Appeal from Superior Court of Whatcom County. Docket No: 93-3-00747-7. Date filed: 12/28/94. Judge signing: Hon. Michael F. Moynihan.
PER CURIAM. Kent Herschleb appeals from an amended decree of dissolution dividing the parties' community and separate property. Among other things, Kent argues that the trial court's decision to equally divide his anticipated recovery from the Exxon Valdez oil spill litigation with his former wife, Lisa, constitutes an unlawful award of his future income. We agree and reverse.
Lisa and Kent Herschleb were married May 30, 1984 in Alaska. Lisa testified that they began living together in 1980. Kent testified that they had begun living together full-time in the spring of 1983. The couple had a child, Alec, in 1982.
The parties separated in February of 1993 and began dissolution proceedings. The child custody matters were resolved largely by agreement. Distribution of the parties' property was contested. The matter was set before Judge Michael Moynihan on August 3, 1994. After hearing testimony, the court decided to continue the resolution of the property distribution until October because Kent had expressed an interest in liquidating his assets which consisted primarily of the property associated with his fishing business. Kent was also a plaintiff in the Exxon Valdez litigation and the value of his settlement claim was still being litigated. The court reasoned:
The Exxon settlement should be resolved at that time [October], at least in terms of an overall award, and each person should have an idea of how much they're going to get, if anything at all.
When the hearing resumed on October 31, the court was informed that the jury in the Exxon case had come back with a verdict on the compensatory and punitive damages, but according to Kent, the judgment had not been entered by the Judge. He stated that the class members had received a "positive verdict on the punitive damages of $5 billion." Kent did not know how much of the settlement he would receive or how the judgment would be structured.
Judge Moynihan ruled that "any amounts that come from the lawsuit involving the Exxon Valdez will be divided on a 50-50 basis." The court also divided the parties' property and concluded that the value of the assets awarded to Kent was $110,000 and those received by Lisa was $10,850. The court then ordered Kent to make an equalizing payment to Lisa of $47,575. Kent challenges this property distribution on several grounds.
Kent first argues that the trial court erred in awarding Lisa a one-half interest in "any amount received from the lawsuit involving the Exxon Valdez". He contends that part of the damage award will reflect compensation for income lost after the date of his separation from Lisa. Likewise, he contends that the punitive damage award calculation may be allocated according to specific yearly calculations. He asserts that the trial court's decision violates In re Kraft, 61 Wash. App. 45, 808 P.2d 1176 (1991), affirmed, 119 Wash. 2d 438, 832 P.2d 871 (1992) and In re Huteson, 27 Wash. App. 539, 619 P.2d 991 (1980) because it constitutes an unlawful award of future earnings.
Lisa does not dispute Kent's contention that an award of future earnings would be inappropriate. Lisa merely contends that the cases cited by Kent are distinguishable because they did not involve income "dependent upon harvesting fish." Further, she asserts that the income is derived from a court action where "there is no way of determining what is future and what is past." She maintains that Kent failed to meet his burden of demonstrating what portion of the award was attributable to future income.
The undisputed testimony indicated that the Exxon Valdez lawsuit included claims for lost future income. Kent testified that the claims encompassed "this year and next year." Lisa also acknowledged that in the dissolution action she was only asserting a claim for lost profits that occurred during the time of her marriage. Accordingly, the fact that the Exxon settlement would encompass income lost after the parties separated was undisputed. The trial court's equal distribution of the Exxon Valdez settlement erroneously failed to take into account the separate and community aspect of the anticipated award. In re Brown, 100 Wash. 2d 729, 731, 675 P.2d 1207 (1984)(the trial court in a dissolution action appropriately allocated the anticipated proceeds of a third party tort claim of a former spouse by drafting an award that recognized the community and separate property aspects of the potential judgment). Accordingly, this portion of the court's award must be reversed and remanded for further proceedings.
Kent next argues that the trial court erroneously failed to characterize the parties' property as community or separate before deciding how the assets should be divided. The basis for this contention is unclear. The trial court entered written findings of fact regarding the character of the property that was before the court for distribution. The findings were signed by Kent's attorney. We find no error in this regard.
Kent also contends, however, that the court failed to assign values to the assets and liabilities before dividing the property. He maintains that the court simply grouped the community property and Kent's separate property together and labeled the accumulated property "assets" with a value of $120,850. This total was comprised of Kent's assets of $110,000 and Lisa's of $10,850. The court then ordered Kent to make an equalizing payment of $47,575. Kent complains that the calculation excluded the value of Lisa's separate real property in Alaska and failed to "explain why the husband's separate property should be divided equally with the wife but the wife's separate property excluded from consideration."
It is evident from the record that the court was attempting to divide Kent and Lisa's assets and liabilities equally. Because of the manner in which the court's findings are drafted, it is unclear whether the court effectuated its apparent goal. The typed findings and Conclusions indicate that the Alaska salmon permit was originally characterized as community property. The court apparently crossed out that finding and interlineated on the following page that the salmon permit was Kent's separate property. In the Conclusions of law, the salmon permit is awarded to Kent as separate property and is included in the total amount of assets awarded to him. It is this total that the court divided to arrive at Lisa's proportionate share. Because the salmon permit was the most valuable individual item of property before the court, and the ...