In re the Marriage of Debra M. Aldridge & Willard D. Aldridge, Jr.

Court of Appeals of Washington·Decided October 16, 2014·No. 31597-5·Unpublished

Opinion

FILED

OCTOBER 16,2014

In the Office of the Clerk of Court WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

In re the Marriage of: )

) No. 31597-5-111 DEBRA MICHELLE ALDRIDGE )

)

Respondent, )

)

and ) UNPUBLISHED OPINION )

WILLARD D. ALDRIDGE, JR., )

)

Appellant. )

FEARING, J. - Will and Debra Aldridge flrst married in August 1986 and divorced in June 1994. In spring of 1996, Will and Debra resumed their relationship and remarried in March 2001. The couple separated again on September 2009. Individually, and together, Will and Debra purchased, improved, managed, and sold multiple properties, which complicates their second divorce. Will Aldridge asks this court to reverse and remand for a recharacterization and redistribution of property divided by the trial court. He also asks this court to reverse the trial court's two awards of attorney fees to Debra. We decline his request to reverse the property division. We afflrm the trial court's award of fees for services before the superior court. We reverse the trial court's

No. 31597-5-III In re Marriage ofAldridge

award of fees to Debra for the appeal, but allow Debra the opportunity on appeal to request an award of reasonable attorney fees and costs.

FACTS

By education and training, Will Aldridge is an architect and Debra Aldridge a nurse. Beginning in 1982, Will worked as an architect at the Naval Yard in picturesque Anacortes, Washington. He also engaged in the buying, improving and selling of real property.

Will and Debra Aldridge have married and divorced one another twice. Each has children from previous relationships. Will and Debra Aldridge married first in August 1986. They divorced in June 1994. The trial court then awarded Debra, as her separate property, the family home on Peters Lane in Anacortes. The trial court awarded Will, as his separate property, his federal civil service retirement pension and the Commercial Avenue building in Anacortes.

In 1995, during the couple's intermarriage years, Will Aldridge purchased a cabin on Yokeko Drive and a duplex on 8th Street in Anacortes. In spring of 1996, Will and Debra coincidentally saw one another at a Rite Aid store, after which they 'Just kind of resumed [their] relationship." Report of Proceedings (RP) at 22. Eventually, they cohabitated in the Peters Lane home.

In February 1999, Will purchased the commercial Deaconess Building, in Wenatchee, paying $10 and assuming a substantial Environmental Protection Agency

No. 3 I 597-5-III In re Marriage ofAldridge

(EPA) lien. A dominant issue at trial was whether Debra and Will had formed an equity partnership under Washington law prior to Will's purchase of the Deaconess Building. The trial court found that the parties entered a committed relationship effective March 1, 1999, one month after the purchase. On appeal, neither party challenges this finding or its legal impact. Debra looked at the Deaconess Building before its purchase, but Will took title to the property only in his name.

On November 24, 1999, Will Aldridge divided the Deaconess Building into two condominium units. Unit one consists of leasable office space; unit two consists of apartments.

In December 1999, Will Aldridge transferred unit two of the Deaconess Building to Deaconess Apartments, a limited liability company (LLC) he formed. In tum, the LLC named Will as its manager. Will then developed the unit two apartments into low- income housing to gain tax benefits available under 26 U.S.C. § 42. Will and his attorney marketed the tax credits to investors. As is typical for section 42 housing, the development's investors owned 99.99 percent of the LLC, with Will owning the remaining 0.01 percent. The LLC compensated Will as manager and paid him a "deferred developer fee." Clerk's Papers (CP) at 288. The trial court later explained: "The value of the project to [Will] during development came, in part, through his ability to work as the 'developer' and receive a salary for that work." CP at 288.

Will and Debra Aldridge remarried on March 7, 2001.

No. 31597-5-III In re Marriage ofAldridge

Will Aldridge used earnings from unit two of the Deaconess Building to

I commence development of unit one as commercial office space. Will needed additional

financing and, in May 2001, he borrowed $250,000 from a friend, Tryg Fortun. In July II 2002, Will borrowed $320,000 from his mother, Eleanor Aldridge. The notes and deeds

of trust for both of these loans collateralize unit one and bear only Will's signature.

I The Deaconess Building required substantial renovation, most of which was

performed by a hired contractor. Both Will and Debra Aldridge personally performed I renovation tasks, with Will performing more work than Debra. Will described the

Deaconess Building as a retirement plan for the couple.

I In May 2002, Will and Debra Aldridge purchased, with title in both names, the

Poolside Apartments, on Mission Street in Wenatchee. Remarkably at trial, neither party provided records establishing the purchase price for the property. Debra Aldridge guessed the price was $200,000 or $300,000. Will sold the 8th Street Anacortes property for a net gain of around $32,000, which he contributed toward the purchase of the Poolside Apartments. The balance of the purchase price for the Poolside Apartments came from two successive loans obtained by the parties in both of their names. The successive lenders were Tryg Fortun and Wells Fargo Bank.

The Poolside Apartments also needed substantial renovation and each spouse assisted in the renovation project. Debra Aldridge quit working as a nurse for the Navy in 2002, in order to devote time to the couple's real estate projects, especially the

No. 31597-5-III In re Marriage ofAldridge

Poolside Apartments. At trial, neither party provided an adequate accounting for how much each contributed to the apartment building. The debt on the building, at the time of trial was $525,179. Will believed the value of the Poolside Apartments to be $952,000. Debra valued the property at $850,000.

In 2003, Debra Aldridge sold the Peters Lane, Anacortes, home. Will Aldridge sold the Yokeko cabin. At trial, Will estimated that the net proceeds on Peters Lane property was $91,000 and the net proceeds for the Yokeko cabin was $78,000. The couple used proceeds from each sale to jointly purchase a residence on Dogwood Place, in Mount Vernon.

In 2004, Will and Debra Aldridge added one another as account holders to each party's separate bank accounts. Also in 2004, Will retired from the Naval Yard. He receives around $2,700 a month from his civil service retirement.

In 2006, Will Aldridge sold the Commercial A venue, Anacortes, property and purchased rural vacant acres in the Squilchuck area of Chelan County. Will claims he netted $535,796 from the sale of the Commercial Avenue property, but no record supports his allegation. Will used $225,000 of the proceeds of the Commercial Avenue property to purchase the Squilchuck property. Will added Debra's name to the Squilchuck title in order to qualify for a 1031 like-kind exchange to avoid federal income tax. The value of the property is $185,000.

Will Aldridge testified at trial that he deposited excess funds from the sale of the

No. 31597-5-III In re Marriage ofAldridge

Commercial Avenue property into a joint account "at a financial accounting company at Wells Fargo Bank, and I don't remember the name of the company. It was one of these financial management companies." RP at 688.

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