IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
ANDREW JAMES CLAYTON, ) ) No. 75010-1-1 Respondent, ) ) DIVISION ONE v. ) ) UNPUBLISHED OPINION ) DOUGLAS MECKLEM WILSON, ) ) Cn Defendant, ) .:.......1 --k G cz:) ) :-1 --% MARY KAY WILSON, ) Fo' rn c ) FILED: April 17, 2017 Appellant. __ ) (pr-Ti ..,--;--,- tic-P APPELWICK, J. — Clayton sought to execute his judgment against three cr% lots owned by Wilson which were contiguous to Wilson's residence. Wilson
argues that the three parcels are part of her homestead and cannot be sold on
the terms authorized by the court. She also argues that she is entitled to her
separate contributions to the property and to appreciation that has accrued since
Clayton obtained a judgment against the community property. We conclude that
the contiguous parcels are not part of Wilson's homestead. We affirm that the
execution sale may be held, but remand for the trial court to determine prior to No. 75010-1-1/2
the sale the value of Wilson's separate property interest in the proceeds that is
not subject to the judgment.
FACTS
Mary Kay Wilson's former husband sexually abused Andrew Clayton for
many years. The Wilsons sought dissolution of their marriage after the sexual
abuse came to light in 2002. In February 2006, Clayton obtained a civil judgment
for damages against the Wilsons, jointly and severally.
Prior to Clayton obtaining this judgment against the Wilsons, the Wilsons
attempted to transfer nearly all of Mr. Wilson's personal and real property
community assets to Ms. Wilson as part of the dissolution. The trial court found
this transfer fraudulent. And, as a result, the court voided the transfer and
enjoined the Wilsons from further disposing of or encumbering the former
community property.
On appeal, this court held that the judgment was enforceable against the
marital community, that Wilson's' liability extends to only the former community
property, and that the property transfer was indeed fraudulent. Clayton v.
Wilson, 145 Wn. App. 86, 106, 186 P.3d 348 (2008), aff'd, 168 Wn.2d 57, 72,
227 P.3d 278 (2010).
After the property transfer was deemed fraudulent, the Wilsons then
owned their real property as tenants in common. That real property included four
contiguous parcels in Kenmore, one of which Wilson now resides on. Wilson's
1 When used in this opinion, "Wilson" refers to Mary Kay Wilson individually, not her former husband Douglas Wilson.
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mother used to live on one of the parcels, but Wilson claims that residence is
now uninhabitable. Another family used to live on another one of the parcels, but
Wilson claims that residence is also uninhabitable.
In December 2015, Clayton sought and obtained a writ of execution
against the three parcels that Wilson does not reside on. Clayton moved for an
order authorizing a sheriff's sale pursuant to the writ. The trial court granted the
motion, and authorized the sheriff to proceed with a sale of the three parcels.
Wilson appealed, and a stay of the sale was granted pending this appeal.
DISCUSSION
Wilson makes three arguments on appeal. First, she argues that the three
parcels at issue are subject to Washington's homestead exemption. Second,
she argues that she is entitled to her separate contributions to the property and
appreciation that has accrued since Clayton obtained a judgment against the
community property. Finally, she argues for the first time on appeal that the trial
court's writ of execution was issued in error.
I. Homestead Exemption
Wilson argues that the trial court erred by not deeming the three parcels at
issue as subject to the homestead exemption. She concedes that she resides on
only the fourth parcel, and two of the three bordering parcels have been occupied
by others in the past. But, she claims that the three parcels at issue are subject
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to the exemption because they are contiguous with the fourth parcel that she
resides on.2
Under RCW 6.13.010, property qualifies as a homestead if the owners use
the property and the surrounding land as their primary residence:
[T]he homestead consists of the dwelling house... in which the owner resides or intends to reside, with appurtenant buildings, and the land on which the same are situated and by which the same are surrounded, or improved or unimproved land owned with the intention of placing a house or mobile home thereon and residing thereon.
