Kathryn M. Cox v. John Cox

Court of Appeals of Washington·Decided June 10, 2019·No. 77634-7·Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

In the Matter of the Marriage of )

) No. 77634-7-1

KATHRYN M. COX, )

) DIVISION ONE

Appellant, )

) UNPUBLISHED OPINION and )

)

JOHN JOSEPH COX, )

)

Respondent. ) FILED: June 10, 2019 )

LEACH, J. — In this marriage dissolution proceeding, Kathryn Cox

challenges the trial court's refusal to enforce a postnuptial agreement, its distribution of property and debts, and its maintenance award. She also claims that the court should have imposed a restraining order against John Cox.1 Substantial evidence supports the trial court's findings underpinning its conclusion about the postnuptial agreement. And the trial court did not abuse its discretion by awarding each party 50 percent of the marital estate and awarding Kathryn 10 years of maintenance consisting of 50 percent of John's gross annual

1 For purposes of clarity, this opinion refers to Kathryn Cox as Kathryn and John Cox as John.

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salary and bonus. Last, the trial court acted within its discretion to decline consideration of Kathryn's request at trial for a restraining order. We affirm.

FACTS

John and Kathryn married in 1986 and have four adult children. John is a commercial real estate professional. Since 2009, John has worked as a senior vice president of Alexandria Real Estate Equities (AREE), a publicly traded real estate investment trust. Kathryn has not worked outside of the home since their first child's birth. John experienced alcoholism and mental health issues throughout the marriage. Both parties testified about John's emotional, financial, and physical abuse of Kathryn.

In December 2006, John moved out of the family home. The next year he filed for dissolution. The parties agreed to dismiss that lawsuit the following year and participated in counseling. But John did not return to the family home. He moved around with no fixed address. He often stayed with friends. He also tried to address his alcohol and mental health issues.

In January 2011, John stopped seeing his mental health care provider and stopped taking his medications. In February 2011, Kathryn presented John with a postnuptial agreement (Agreement). John signed the Agreement in March 2011 without modifications and without consulting an attorney.

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In May 2016, Kathryn filed for legal separation. John filed a counterpetition for dissolution. Kathryn filed for summary judgment, asking the trial court to enforce the Agreement. The trial court denied this request. After a five-day trial, the trial court found the Agreement unenforceable because it was substantively and procedurally unfair. The trial court divided the parties' property and debts, awarded Kathryn spousal maintenance, and denied her request for a restraining order. Kathryn asked the court to reconsider its decision. The trial court declined this request but granted her request to clarify certain decree provisions and entered a second amended dissolution decree in October 2017. Kathryn appeals.

ANALYSIS

Postnuptial Agreement

Kathryn challenges the trial court's refusal to enforce a postnuptial agreement between her and John. A court conducts a two-step analysis to determine the enforceability of a postnuptial agreement.2 The court first decides if the agreement is substantively fair to the spouse not asking to enforce it.3 If it is, the court will enforce it.4 If the agreement is substantively unfair to the spouse not asking to enforce it, the court determines if the agreement is procedurally fair

2 Inre Marriage of Bernard, 165 Wn.2d 895, 902, 204 P.3d 907 (2009).

3 Bernard, 165 Wn.2d at 902.

4 Bernard, 165 Wn.2d at 902.

No. 77634-7-1 /4

and, if it is, the agreement is valid and binding.5 The party seeking enforcement of the agreement has the burden of proof.8 A court determines fairness based on the circumstances at the time the parties signed the agreement.7 To be substantively fair, the agreement must make reasonable provision for the spouse not asking for enforcement.8 Factors the court may consider to decide this question include provisions disproportionate to the means of each spouse, limits on the creation of community or separate property, preclusion of the distribution of one spouse's separate property to the other, prohibitions or limits on maintenance, and limits on inheritance.8 Substantive fairness is a question of law an appellate court reviews de novo unless the trial court resolved factual disputes to interpret the meaning of the contract.1° An appellate court accepts the trial court's resolution of factual disputes unless they are not supported by substantial evidence.11 The court determines whether the agreement is procedurally fair by asking "(1) whether the spouses made a full disclosure of the amount, character, and value of the property involved and (2) whether the agreement was freely entered

5 Bernard, 165 Wn.2d at 902-03.

6 Bernard, 165 Wn.2d at 902.

7 Bernard, 1654 Wn.2d at 904.

8 Bernard, 165 Wn.2d at 902.

9 Bernard, 165 Wn.2d at 904.

10 Bernard, 165 Wn.2d at 902; Mountain Park Homeowners Ass'n v.

Tydinqs, 125 Wn.2d 337, 341, 883 P.2d 1383 (1994).

11 Bernard, 165 Wn.2d at 903.

No. 77634-7-1 / 5

into on independent advice from counsel with full knowledge by both spouses of their rights."12 This procedural fairness analysis involves mixed issues of policy and fact; appellate review is de novo but done in light of the trial court's resolution of the facts.13 An appellate court reviews challenged findings of fact for substantial evidence.14 "'Substantial evidence is evidence sufficient to persuade a fair-minded person of the truth of the declared premise.'"15 Here, the trial court decided that the Agreement was substantively and procedurally unfair. It made extensive factual findings in support of this conclusion. The court made the following findings in support of its conclusion that the Agreement was substantively unfair to John:

1) Regardless of whether Petitioner was aware of the legal and financial consequences that the Agreement would have imposed upon Respondent had the Agreement been implemented as written in March 2011 (The court declines to make findings as to the extent of Petitioner's subjective understanding or her specific intent with respect to the Agreement's terms.), the court finds that the terms of the Property Settlement Agreement are substantively unreasonable because they are severely overreaching and grossly disproportionate in favor of Petitioner; and that had the Agreement been implemented in March 2011, the effects of the Agreement would have been devastating legally and financially for Respondent.

12 Bernard, 165 Wn.2d at 902-03.

13 Bernard, 165 Wn.2d at 903.

14 Bernard, 165 Wn.2d at 903.

15 Bernard, 165 Wn.2d at 903 (quoting In re Marriage of Hall, 103 Wn.2d 236, 246,692 P.2d 175 (1984)).

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2) At the time of its execution, the Agreement did not include a fair and reasonable provision to Respondent, as shown by the financial analysis of Respondent's expert witness Gregory Porter, CPA, MBA, MS, regarding the financial impact of the Agreement on the parties as of March 2011.

Ex. 147, 163.

3) Had the Agreement been implemented as of March 2011, Respondent would have received assets/liabilities resulting in a net worth of negative $843,588 and an annual cash flow of negative $6,364, while Petitioner would have received assets/liabilities resulting in a net worth of $396,870 and an annual cash flow of $177,878. Ex. 147, 163.

4) The Agreement required Respondent to pay Petitioner 60% of Respondent's restricted stock awards received and to be received from his employer, Alexandria Real Estate Equities, Inc. ("AREE"); and the Agreement also required Respondent to pay Petitioner 60% of the income he would receive from exercising the remainder of stock awards(40%)

awarded to him, resulting in Petitioner receiving a total of 84% of the proceeds of Respondent's employee stock awards (i.e., 60% +(60% x 40%)= 84%).

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