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Kelsey v. Kelsey

Court of Appeals of Washington, Division 3

February 4, 2014

Craig J. Kelsey et al., Respondents,
Dennis E. Kelsey et al., Appellants

Appeal from Adams Superior Court. Docket No: 07-2-00266-2. Date filed: 05/14/2012. Judge signing: Honorable Richard Walters Miller.

Kenneth H. Kato, for appellants.

Lee R. McGuire Jr. (of Carpenter, McGuire & DeWulf ), for respondents.

AUTHOR: Stephen M. Brown, J. Teresa C. Kulik, J. concurs. Kevin M. Korsmo, C.J. (dissenting).


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Brown, J.

[179 Wn.App. 362] ¶ 1 Janice Kelsey appeals the Adams County trial court's order partitioning real

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and personal property. In 2009, the trial court adopted a referee's report to partition farmland. To equalize the division of real property, a $23,321.50 cash adjustment was necessary from Janice to her brother-in-law and sister-in-law, Craig and Donna Kelsey.[1] Craig and Donna accepted extra equipment valued at $11,472.00 to mitigate the original figure, leaving the cash adjustment owing from Janice to Craig and Donna of $11,849.50. The court later ordered Janice to pay an additional $86,005.00 to Craig and Donna because a portion of the property awarded to them had a discounted value. The court further ordered Janice to pay $6,015.25 in costs and $4,840.62 in attorney fees. Janice contends the trial court erred by (1) not discounting the value of her property as it did for Craig and Donna's property, (2) awarding attorney fees and costs to Craig and Donna, (3) dividing personal property, and (4) adopting the referee's report in its partition order. We find no error and affirm.


¶ 2 Craig and his brother, Dennis Kelsey (Janice's husband), operated the family farm for approximately 41 years. They owned some of the ground together and farmed the rest for their parents. Their mother, Arlyne Stine Kelsey, had a life estate in a large portion of the land. In late 2007, Craig and Donna sued Dennis and Janice to partition real and personal property, alleging the parties were tenants in [179 Wn.App. 363] common in 15 parcels of real property. We could not find an answer in our record. Dennis died in June 2008.

¶ 3 In October 2008, the court ordered referee Allen Hatley to prepare a report on a proposed property division of the parties' property, including property held as remaindermen. Mr. Hatley's January 28, 2009 report stated the purpose was to divide the farm " in such a fashion that the Craig Kelsey family and the Dennis Kelsey family no longer share any common ownership. In addition there are numerous other family members that own a partial interest in some of the parcels and that ownership will remain the same with no change in percentages or tracts of land." Clerk's Papers (CP) at 29. The report states Janice's attorney instructed Mr. Hatley to consider Arlyne's interests " to actually being owned by Craig Kelsey and Dennis Kelsey equally and that interest was also divided among the Craig Kelsey family and the Dennis Kelsey family." CP at 29.

¶ 4 Mr. Hatley " divided the land into two units ... [u]nder this division the 'Craig Kelsey Parcels' have a value of $889,314 [and] the 'Dennis Kelsey Parcels' ... $935,957." CP at 31. Mr. Hatley further recommended " a cash adjustment ... payment of $23,321.50 from the Dennis Kelsey family to the Craig Kelsey family." CP at 31. On May 4, 2009, over Janice's objections, the court adopted the report in full and entered a partition order. A portion of the land designated to Craig, known as the Stine property, had an undivided interest between him and his cousins. The court directed Mr. Hatley to prepare a report on any average discounts for the undivided interest being received by Craig.

¶ 5 Craig and Donna successfully requested the court divide the parties' personal property based on the need to divide the farm equipment when dividing the property. While Janice did not initially object, she later unsuccessfully objected to the court's jurisdiction to partition the personal property, consisting mainly of farm equipment, including trucks, and directed the parties to divide and retrieve the remainder.

[179 Wn.App. 364] ¶ 6 In an August 26, 2010 letter, Mr. Hatley discussed the issue of a fractional ownership interest discount in value on the Kelsey properties. He opined the value of the parcels would decrease based upon a fractional ownership interest and gave supporting reasons that the court apparently accepted.

¶ 7 On May 11, 2011, Craig and Donna requested an order awarding costs and discounted property value due to the undivided interests. In Mr. Hatley's opinion, a fractional ownership interest justified a discounted value of 25 percent to Craig's property for parcels 1, 2, 11, and 12. This discount was not originally considered because Mr. Hatley

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had been instructed to value the property as if both parties owned the ...

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