2 Wilson has filed a motion to supplement the record. The motion first seeks to correct an apparent misstatement that she had previously filed a declaration of homestead, and named only the parcel where she resides as her homestead. She now claims to never have filed this declaration. The motion also seeks to introduce evidence that Clayton recorded certified copies of judgments against the three parcels at issue here. Wilson claims this is relevant because a party must record a certified copy of a judgment against real property if the creditor seeks a lien on homestead property. A motion to supplement the record should be granted if six requirements are met. RAP 9.11. Those requirements are:
(1) additional proof of facts is needed to fairly resolve the issues on review, (2) the additional evidence would probably change the decision being reviewed, (3) it is equitable to excuse a party's failure to present the evidence to the trial court, (4) the remedy available to a party through postjudgment motions in the trial court is inadequate or unnecessarily expensive, (5) the appellate court remedy of granting a new trial is inadequate or unnecessarily expensive, and (6) it would be inequitable to decide the case solely on the evidence already taken in the trial court.
Id. The premise of Wilson's motion is that the parties' own view of whether the subject parcels are a homestead is a factor that the court would consider. However, the parties' own respective views on the exemption do not go to any of the six supplementation factors. The additional evidence is (1) not necessary to fairly resolve the issue and (2) probably would not change the decision being reviewed. We therefore deny the motion to supplement the record.
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The homestead exemption protects up to the amount of the land's value or
$125,000, whichever is less, from the reach of creditors. RCW 6.13.030. In
other words, a creditor's lien on homestead property is for only an amount in
excess of the homestead exemption. In re Trustee's Sale of the Real Property of
Upton, 102 Wn. App. 220, 223,6 P.3d 1231 (2000).
Courts favor the homestead act, ch. 6.13 RCW, and construe it liberally to
promote its purpose of protecting family homes. In re Dependancv of Schermer,
161 Wn.2d 927, 953, 169 P.3d 452(2007). Whether the homestead act exempts
property surrounding a parcel where a residence is located is a matter of
statutory interpretation, which is reviewed de novo. In re Marriage of Baker, 149
Wn. App. 208, 210-11, 202 P.3d 983(2009).
Wilson's relies heavily on Baker. Like this case, Baker addressed whether
contiguous parcels were exempt as part of a homestead. Id. at 210. The case
involved five contiguous parcels that were originally Mr. Baker's parents'
property. Id. The parcels were all deeded to Mr. Baker as his separate property
during the dissolution. Id. Mrs. Wilson sought a writ of execution against another
one of the five parcels, parcel B. Id. Mr. Baker claimed that parcel B was part of
his homestead. Id. With little guidance as to the extent of its holding, the court
found that parcel B was subject to the homestead exemption. Id. at 212. The
court stressed that, based on the statutory language, "the use and enjoyment of
a residence includes the surrounding property. They, together, make up the
homestead." Id. The court reasoned that its holding was in line with "the sanctity
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with which the legislature has attempted to surround and protect homestead
rights." Id.
The Baker decision relied on two older cases that support the principle
that multiple parcels in a single' tract may collectively be deemed a homestead.
Id. at 211-12. In Morse v. Morris, 57 Wash. 43, 43-44, 106 P. 468 (1910), Morse
owned two blocks of land, block 7 and block 8. Id. at 44. "Plaintiffs' dwelling,
wood sheds, and outbuildings were built on the lots in block 8. The lots in block
7 were used as a garden, orchard, chicken run, etc. The two blocks were
separated by an alley." Id. The court found that the parcels on block 7 were part
of the homestead, even though the dwelling was on block 8. Id. at 47. The court
reasoned that the homestead exemption should include adjacent parcels if those
parcels are used to support the residence on the primary parcel:
It represents the dwelling house, at which the family resides, with the usual and customary appurtenances, including outbuildings of every kind necessary or convenient for family use and lands used for the purposes thereof. If situated in the country, it may include a garden or farm. If situated in a city or town, it may include one or more lots, or one or more blocks. Id. at 46.
