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Waterstraat v. Heath Northwest Inc.

May 27, 1997

HELENA WATERSTRAAT, RESPONDENT,
v.
HEATH NORTHWEST, INC., AMERICAN DISCOUNT CORPORATION, AND JOHN M. WASSON AND LY THI WASSON, A MARITAL COMMUNITY, APPELLANTS.



Appeal from Superior Court of King County. Docket No: 95-2-23735-5. Date filed: 12/20/95. Judge signing: Hon. Liem E. Tuai.

Authored by Ronald E. Cox. Concurring: Susan R. Agid, Ann L. Ellington.

The opinion of the court was delivered by: Cox

COX, J. -- When there is no equity in community realty as of the date of dissolution of the marriage, and a court awards that realty to one of the former spouses, may a judgment creditor for a community debt execute against post-dissolution equity in the realty? Because such an execution is contrary to well-established law and the trial court did not otherwise err, we affirm. We also impose sanctions against American Discount Corporation (ADC) because this appeal is frivolous.

In 1982, David Waterstraat borrowed money from ADC's predecessor in interest. ADC acquired the right to collect the debt owed by the Waterstraats.

In 1986, the Waterstraats obtained a decree of dissolution of their marriage. At the time of the dissolution, the Waterstraats' only asset was their residence. The court awarded the residence to Helena Waterstraat.

In 1990, ADC obtained a judgment on an arbitrator's award against Helena Waterstraat. The judgment was expressly limited to satisfaction from her community property interest in property at the time of dissolution of the marriage.

Following the dissolution, four of the encumbrances against the property were released. These included a George and Ritsuko Waterstraat mortgage, a Capretto & Clark deed of trust, and two federal tax liens. Evidence in the record shows that the principal balances on the deed of trust, mortgage, and federal tax liens totaled $107,923.45 at the time of the dissolution.

In 1995, Waterstraat commenced this quiet title action. She moved for summary judgment and CR 11 sanctions for ADC's opposition to her action. Waterstraat provided evidence from the King County Assessor's records showing that it valued the residence for tax purposes at $73,700 in 1985 and $77,200 in 1987. These dates bracketed the 1986 date of dissolution of the marriage. ADC countered with an affidavit of a real estate agent that stated that the fair market value of the residence in the two years prior to the dissolution was $87,000. It provided no evidence as to the amount of debt against the residence in reply to the motion.

The trial court granted the motion for summary judgment but denied the motion for sanctions. ADC appeals. Waterstraat cross-appeals the denial of sanctions.

I

Summary Judgment

In this appeal of a summary judgment order, we undertake the same inquiry as the trial court. *fn1 CR 56(c) permits a court to grant summary judgment to a moving party if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. *fn2 We review questions of law de novo. *fn3 We consider all facts and reasonable inferences from facts in the light most favorable to the nonmoving party. *fn4

ADC argues that Watters v. Doud *fn5 is not good law. In the alternative, it argues that this case is distinguishable from Watters. We reject both arguments.

In Watters, the state Supreme Court held that a creditor of a dissolved marital community could satisfy a community debt only from the community's net equity at the time of dissolution. *fn6 He was barred from collecting post-dissolution appreciation. To reach this result, the court noted that creditors cannot satisfy community debt from separate property and its appreciation. Moreover, community property becomes separate property upon dissolution of marriage. Although one law ...


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