Appeal from Superior Court of Kittitas County. Docket No: 93-3-00208-1. Date filed: 10/19/94. Judge signing: Hon. Michael E. Cooper.
Authored by John A. Schultheis. Concurring: Philip J. Thompson, Frank L. Kurtz.
The opinion of the court was delivered by: Schultheis
SCHULTHEIS, A.C.J. Yong Estes appeals the dissolution decree contending the court should have included her attorney husband's contingency fee cases as marital assets and the maintenance and property awards were an abuse of discretion. Ronald Estes contends Ms. Estes's appeal was not timely and should be dismissed. In a second, consolidated case, Ms. Estes appeals the denial of her motion to vacate the decree.
Mr. Estes filed a petition for dissolution in December 1993. The parties had been married for 10 years, and separated in October 1993. They have no children.
Mr. Estes had practiced law since 1979. He continued to practice in partnership with Michael Platts until 1981, when he started his own practice. Mr. Estes's gross income from his law practice in 1992 was $61,400. At the time of separation he had accounts receivable of $77,689.90. In addition he had been working on five or more personal injury cases in which his fee was contingent on the amount of any actual recovery. He testified in one case his client had made a settlement offer of $1.2 million, which had not yet been accepted or rejected. Because of the uncertainty of the outcome in any of his contingency fee cases, he testified that they had no value.
Ms. Estes was employed in the banking industry during much of the marriage. She obtained additional training and certification as a travel agent but never obtained gainful employment in that field. At the time of trial she was employed as a part-time bank teller earning $7.25 per hour.
The parties' community assets consisted of the family residence, an interest in several nonresidential properties, items of personal property, various bank accounts and securities. The court valued these assets at $387,738.
The court found the rights to contingency fees had no value and awarded them to Mr. Estes. The court awarded Mr. Estes assets valued at $188,352, and liabilities of $10,469, for a net property distribution of $177,883. The court awarded Ms. Estes assets of $209,855, including a payment of $60,000 from Mr. Estes, secured by a judgment lien. The court found Ms. Estes was in need of maintenance and awarded her $1,000 per month, to terminate upon her receipt of $73,631 from Mr. Estes, and noted the purpose of the unequal property division was to provide for her needs in lieu of additional maintenance. The decree of dissolution was entered on July 25, 1994. Ms. Estes moved for reconsideration, and following denial of her motion filed notice of appeal.
On September 6, 1994, Mr. Estes obtained a tentative settlement agreement in one of his contingency fee cases. Under the final agreement he received a contingency fee of $178,640.72. Mr. Estes did not disclose the fact of the settlement or the amount of his contingency fee to Ms. Estes prior to the trial court's ruling on her motion for reconsideration.
Ms. Estes learned of the settlement agreement in July 1995. She moved to vacate the dissolution decree, alleging the amount of the contingency was newly discovered evidence that showed misrepresentation as to the value of the case. The motion was denied, and she appealed. The appeals have been consolidated.
Ms. Estes contends the court should have found Mr. Estes's right to attorney fees in several cases taken on a contingency basis was a valuable asset and awarded the right to fees to both parties as tenants in common.
An enforceable contract right is property. Freeburn v. Freeburn, 107 Wash. 646, 182 P. 620 (1919). A contingent future interest is also property. In re Leland, 69 Wash. App. 57, 71, 847 P.2d 518, review denied, 121 Wash. 2d 1033, 856 P.2d 383 (1993); Washington State Bar Ass'n, Community Property Deskbook sec. 3.24 (2d ed. 1989). Here, the court correctly determined the right to the contingency fees was marital property.
Ms. Estes argues the court erred in finding the right to those fees had no value. Mr. Estes testified the value of the contingent fees was zero. He also indicated that in one case he had made a $1.2 million settlement offer on behalf of his client. The latter evidence suggests that while the value of the contingent fees would be difficult if not impossible to ascertain, they had some value. The difficulty of valuation, without more, does not preclude the court from awarding contingent fees; the proceeds of a contract obtained during the marriage in the conduct of the community's business may be awarded to both parties and divided between them when received. Freeburn, 107 Wash. at 650; see In re Bulicek, 59 Wash. App. 630, 800 P.2d 394 (1990); DeRevere v. DeRevere, 5 Wash. App. 741, 491 P.2d 249 (1971).
This is the approach followed in the majority of jurisdictions that have considered the matter. In re Garrett, 140 Ariz. 564, 683 P.2d 1166 (1983); In re Kilbourne, 232 Cal. App. 3d 1518, 284 Cal. Rptr. 201 (1991); Waters v. Waters, 75 Cal. App. 2d 265, 170 P.2d 494 (1946); In re Vogt, 773 P.2d 631 (Colo. Ct. App. 1989); Due v. Due, 342 So. 2d 161 (La. 1977); Lyons v. Lyons, 403 Mass. 1003, 526 N.E.2d 1063 (1988); Metzner v. ...