Example of Court Annexed Arbitration Opinion: Four

     Comment:  One can read between the lines that neither side presented adequate evidence to value all of the marital assets and liabilities.  This is a very dangerous approach to an arbitration because without evidence, the arbitrator is left to guess.  One would think that a good result would be important enough to the parties that they would be fully prepared for the hearing.  Lack of preparation only saves money during the preparation stage, but likely will lead to much larger losses in the outcome.

    This is not a criticism of the lawyer presenting the case - as the arbitrator, I am unable to know whether the presentation was limited by the client's payments to the lawyer, or by the client's failure to provide the information to the lawyer, or whether the failure to provide evidence was a strategic decision.


          I was appointed arbitrator for this case pursuant to ORS chapter 36.  After pre-hearing submissions, the case came before me for hearing at 1300 SW Fifth Avenue, Suite 2750, Portland, Oregon   97201.  Petitioner Husband appeared in person and with his attorney.  Respondent Wife appeared in person.

    I have reviewed the petition and the response.  It appears that wife wishes her name to be restored to . . . .  If this is not correct, that is, if there is a middle name or otherwise, I should be told in writing immediately, because the judgment will otherwise incorporate this information.

    Testimony was taken from Husband, Wife, and Husband’s mother, and the hearing was closed.  It falls to me to sort this case out.

    There was ample proof of the jurisdictional facts.  The marriage will be terminated effective the date the judgment is signed by a circuit court judge.

    I will deal with matters in the following general order: real property (little house, big house), personal property, liabilities, spousal support, equalizing judgment, attorney fees and costs.

    There are no children of this marriage and wife is not pregnant.  There are no issues of parenting or child support.

    The parties met in 199-.  Husband invited wife to come to Portland, and agreed to ‘take care of her.’  I don’t make much of the ‘take care of’ agreement; they simply agreed to cohabit which led to marriage.  Wife accepted.  They started living together.  Wife attended junior college.  After she took certain courses, she began to work as a certified nurse’s assistant, and later as a lab technician assistant.  She did not get a degree before she stopped attending school.  Prior to their marriage, wife got financial aid.  If there were any loans, they have been paid off.  After their marriage in 200-, wife’s school was paid for by the parties, as a marital expense.

    Husband is presently an operator or similar skilled tradesperson and the impression I am left with is that he worked at his employer from before 199-.

Real property

    The little house

    Prior to meeting wife, husband owned and lived in  “the little house.”  I find  that after wife moved to Portland (either immediately or shortly thereafter), she lived there with husband, and from time to time, other people.   Some improvements were made to that house.  From my perspective, it does not matter exactly who did the work or the value of the improvements.  The point is that the house appreciated in value from the date of marriage (or some earlier time when the parties cast their economic lot together).  The sweat equity is compensated to everybody by the increase in equity.

    The little house is encumbered by a first mortgage which had a balance in November 200- of $83,421 (Ex 3), and a second mortgage with a balance in February 200- of $15,914 (Ex 6).  I conclude, however, that the mortgage or some mortgage was on the house prior to Wife’s appearance on the scene, and in all probability, the mortgages were partly paid down during the marriage which actually increases the equity in the house beyond the appreciation in property values discussed below.  However, there was no evidence of the mortgage debt as of earlier dates.

    There is some legal question as to whether the relevant valuation dates for the real property are, at the front end, when the parties began to cohabit, or when they were married, and at the back end, when the parties moved out of the little house, when the parties separated, or the date of trial.  The shortest period I could take is from 200- to 200-, the longest from 199- to 200-.  The appreciation of the house between the front end and the back end is a marital asset and subject to division.  The proof tendered as to valuation was party opinion and tax assessment documentation, and not particularly definite.

    For starters, even if the little house was separate property prior to the marriage, I reject the contention that I should not consider appreciation during the marriage after the parties moved into the big house.  There was testimony that wife helped out with the management of the little house and no attempt to prove that wife did not help out.  The presumption of equal contribution is not rebutted.

    I cannot entirely leave my knowledge at the door.  I have lived in Portland for 29 years, and in Northeast Portland since 2000 and at other times in the past.  I have owned property in Portland for most of the 29 years.  I have bought and sold single family residences to live in and for resale.  In the last year I have presented expert testimony about trends in increases in property values of residences in dissolutions over the same period of time this couple was married, within two or three miles of these properties.  And I read the newspapers.  Suffice it to say that I know that all properties in this area have increased in value over the period of time in question.