Similarly, in In re Murphy's Estate, 46 Wash. 574, 575-76, 90 P. 916
(1907), the Supreme Court addressed a scenario where a widow sought a
homestead exemption for property consisting of four contiguous parcels. The
tract contained a total of two buildings. Id. at 577. Prior to the husband's death,
the widow had had not abandond the property due to the husband's abuse of the
wife. The husband continued to live in the primary dwelling. Id. at 577. The
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parcels were bought at one time for the purposes of having a home. Id. The two
structures were separated by a fence. Id. One of the structures was "a mere
shack." Id. Because the lots were purchased for a home in a single transaction
and the wife did not leave the property voluntarily, the court did not find any error
in the trial court's decision to apply homestead protection to the entire property.
Id. at 577-78.
Under Baker, the homestead protection can apply to contiguous parcels.
See id. But, examining the case law that Baker relied upon, the mere fact that
parcels are contiguous does not render them per se part of the homestead.
Instead, Baker, Morse, and Murphy's Estate dictate that if the household uses
the surrounding parcels for purposes related to the use of the primary residence,
the surrounding parcels may be protected as homestead. Baker, 149 Wn. App.
at 212; Morse, 57 Wash. at 46; Murphy's Estate, 46 Wash. at 577-78. Here, no
evidence shows that any of the parcels were used for the enjoyment of Wilson's
homestead. Rather, two of the three contiguous parcels contain independent
residences, and Wilson concedes that those separate residences have been
occupied by others in the past. Wilson's claim is based solely on the contiguous
location, not use. Even construing RCW 6.13.010 liberally, the statute does not
contemplate that contiguous location alone is sufficient to establish that the
homestead applies. The trial court correctly concluded the homestead did not
apply to the three lots and properly authorized the execution sale.
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II. Separate Property
Wilson also argues that the trial court erred, because it should have
awarded her an equitable lien for the appreciation of and improvements to the
property following her dissolution. In other words, she argues that the trial court
should have granted her an offset from the proceeds of the impending sale,3
because Washington law allows Clayton to claim only the portion of the property
that existed at the time of dissolution.
An equitable lien will be enforced in equity against specific property,
though there is no valid lien at law. Sorenson v. Pyeatt, 158 Wn.2d 523, 530 n.9,
146 P.3d 1172 (2006). Equity imposes liens either to carry out the intention of
the parties to give as security or to prevent injustice, regardless of the intent. Id.
Equitable liens are an equitable remedy and may arise from any number of facts
and circumstances. Id. at 535. This court reviews a trial court's decision to grant
or deny an equitable lien for abuse of discretion. In re Marriage of Marshall, 86
Wn. App. 878, 882, 940 P.2d 283(1997).
Wilson cites Farrow v. Ostrom, 16 Wn.2d 547, 555, 133 P.2d 974 (1943)
in support of her argument that she is entitled to an equitable lien. Mr. Ostrom
crashed into Farrow while driving. Id. at 548-49. Farrow obtained a judgment
against Ostrom's martial community. Id. at 549. Prior to the judgment being
entered, the Ostroms divorced. Id. Ms. Ostrom received real estate as a result
of the divorce. Id. at 549. She sold the real estate, but the purchase money was
held in escrow pending the collection matter. Id. at 550-51. The court held that
3 The order authorizing sale was stayed, and a sale has therefore not yet taken place.
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Farrow was entitled to the money held in the escrow account to satisfy her
damages. Id. at 556. But, the court also held that Ms. Ostrom was entitled to an
offset for payments she personally made towards the contract for deed, and for
mortgage payments that she personally made following the entry of the decree.
Id.
Wafters v. Doud, 95 Wn.2d 835, 840, 631 P.2d 369 (1981) extends the
reasoning in Farrow to appreciation following dissolution. In that case, a
husband incurred a debt while a couple was married. Id. at 836-37. The
property settlement in their dissolution gave their family home to the wife. Id. at
837. The creditor sought to levy against the family home. Id. The specific issue
was "whether post-divorce appreciation, like a separate property contribution, is
exempt from community creditors." Id. at 838. In keeping with Farrow, the
Watters court concluded that the nonobligated spouse's share of postdissolution
appreciation was out of the creditor's reach:
[T]he divorce and property settlement converted the Douds' home and its subsequent appreciation into Judith's separate property.
