceeding brought at law or equity to enforce any of the provisions of this agreement, the prevailing party shall be awarded reasonable attorney[] fees and costs and all expenses incurred." Id. Any modification or waiver of the terms of the agreement needed to be "in writing and executed with the same formality" as the agreement. SCP at 76.

Although they signed the separation agreement, Michael and Lisa did not finalize their dissolution in 2010. In 2016, the Clallam County Clerk sent notice that the dissolution action would be dismissed for want of prosecution. In 2018, the trial court dismissed the case.

B. Current Proceedings

Michael understood that he would be able to "walk into court" with the separation agreement and finalize the dissolution at any time and that it would be "a very simple process with no chance for either party to negotiate back and forth because that had already been done." Verbatim Report of Proceedings (VRP) (Jan. 13, 2020) at 192. When Michael went to finalize the dissolution in summer 2018, he was surprised to learn that the case had been dismissed. He said that he never received the 2016 notice of dismissal, which had been sent to his parents' address. Michael was informed that refiling the dissolution case would require renegotiating the parenting plan for the parties' then-17-year-old son, so Michael waited to refile until after his son turned 18 in 2019.

In 2019, Michael filed a new petition for a decree of dissolution. He asked the trial court to find that the marital community ended in 2009, when Michael and Lisa moved into separate households and separated their assets. Michael also asked the trial court to enter a decree of dissolution that incorporated and enforced the 2010 separation agreement.

In response, Lisa asked the trial court to "find that the Separation Agreement signed by the parties in 2010 did not address future property accrual by the parties and that the Court has authority to divide the parties' property, both community and separate, without regard to the terms of such an agreement." Clerk's Papers (CP) at 24. She relied on In re Marriage of Logan, 141 Wash. 62, 250 P. 641 (1926), a 1926 case where the Washington Supreme Court determined it had the authority to redivide the parties' property after "there had been a divorce case filed, a separation agreement signed, the divorce case was dismissed, and then one of the parties approached the Court for relief in a subsequent case asking for the enforcement of the terms of the agreement signed in the prior case." CP at 25. Lisa disagreed that the marital community had ended in 2009, "as [the parties] continued to be married thereafter," and she claimed that she and Michael "continued to share households from time to time through 2016, when [they] attempted to reconcile." SCP at 54.

The parties proceeded to a bench trial. Lisa testified that when she signed the separation agreement, she had an attorney who helped her review and understand the document. She said that she signed the agreement voluntarily and understood it to signify a final separation between herself and Michael. She agreed that she had "indicated it was fair and equitable" when she signed it. VRP (Jan. 13, 2020) at 43.

However, she also testified that she would spend several nights per week with Michael in 2016 and 2018 and that they were attempting to reconcile their marriage. She said that she would introduce Michael as her husband and "everyone knew" they were still married. Id. at 220. According to Lisa, although she periodically wanted to finalize the divorce, Michael asked her not to and said that he still loved her. Now that the dissolution was being finalized in 2019, Lisa asked the trial court to redivide the property, such as the house and Michael's pension, based on its 2019 value rather than its 2010 value.

Michael denied that Lisa ever lived with him after the separation or spent the night at his house on a regular basis, and he said that they never reconciled. Michael's close friends and family testified that they had never seen Lisa at Michael's house and that they would be surprised if there was ever any reconciliation between the two.

According to Michael, they did not finalize the divorce before 2018 so that Lisa could remain on his health insurance. Michael asked his attorney to include a provision in the separation agreement giving him the option to continue providing medical insurance for Lisa and her two minor daughters. See SCP at 77 ("Michael will use his best efforts to allow Lisa to remain[] insured under his health care insurance through his employer pending dissolution of their marriage."). He explained, "I did not feel like it was in the best interest of my son to cut her off my insurance and her providers that she had been seeing regularly." VRP (Jan. 13, 2020) at 161. Although the agreement required Lisa to reimburse Michael for her portion of the monthly premiums, she never did.

C. Trial Court's Ruling

After the trial, the court issued a memorandum opinion, explaining that the agreement provided for any property acquired by Lisa or Michael after their separation to be their separate property. It also found, "No evidence was presented of Lisa and Michael having acquired any property together since separating." CP at 35. The trial court recited RCW 26.09.070(3), which states that a separation agreement is binding if it was fair at the time of its execution, and concluded, "Here the parties agreed that at the time of the execution of the Agreement, that it was fair and equitable. No evidence was produced at trial by either party to dispute that assertion, or that either party had hidden assets from the other." CP at 36.

The trial court reasoned that unlike the parties in Logan, it did not find that Michael and Lisa had reconciled and, regardless, "reconciliation is irrelevant to the issue of the validity of the Separation Agreement" because "[a] reconciliation of the parties on its own, does not invalidate a decree of legal separation in Washington." CP at 38 (citing In re Marriage of Moody, 137 Wn.2d 979, 990, 976 P.2d 1240 (1999)). The trial court also noted that Logan was decided prior to the enactment of RCW 26.09.070.

The trial court concluded that the 2010 agreement was "fair and equitable at the time it was made" and found "no reason to engage in a re-division of property." CP at 39. It also concluded that the trial was "necessary to effectuate the specific performance and/or enforcement of the Agreement," so Michael, as the prevailing party, was entitled to costs, reasonable attorney fees, and expenses incurred, such as time off work, under the agreement. CP at 40.

The trial court then entered findings and conclusions. It found that "[t]he marital community ended on November 10 2009. The parties stopped acquiring community property and incurring community debt on this date." CP at 12 (emphasis omitted). It concluded, "The parties should be ordered to comply with the terms of the contract" they signed in 2010, and the divisions of all property ...