    The low appreciation would be the change in RMV [RMV is the value of the property on January 1 prior to the tax year.  As such, for instance, Exhibit 9 is the value on January 1, 200-] from 1/1/200- of $*,000 (Ex 10) to 1/1/200- of $*,000 (Ex 9), that is, $*,000 [I take judicial notice, from www.portlandmaps.com, that the RMV in January 199- and January 200- was $*,000, and the RMV in January 200- is $*,000].  I think the rate that RMV increased is probably close to accurate.  However, I distrust RMV as an absolute measure of value because Husband stated he bought the house in 199- [www.portlandmaps.com indicates it was 1/1/199-] for $*,000 and RMV for 1/1/199- was $*,000 and for 1/1/199- it was $*,000.  He testified it was worth $110,000 in 200- and $125,000 in 200-.  The trouble is that I don’t have other evidence to base my opinion on.  So, I am going to say the little house appreciated in value $36,000 between the beginning valuation date and the ending valuation date, whatever they are, and that $36,000 is a marital asset.

    The big house

    At the beginning of the marriage, neither Husband nor Wife  had an interest in this house.  During the marriage, Mother acquired the house, ultimately free and clear.  Because of her health and the relationship between her and her son, Husband agreed to and convinced Wife to move in with Mother.

    Essentially as an inducement, Mother agreed with Husband and Wife that the house would be gifted to Husband and Wife so that they could borrow money to repair the house, buy cars, attempt in vitro fertilization, and purchase consumer goods.  There was an oral condition that Mother could live in the house for the rest of her life and Husband and Wife would assist Mother.

    While the transaction was not documented the same way it was formulated, this is a court of equity and I will treat the transaction the way it was intended.  Mother conveyed the big house to Husband and Wife, retaining a life estate.  Mother is 65 and has chronic diseases but she could live for many years especially if she gets to stay in the house and has the assistance of Husband.  I find that Mother’s donative intent was to both Husband and Wife.  While undoubtedly there was friction at all times between Husband and Wife, and between Mother and Wife, the facts that all witnesses agreed that there were discussions about transaction prior to the gift, that the loan was in part to pay for attempts at in vitro fertilization so that Mother could become a grandmother, and everybody shared access to the loan funds, all indicate to me that at the time of the gift transaction it was intended to be a gift to the married couple in substance as well as form.

    The question remains: What was the gift? and: What was it worth?  The gift was a fee simple title to Husband and Wife, subject to a life estate in common with Mother, who has a reasonable life expectancy.  While such a title has value to a family member who is willing to live with Mother, there is also the quid pro quo of taking care of Mother if she needs that care.  Frankly, the title held by Husband and Wife has little market value. 

    In any event, Husband and Wife then liquidated the value of the gift by borrowing $107,000.  While part of that borrowing was for the furnace, roof, air conditioning and materials for a fence, and after other parts were spent Mother still had access to it until it was gone, the impression that I get is that $90,000 was spent on marital expenses of Husband and Wife. 

    At the same time, the evidence from tax statements was that the RMV of the house appreciated from $*,000 on 1/1/200- (Ex 8) to $*,000 for 1/1/200- (Ex 7) [I take judicial notice that the RMV was $*,000 in 200-].  Mother said she thought it was worth $250,000 in 200-.  The new roof, furnace, air conditioning and fence increase the value of the property and typically are not taken into account in establishment of RMV, which is done by trending.  Obviously, the present value of Mother’s life estate (at least as a proportion of the total value) has declined over that same period, because she has gotten older.  Thus, the value of Husband’s and Wife’s restricted interest has increased and that increase is a marital asset. 

    My conclusion is: having in mind the other provisions of this award and particularly how I have resolved other uncertainty, I award the interest of Wife and Husband, whatever it is, subject to the balance of the loan, still around $103,000 (Ex 2), to Husband, and order him to pay the loan and hold Wife harmless from it.  My award and the judgment will specifically refer to this property by its legal description and I also order Wife to execute a bargain and sale deed of her interest to Husband, if such a deed is prepared by and at the expense of Husband; however, I will not sanction Wife if she does not execute the deed; rather pursuant to ORCP 78, the judgment will have the effect of a transfer.

Personal property and debts

    The parties spent a lot of money during the marriage.  This reflects the fact that the parties had a reasonably large income and only modest debt.  The large debts for the mortgages on the little house and the big house were mostly covered by payments from renters and Mother. 

