Appeal from Superior Court of King County. Docket No: 95-2-08258-1. Date filed: 02/02/96.
Authored by Susan R. Agid. Concurring: C. Kenneth Grosse, Faye C. Kennedy.
The opinion of the court was delivered by: Agid
AGID, J. -- Roy Chitwood admits that he failed to pay court ordered maintenance to his former wife, Francesca Maurizio. However, he appeals from the trial court's order finding him in contempt, arguing that the findings of fact and Conclusions of law were not supported by substantial evidence. He also contends that the order violates the civil contempt statute because it imposes a fixed term of confinement and he cannot satisfy the conditions necessary to purge the contempt.
In 1994, Francesca Maurizio and Roy Chitwood were divorced California. The California trial court entered a judgment awarding Maurizio $2,800 per month in maintenance. Chitwood failed to pay the ordered maintenance and was eventually jailed for contempt. He and his corporation, Max Sacks, Inc. (MSI), relocated to Washington after his release. Chitwood again made no maintenance payments to Maurizio until she transferred the case to Washington and began contempt proceedings here.
The Washington trial court heard testimony and reviewed Chitwood's deposition and check registers. It found that Chitwood paid little or no support but continued to pay other debts which had been discharged in bankruptcy. It also found that MSI paid a significant portion of Chitwood's personal expenses and that he continued to live in a 2,500 square foot residence, hire a cleaning service, and take expensive trips which were only partially business related. Finally, it found that he earned around $40,000 per year and that the support payments could be paid from that amount as well as from MSI's assets.
The court held Chitwood in contempt and ordered him to pay $93,000 in arrears. It imposed 180 days confinement, but suspended that sentence and gave Chitwood the opportunity to purge the contempt by making the payments through his accountant, filing a security interest for MSI corporate interests in Maurizio's favor, designating Maurizio as sole and irrevocable beneficiary of his life insurance, and ceasing payment on all debts discharged in bankruptcy until his payments to Maurizio were complete. It also ordered that if he failed to meet the conditions, he would be confined to jail for 10 days and could be released only upon posting $50,000 cash bail.
Chitwood first contends that the trial court's contempt order should be reversed because its findings of fact were not supported by substantial evidence. This court reviews the findings of a trial court sitting without a jury to determine whether the evidence on the record "'would convince an unprejudiced, thinking mind of the truth of the declared premise.'" Freeburg v. City of Seattle, 71 Wash. App. 367, 371, 859 P.2d 610 (1993) (quoting Nord v. Shoreline Sav. Ass'n, 116 Wash. 2d 477, 486, 805 P.2d 800 (1991)). We review the findings with great deference because the trial court observed the witnesses, heard evidence as it was presented, and made credibility determinations. Freeburg, 71 Wash. App. at 371-72. Therefore, we take all reasonable inferences in favor of the party who prevailed at the highest fact finding level. Freeburg, 71 Wash. App. at 372.
The trial court found that severe coercive measures were necessary to assure that Chitwood made his support payments to Maurizio. In part, it relied on its finding that Chitwood moved to Washington from California after he was jailed for contempt. Chitwood claims that the record does not support this finding because he began moving to Washington before he was jailed, so he could not have been moving to evade the court's jurisdiction. However, the record is clear that he began moving to Washington after the contempt order was entered, but before he was jailed. Thus, the record supports the trial court's finding that he began his move out of the California court's jurisdiction after the first contempt proceedings, and the court could reasonably have found that he left California and moved his business to Washington to avoid further contempt sanctions.
The court also found that Chitwood had substantial assets with which he could have paid the ordered support. But Chitwood argues that he was not being paid by MSI and had no assets with which he could have paid the maintenance. The trial court found that he continued to pay more than $16,000 on a debt which had been discharged in bankruptcy. Chitwood admitted, and his check register shows, that he made regular payments on that debt through MSI. The evidence before the court showed that these payments added up to more than $16,000. Relying on the check registers, the court also found that he was able to pay for a cleaning service and to give money to his son every month.
In addition, the court found that MSI's assets were substantial and could be used to satisfy his debt to Maurizio because it was his corporate alter ego. MSI's check registers show that the corporation paid nearly all of his living expenses, as business expenses, and that he used the corporate office as his home, corporate car as his personal car, *fn1 and corporate trips as his vacations. Finally, it found that he was paid a salary of $3,000 per month, controlled corporate assets for his personal expenses, and received rental income from a Los Angeles apartment. In all, the registers show that his expenses reached $14,000 per month when Chitwood was traveling, that he had earned about $40,000 per year since the divorce in California and that he continued to earn that sum, although he was actually paid a very small salary. Considering the record as a whole, there was substantial evidence to support each of the court's findings.
Chitwood next contends that the trial court improperly found that MSI was his alter ego and assigned corporate assets to cover his maintenance requirements. *fn2 Chitwood argues that the corporate assets cannot be assigned to Maurizio because MSI does not owe her a debt and therefore a transfer to Maurizio from MSI would be fraudulent. However, Washington courts have long held that when a corporate actor controls a corporation so closely that the corporation acts on behalf of the individual, corporate assets may be used to satisfy personal debts. Standard Fire Ins. Co. v. Blakeslee, 54 Wash. App. 1, 6-7, 771 P.2d 1172, review denied, 113 Wash. 2d 1017, 781 P.2d 1320 (1989). The record establishes that Chitwood used MSI to hide his personal assets by paying himself a very small salary and using corporate assets to cover his personal expenses so that it would appear that he had insufficient assets to pay his debt to Maurizio. He clearly formed the intent to defraud Maurizio by hiding his assets in the corporation. Because Chitwood hid his personal assets in MSI and this arrangement facilitated his intent to defraud Maurizio, the trial court correctly found that MSI's assets could be pledged to cover his debt to her.
Chitwood next contends that the trial court's order violates the civil contempt statute because it imposed a fixed term of confinement, thereby transforming a permissible civil contempt proceeding into an impermissible criminal order. We review a trial court's contempt order for abuse of discretion. In re Marriage of Mathews, 70 Wash. App. 116, 126, 853 P.2d 462, review denied, 122 Wash. 2d 1021, 863 P.2d 1353 (1993). Therefore, unless ...