In Re Marriage of Wallace

45 P.3d 1131
CourtCourt of Appeals of Washington
DecidedMay 10, 2002
Docket27282-2-II
StatusPublished
Cited by63 cases

This text of 45 P.3d 1131 (In Re Marriage of Wallace) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Marriage of Wallace, 45 P.3d 1131 (Wash. Ct. App. 2002).

Opinion

45 P.3d 1131 (2002)

In re the MARRIAGE OF Tina M. WALLACE, Respondent, and
D. Randy Wallace, Appellant.

No. 27282-2-II.

Court of Appeals of Washington, Division 2.

May 10, 2002.

*1132 Dennis George Ott, Kelso, Catherine Wright Smith, Edwards, Sieh, Smith and Goodfriend, Seattle, for Appellant.

Tina M. Wallace, Toledo, Kenneth Wendell masters, Wiggins Law Office, Bainbridge Is, for Respondent.

BRIDGEWATER, J.

D. Randy Wallace appeals from a dissolution decree, alleging bias and errors in the valuation of certain property. We affirm.

Randy and Tina Wallace married in November 1980 and had three children. The parties separated in May 1998. In August 1999, Tina petitioned for dissolution in Cowlitz County.

Randy had interests in the following (rock crushing and road building) businesses:

• Wallace Sand and Gravel (WSG)—a sole proprietorship that Randy started in 1992.

• Wallace Sand and Gravel, Inc. (WSGI)— a separate corporation that Randy owned.

• Wallace Brothers, Inc. (WBI)—a corporation started by Randy's father and uncle. When the parties separated Randy owned 55 percent of WBI.

Between 1992 and the parties' separation, WSG was the family's primary source of income. During this time, Randy also received wages from WBI.

Randy operated WSG, mining gravel on 200 acres of property on Mandy Road (the Mandy Road property) where the family also lived. In 1986, Randy purchased this property from his father, agreeing to pay $3,500 per month. Randy, however, could not produce evidence of having made a single payment. (His father did not ask for payment until six months after the parties separated.) In November 1998, Randy, without Tina's permission, quitclaimed the Mandy Road property back to his father "in lieu of foreclosure." Report of Proceedings (Jan. 17, 2001) at 85.

After quitclaiming the Mandy Road property, Randy entered into a written agreement wherein he rented the property. This "Rental and Stumpage Agreement" required Randy to pay his father approximately $27,000 per month for use of the Mandy Road property, certain equipment, and for any rock and topsoil he removed. In a separate document, Randy agreed to rent an $80,000 piece of equipment for $10,000 per month. Randy admitted that Tina did not know about these agreements.

*1133 Randy transferred other assets to relatives without Tina's knowledge or consent. For example, Randy gave some of WSG's equipment and 45 percent of WSGI to the parties' children. He sold the other 55 percent of WSGI to his father for $95,000.

After Randy disposed of WSGI, a superior court judge entered a temporary order restraining the parties from disposing of community assets, except in the normal course of business. A month later, Randy, without the court's or Tina's approval, wrote his father two $100,000 checks. Soon thereafter, Randy paid his father another $80,000.

After learning of Randy's actions, Tina filed a contempt motion. In May 2000, the court granted her motion and ordered Randy to pay $10,000 in attorney fees and costs.

At trial, Randy admitted to hiding the full extent of his property when Tina's lawyer asked about the real property that he owned. He failed to disclose the "Stuckey" property he owned through WSGI and the "Lewis County wetlands" he owned with his father and uncle. The evidence also supported that Randy dissipated WSG's assets. After 1998, WSG paid substantial amounts for material and equipment to Randy's father under the stumpage agreement, which lowered net income.

When Randy's father sued the parties in Lewis County to recover money owed under the stumpage agreement, Randy did not defend the claim. A Lewis County court held that the deed to Randy's father, which led to the stumpage agreement, violated community property law because the Mandy Road property belonged to the community and Tina did not consent to the transfer. Consequently, neither Tina nor the community were liable for the debt. Randy, however, admitted that he owed the money so the court entered a judgment against him for $207,000.

One month before trial, WBI distributed most of its cash—$260,000—to Randy's father and uncle. Randy, WBI's majority shareholder, denied any responsibility for such payments; he did, however, authorize the transfer of funds into the account from which his uncle and father withdrew them.

Randy submitted an estimate showing that the future cost of reclaiming the Mandy Road property, after the pit is exhausted, would exceed $685,000. A Department of Natural Resources reclamation specialist estimated the cost at only $120,000.

Ultimately, the trial court ruled as follows:

a. [Randy] has failed to provide complete financial records which has been done deliberately. [Randy's] failure to provide complete financial information was deliberate and fraudulent and that he either fraudulently or grossly negligently wasted community assets.
b. The transfer of [the] Mandy Road [property] to [Randy's] father ... was fraudulent. It was done with the intent to deprive [Tina] of the community interest in the property.

c. The "Rental and Stumpage Agreement" that was executed between [Randy] and his father after the [parties] separat[ed] was unreasonable and burdensome and there was no reasonable justification for that lease at all.

d. [Randy's] decrease in business and shutting down of the business known as Wallace Sand and Gravel was a deliberate attempt to make himself look poor for the purposes of the dissolution of marriage action. [Randy] has wasted that community asset and said waste was done deliberately.
e. [Randy's] consent to a judgment in a Lewis County lawsuit for the Rental and Stumpage Agreement was fraudulent and a waste.
f. [Randy's] transfer of cash to his father for debts and other claimed debts owed to his father was fraudulent. Any alleged debt owing on the Mandy Road property was barred by the statute of limitations and the court finds that there were no such debts.
g. The sale of the ["Stuckey"] property owned by Wallace Sand and Gravel, Inc., was fraudulent and done for the purpose of depriving [Tina] of her community interest in said property.

h. The conveyance of stock in Wallace Sand and Gravel, Inc., by [Randy] to his *1134 father was not for a bonafide consideration to the community and was fraudulent.

i. [Randy's] claimed reclamation costs on the Mandy Road pit are grossly and fraudulently over-inflated.
j. [Randy] abandoned any responsibility for Wallace Brothers, Inc., wherein he was the majority shareholder. The court finds that there was no excuse for [Randy] abandoning his responsibility to this corporation when he is the majority shareholder.
k. The disbursement of $260,000 to [Randy's] father and uncle ... is compelling evidence that [Randy's] father and uncle have raided the corporation for the purpose of lowering [Randy's] value.
1. The account receivable in Wallace Brothers, Inc., which has been carried on the books as an asset of $430,000 has some value. [Randy's] representation that the account receivable has no value is fraudulent. The corporate shareholders have included the account receivable in financial statements when they wanted the corporation to look good and are now saying that it has no value when they want the corporation to look bad.

Clerk's Papers at 15-16.

Property Distribution

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Cite This Page — Counsel Stack

Bluebook (online)
45 P.3d 1131, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-marriage-of-wallace-washctapp-2002.