    There was very little, if any, documentary evidence presented about the details of spending; just that there was a lot of it.  Everybody agreed that Mother, Wife, and Husband had access to most of the money from the refinancing of the big house.  Mother’s social security checks went into the pot, which was often overdrawn.  The complaints about Wife’s spending were known and aired over eight to ten months before the separation.  In my opinion, if Mother and Husband had wanted to pull the plug on Wife’s alleged excessive spending, if there was excessive spending, the could have done so if they had tried harder. 

    Many of these complaints are easy to make and hard to defend.  It was undisputed that Wife gambled but there was no proof that the magnitudes were excessive, given the tensions in the marriage.  I understand the Wolhaupter case, and more recently, Garza and Garza, 201 Or App 318, 118 P3d 824 (2005), and I don’t find the facts of this case to be like, for instance, Garza

    The State of Oregon advertises that the lottery should be played for entertainment.  I conclude that there was not much money management going on by anybody and some if not all of the mismanagement was tolerated (or even contributed to) by the other parties. 

    There were tensions in this marriage, and on this record, the amounts of money dissipated were not proved nor do they appear to be disproportionate or such as require me to treat as anything other than a marital expense made by one party without the express consent of the other party. 

    Nor should we forget that Wife was working regularly throughout the marriage at an appropriate job for a reasonable income.

    The two trucks

    I award the two trucks to Husband.  I find the equity value of those two vehicles to be $4,700, in the aggregate.   Husband testified that in October 200- he borrowed $12,500 at 4.9% interest to buy the truck and he pays for 66 months at $247 per month (plus paid $5,000 from the family borrowing).  I believe he knows the percentage rate, the monthly payment and the amount of the purchase price that he financed, but when I amortized these the numbers for 66 months, they “don’t compute.”  If you try to figure out the initial balance using 66 months, it is over $14,000, and I don’t think there were this much in junk charges.  So, I conclude that the term of the loan was 60 months and the initial amount financed was $13,120, and I assume that some $600 in junk charges from the auto dealer were financed.

    I have to figure out the equity in the truck.  The trouble that I have here is that the valuation of the truck provided by husband (Husband’s Exhibit 5) is a January 200- Kelly Blue Book trade in value.  Obviously, the truck declines in value every day and the principal due on the loan declines every month.  If I use a 200- value for the debt and a 200- value for the truck, that substantially understates the equity in the truck.  On the other hand, I don’t have access to other dates for valuation.  So, I assume that the value of the truck declined in proportion to the decline in principal amount of the loan.  The $8,390 value for the truck is offset by the $4,374 debt on the truck that I calculate, for an equity of $4,000 in round numbers.

    The parties borrowed $10,000 against Wife’s car to purchase the candle business.  As a practical matter, Wife had to have known about it.  Thus, this loan was a marital debt.  When the car was totaled, the loan was paid, thus reducing marital debt, but with the result that Wife ended up without a car.  The effect is that $11,882 of Wife’s car was traded for something which is now worth $500.

    The candle business

    I award the candle business (including all the racks and candles) to Wife, but at a value of $500.  I doubt that the materials have anything more than Craigslist liquidation value.

    Other personal property

    I award to Wife the bedroom set and all of her other goods that are in storage with Husband.  I order Wife to remove the candles and all of those goods by June 1, 200- (sooner is better), and if she does not do so, that she be deemed to have abandoned them to Husband.  Husband and Wife are to cooperate.  Wife must provide a U-Haul or similar vehicle and labor to load the van.  Husband is to provide unimpeded access.

    The remainder of tangible personal property is awarded to the person in possession, except as specifically otherwise provided for herein.

    I award to Wife one half of the appreciation in value of Husband’s 401(k) Retirement Savings Plan for the period from the date of marriage to the date when Husband filed for divorce, i.e., August 200-.  The evidence presented to me was that the market value of the plan as of 6/30/200- was $19,160.24 (Ex 4).  There was no proof of the value as of around June 200-.  Without information about the value then, I will assume that the entire amount is a marital asset.  I will allow Husband ten days from the date of this letter to provide to my office a statement of the value of his plan for the period ending June 30, 200-.  The appreciation is the difference.  Reduce the difference by 24% (15% for federal taxes and 9% for state taxes) to get the after tax value of the appreciation.  As stated, for present purposes, that is $14,561.  If I get the requested evidence then I will modify the equalizing judgment.

