§69.02 Assets and Liabilities not Disposed of By The Decree

• Jurisdiction: Washington

§ 69.02 ASSETS AND LIABILITIES NOT DISPOSED OF BY THE DECREE

Parties to a dissolution action have the right to have their property interests definitively and finally determined in the decree. In re Marriage of Sedlock, 68 Wn. App. 484, 849 P.2d 1243 (1993) (citing Shaffer v. Shaffer, 43 Wn.2d 629, 631, 262 P.2d 763 (1953)). The court has a duty to not award property to parties as tenants in common. Stokes v. Polley, 145 Wn.2d 341, 37 P.3d 1211 (2001). To avoid awarding property to the parties as tenants in common and prevent the need for future litigation, courts should award the property itself to one spouse and an offsetting monetary award to the other spouse. Id. at 347. Pursuant to RCW 26.09.080, all property, both separate and community, is before the court for division. Friedlander v. Friedlander, 80 Wn.2d 293, 305, 494 P.2d 208 (1972). A court cannot modify or revoke provisions as to property disposition unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state. RCW 26.09.170; Guardado v. Guardado, 200 Wn. App. 237, 402 P.3d 357 (2017).

The rule is well settled that property of the spouses not disposed of by a divorce decree vests equally in the parties as tenants in common. Wagers v. Goodwin, 92 Wn. App. 876, 964 P.2d 1214 (1998) (citing In re Marriage of Monaghan, 78 Wn. App. 918, 929, 899 P.2d 841 (1995)); see Yeats v. Estate of Yeats, 90 Wn.2d 201, 580 P.2d 617 (1978); Chase v. Chase, 74 Wn.2d 253, 444 P.2d 145 (1968); Nw. Life Ins. Co. v. Perrigo, 47 Wn.2d 291, 287 P.2d 334 (1955); Olsen v. Roberts, 42 Wn.2d 862, 864, 259 P.2d 418 (1953); Ambrose v. Moore, 46 Wash. 463, 90 P. 588 (1907). This rule is applicable to all community property not disposed of in a decree, regardless of whether it is realty or personalty. Mayo v. Jones, 8 Wn. App. 140, 505 P.2d 157 (1972). In Wagers, 92 Wn. App. 876, the wife brought a declaratory judgment action against the husband claiming that his military pension was not mentioned nor divided in the decree. Husband argued that wife was not entitled to submit an action for declaratory judgment, citing the rule that "a plaintiff is not entitled to relief by way of a declaratory judgment if, otherwise, he has a completely adequate remedy available to him." Id. at 879-80 (quoting Reeder v. King County, 57 Wn.2d 563, 564, 358 P.2d 810 (1961)). Pursuant to Reeder, the trial court dismissed the wife's action on summary judgment, ruling that wife should have filed a CR 60(b) motion to reopen the original divorce action. The Court of Appeals reversed the trial court finding, holding that the wife had every right to file an independent action for partition or for declaratory relief to adjudicate the parties' rights to the pension. Id. at 882 (citing Devine v. Devine, 42 Wn. App. 740, 743, 711 P.2d 1034 (1985)). In Devine, the wife submitted an independent action to receive a part of husband's pension left undivided in the Hawaiian decree. 42 Wn. App. at 743. The appellate court reversed the trial court, holding that it had jurisdiction to divide the pension, regardless of whether the decree that did not divide it was from out of state. Id. at 743—44. In Yeats, 90 Wn.2d 201, a former wife brought an action to divide life insurance policies not mentioned nor divided in the decree. The Yeats court held that because the insurance policies were not divided, they were held by the parties as tenants in common. Id. at 206.

Neither concealment nor fraud must be shown to sustain an action to divide undistributed property. Pittman v. Pittman, 64 Wn.2d 735, 737, 393 P.2d 957 (1964). Accidentally failing to divide property when the parties are aware of the asset does not support a conclusion that an asset was distributed by implication. In re Marriage of de Carteret, 26 Wn. App. 907, 908, 615 P.2d 513 (1980). Thus, a former spouse is entitled to bring an action to adjudicate the parties' rights to property that was not distributed by the decree. Lambert v. Lambert, 66 Wn.2d 503, 403 P.2d 664 (1965); Wagers, 92 Wn. App. 876.

Practice Tip: Be careful of catchall provisions awarding property or accounts to each spouse. Also be sure that discovery has been performed and there is full disclosure so that there are no undisclosed assets awarded in the decree. Also, list all property being awarded in the decree, both separate and community, so there is no ambiguity regarding the award or characterization of property.

All property, separate and community, is before the court for division. Friedlander, 80 Wn.2d at 305. However, separate property of a spouse that is not divided by a decree remains the separate property of that spouse. James, 51 Wash. at 62; Ambrose, 46 Wash. 463; see also Stokes, 145 Wn.2d 341. In James, the court stated:

Where no disposition of the property rights of the parties is made by the divorce court, the separate property of the husband prior to the divorce becomes his individual property after divorce, the separate property of the wife becomes her individual property, and from the necessities of the case, their joint or community property must become common property. After the divorce there is no community, and in the nature of things there can be no community property.

51 Wash at 62. In Ambrose, the court indicated that, absent fraud or where the property is without the jurisdiction of the court, when a spouse fails to bring the property rights of the parties before the court for adjudication, he or she waives any right in or to the property of the other spouse. 46 Wash. at 466-67.

Community encumbrances not divided by the decree are held by the parties as joint debtors. Hanson v. Hanson, 55 Wn.2d 884, 350 P.2d 859 (1960). In Hanson the parties seem to have anticipated the Internal Revenue Service debt that became the subject of the action. The decree contained the provision that "[a]ny other or further indebtedness not disclosed at the time of the trial of this action to be subject to the further order of the Court." Id. at 885. However, the Hanson court held that, although the court could not change the terms of the divorce decree, the wife was entitled to a set-off of the amounts owed to the husband under the decree in the amount of one-half of the undistributed debt she paid post decree, indicating that undistributed debts become not only joint but equal liabilities of the parties. Id. at 888. The Supreme Court stated that this language must "be treated as mere surplusage" because the court did not have the power to retain jurisdiction over property settlements. Id. at 861. The debt became the joint responsibility of the parties. A different allocation of the debt would not be made. Provisions in a divorce decree regarding the payment of community indebtedness are dispositions of property rights that become fixed at the time of the decree. They are not a proper subject for modification and can be challenged only by appeal. Sessions v. Sessions, 7 Wn. App. 625, 501 P.2d 629 (1972) (citing Messersmith v. Messersmith, 68 Wn.2d 735, 415 P.2d 82 (1966)). An action for contribution arises when a joint debtor pays the entirety of a joint debt. Proff v. Maley, 14 Wn.2d 287, 128 P.2d 330 (1942).

[1] Intentional Nondisclosure of Assets and Liabilities

When a spouse intentionally and fraudulently fails to disclose the full nature and value of an asset, the court may conclude the asset was not divided by the decree. Seals v. Seals, 22 Wn. App. 652, 590 P.2d 1301 (1979). In Seals, the trial awarded the husband, "[a]ll assets used by respondent in conjunction with his business known as Seals Construction Company." 22 Wn. App. at 656. Based on the husband's fraudulent representations, the trial court found the business assets totaled only $5,000. Upon the wife's filing of a partition action, the court found that the husband had failed to disclose two contractors escrow accounts totaling $28,000; several hundred shares of stock in two corporations; and proceeds from a checking account totaling $22,420. The court held that the wife's partition action was a...