. . . Creditors are adequately protected without making postdivorce equity available to them. Farrow and other cases permit them to execute upon formerly community held assets to the extent of the community's net equity. Id. at 839-40. The court went on to reason that the alternative would create an
unwarranted burden on the nonobligated spouse: "[F]rom the debtors'
perspective, allowing creditors to reach all appreciation would be unduly harsh. It
would penalize the contributing ex-spouse in that he or she would be deprived of
any return on the contributions." Id. at 840.
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Clayton argues that, irrespective of the case law, any equitable lien that
Wilson claims is prohibited by the judgment in the prior case. Specifically, that
judgment stated that "Douglas Wilson and Defendant Mary Kay Wilson are
enjoined from further disposition or encumbrance of any assets distributed as
part of their community property."
It is true that a lien is an encumbrance upon property. Sullins v. Sullins,
65 Wn.2d 283, 285, 396 P.2d 886 (1964). But, the trial court's prohibition on
encumbrances was intended to prevent cloud on title that would interfere with
Clayton's ability to levy against the property (such as the prior fraudulent
transfer). Wilson's lien is not a lien against the community property itself. She is
asserting an equitable lien against the proceeds of the sale of the property. The
trial court's order did not address this issue explicitly. Nothing in the record
suggests that the order was intended to prevent Wilson from recovering for the
reasonable value of her separate contributions necessary to preserve the
property from tax foreclosure, to maintain the value of the property, or that
enhanced the value of the property without third party encumbrance. The
equitable lien at issue here was not barred by the prior judgment. The trial
court's ruling contravened our Supreme Court's reasoning that in light of the
equities and the community property principles, creditors are limited to the net
equity as of dissolution. Watters, 95 Wn.2d at 840-41.4 This was an abuse of
discretion.
4 Clayton also contends that, even if Wilson has an equitable lien, we should nevertheless affirm because that lien is subordinate to Clayton's interest. In other words, Wilson may make a claim for contributions only against the
10 No. 75010-1-1/11
On remand the trial court should determine the amount of an equitable lien
on proceeds of the sale that encompasses Wilson's separate property interest
arising postdissolution from: her contributions to the property that enhanced its
value; expenditures she made that preserved the property's availability to
Clayton, such as tax payments5; and to offset for appreciation. Because the lien
amount may affect bidding at the sale, the lien amount should be established
prior to the sale.
III. Sufficiency of Writ of Execution
Wilson also argues that the writ of execution is invalid because Clayton's
supporting declaration did not conform to the requirements of RCW 6.17.100,
and the trial court improperly extended the writ. But, she did not make this
argument below. The allegedly deficient writ was filed on December 10, 2015.
Wilson filed her response to Clayton's motion for an order directing sale of
property on March 9, 2016, without making any argument related to RCW
6.17.100. She therefore had ample time to include this argument in her response
at the trial court, but did not. Under RAP 2.5(a), an appellate court may refuse to
excess proceeds of a sale, if any excess proceeds result. And, she must wait until the sheriffs sale to make that claim. But, this is irreconcilable with our analysis. Clayton has no right to postdissolution improvements and appreciation in the first place, because they are Wilson's separate property. 5 Under RCW 84.60.010, a tax lien on real or personal property "has priority to and must be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation, or responsibility" is paid. Therefore, by paying property taxes, Wilson effectively preserved the property so that Clayton's interest was not involuntarily encumbered by a tax lien that would have taken priority.
11 No. 75010-1-1/12
review any claim of error that was not raised in the trial court. We therefore
decline to address this argument.
We affirm the trial court's determination that the three surrounding parcels
are not part of Wilson's homestead and that the execution sale should proceed.
But, we remand for the trial court to determine the value of Wilson's equitable lien
against the proceeds of any sale prior to allowing the sale to proceed.
WE CONCUR:
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