    I award the dog to Husband.  I award the bird along with any cages and related stuff to Wife.

    If, and I don’t know where they are, Wife has any wedding or engagement rings, I award them to her.  In my opinion, they are the memorabilia of a failed marriage and whoever has them should sell them and spend the money.  Having in mind this distribution of the rings, I award the fish tank to Husband.  Again, my thinking is that a fish tank is replaceable.

    I am making no requirement that Wife return the game systems.  I assume that if Husband really wanted them, he could replace them for much less on Craigslist or other used markets.

Debts of the parties

    Husband proved that he owes $9,476 to the Credit Union Visa as of 11/1/200-, which was 13 months after the date of separation (Ex 1).  There is no proof when this debt was incurred.  I have trouble ordering payment by one party of a  debt owed by the other party, as part of an equitable allocation process, without evidence that debt was incurred during a period of cohabitation or for the benefit of the marriage or to purchase some tangible thing that is the subject of equitable distribution.  It is not obvious to me from the mere fact of a credit card debt owing by one party thirteen months after separation that such a debt falls in the one of those categories.

    Having in mind that I have found no equity in the big house, I resolve this uncertainty by ordering this debt be paid by Husband, either because it is not a marital debt or even if it is I choose to do so as part of an equitable division.

    There is apparently a debt payable to Multnomah County for taxes related to the candle business.  Husband said it was $1,800 but no document was produced.  I direct that be paid by Husband.  He can contest it.  It seems to me that there should be a way to have it educed or eliminated if approached correctly.  I understand that it is associated with the candle business that has been awarded to wife, and have taken this into consideration.

    The debt in favor of collection agency A in the amount of $405  (Ex 107) appears to be dated 9/24/200- and is a marital debt.  Wife  shall pay it.

    The debt in favor of Collection agency B in the amount of $613.60 (Ex 106) or whatever amount was conceded to have been incurred by Wife during the marriage, is a marital debt.  Wife shall pay it.

    The debt of $1,181 in favor of Municipal Court (Ex 105) was incurred from a reckless driving charge where Wife’s car was totaled, after the separation of the parties.  It is not a marital debt and wife shall pay it.

    The debt of $341 in favor of Collection Agency C (Ex 104) was incurred from wife’s auto accident and is not a marital debt and wife shall pay it.

    The parties should file separate tax returns for 200- and 200-.  Husband should take the mortgage interest and other deductions associated with the big house.  If the parties can cooperate, they can file joint returns after filing their separate returns.  If they do, then, any additional refunds after payment of all taxes, interest and penalties due on the original returns, should be split 50/50 after payment of the accountant.

Spousal  support

[Note: These parties agreed that the arbitrator could decide spousal support issues]

    I can award spousal support only under ORS 107.105(1)(d)( C).  I find ORS 107.105(1)(d)(A) and (B) to be inapplicable.  ORS 107.105(1)(d)( C) provides:

    (1) Whenever the court renders a judgment of marital annulment, dissolution or separation, the court may provide in the judgment:
* * *
        (d)  For spousal support, an amount of money for a period of time as may be just and equitable for one party to contribute to the other, in gross or in installments or both. * * * The court may order:
* * *
            (C) Spousal maintenance as a contribution by one spouse to the support of the other for either a specified or an indefinite period. The factors to be considered by the court in awarding spousal maintenance include but are not limited to:
                (i) The duration of the marriage;
    The duration of this marriage suggests that support should not be for a long period of time
                (ii) The age of the parties;
    The parties are young so they cannot expect social security or other pensions to provide for their income, but on the other hand their relative youth allows them choices
                (iii) The health of the parties, including their physical, mental and emotional condition;
    The parties are healthy and to the extent Wife has emotional issues they are situational and will or need to resolve
                (iv) The standard of living established during the marriage;
    The parties lived at the standard of living provided by $75,000 or more combined annual income coupled with only modest debt and the injection of close to $100,000 of gifts from Mother.  Their expenditure pattern during the marriage could not be replicated on a sustainable ongoing basis
                (v) The relative income and earning capacity of the parties, recognizing that the wage earner’s continuing income may be a basis for support distinct from the income that the supported spouse may receive from the distribution of marital property;
    Husband has higher earning capacity than wife.  It may be that wife’s skills in the medical industry were created during the marriage, but they are not so unique nor do they create such a high level of income that I consider them anything other than the product of an appropriate community college education.  Husband brought his earning capacity into the marriage.  On the other hand, husband’s high earnings are dependent on continuation of work at his employer and to some degree on the continuation of the availability of overtime. 
                (vi) A party’s training and employment skills;
    Both parties have appropriate training and education for their work and I am not providing spousal for the purpose of Wife obtaining new skills.
                (vii) A party’s work experience;
    Both parties have appropriate work experience and wife’s work experience is an appropriate platform for her to return to work if she gets going.
                (viii) The financial needs and resources of each party;
    At and after the separation, Husband remained employed and in possession of most of the assets of the parties.  Wife resigned her work in January 200- and has not worked for a year.  She may felt that was an appropriate decision but my view is that for purpose of economic evaluation of this family, she should have found some other work, even if at a lower wage rate.  However, fundamentally, Husband’s lifestyle has continued without much change since the separation.  He has both houses; his truck, his job and income of approaching $6,000 per month in 200-.  He has a place to live.  It does not appear that he has transferred any assets to Wife during this time.  Wife left the marriage with little, and has had nothing to build on.  She lived on unemployment (Ex 112 and 113) and other handouts and probably by her wits for the last year.
                (ix) The tax consequences to each party;
    Spousal support is deductible to the payer and taxable to the payee.  The closer spousal support gets to equalizing the total income of each party, the less tax benefit there is. 
                (x) A party’s custodial and child support responsibilities;
                (xi) Any other factors the court deems just and equitable.

     “The purpose of an award [of spousal support] under the statute [former ORS 107.105(d) which is similar to ORS 107.105(1)(d)( C)] is to provide a reasonable amount of income to the recipient spouse that will enable that party to enjoy a standard of living, to the extent practicable, that will not be overly disproportionate to what was enjoyed during the marriage”), Waterman and Waterman, 158 Or App 267, 270-71, 974 P2d 256 (1998); Garza and Garza, 201 Or App 318, 118 P3d 824 2005).  See, Taylor and Taylor, 136 Or App 416, 420, 902 P2d 120 (1995) (“[a]lthough we are mindful of the goal of ending the support-dependency relationship within a reasonable time, we cannot do so if the result works undue hardship”).

    The parties cohabited for six years (from 1999 to 2005) and were married for five and one half (from 2001 until now).[Duration of marriage is only one of the factors to be considered, and, a five year marriage is not a ‘short’ marriage anyway, in Olinger and Olinger, 75 Or App 351, 707 P2d 64 (1985); Frank and Frank, 86 Or App 727, 732 (1987); Seefeld and Seefeld, 294 Or 345, 359 n 2, 657 P2d 201 (1982); Frishkoff and Frishkoff, 45 Or App 1033, 610 P2d 831 (1980).]  At the end of the marriage, wife’s potential income was $15 per hour times 2000 hours per year or $30,000 per year.   Her pay stub (Ex 114) indicates that she earned $15.61 per hour at the end of the marriage.  Thus she has the capacity for self sufficiency over the long term.

    Husband testified that he earned $71,000 in 200-, that his base salary is $45,000, and that he has overtime though the circumstances for overtime are convoluted. 
    There is anecdotal evidence that some Multnomah County domestic relations judges award spousal support on the basis of one half the duration of the marriage, at a figure sufficient to equalize the income disparity at the beginning and stepping down, but there is no statute or case providing for this. 

    I have authority under ORS 107.105(1)(d) to award support either in gross or in payments.

    The question is how husband should pay.  Here, I refer to Husband’s UTCR 8.010 Statement, page 2, which states “Husband proposes Wife should be entitled to a portion of the equity in the home in an amount to be determined at the hearing, to be accomplished by either selling the Little House or by refinance.” 

    Taking into consideration all of the above, I award an equalizing judgment in favor of Wife and against Husband in the amount of $27,684 and spousal support in favor of Wife and against Husband of $1,250 per month from March 1, 200- to February 1, 200-, and $750 per month from March 1, 200- to February 1, 200-.

    It appears to me that there is sufficient equity in the little house to pay this judgment if the house is sold or by refinancing the second mortgage or by refinancing the first and second mortgages; however, that is up to Husband.

    The equalizing judgment has to be paid in one year and bears interest at the rate of 8 per cent, but can be prepaid. 

    If husband wants to pay the judgment for spousal support off by refinancing or sale, then it can (but need not) be paid in a lump sum with each monthly payment reduced at a discount rate of 9% per year.

    Thank you for your consideration.