A.J. Clayton v. Douglas Mecklem Wilson

For a number of years Douglas Wilson sexually abused



Andrew Clayton, a young boy hired to help with yard work on properties owned by the



Wilsons' marital community. Clayton eventually notified police of the abuse, which



led to Mr. Wilson's arrest. When Mr. Wilson was released from jail but still awaiting



trial, the Wilsons executed a property agreement giving Mary Kay Wilson more than



90 percent of the community assets.



Clayton filed a tort action against the Wilsons. After a bench trial the King



County Superior Court found the marital community liable and awarded damages



against Mr. Wilson separately, as well as jointly and severally against Ms. Wilson.



The court also voided the property transfer after finding it fraudulent. Ms. Wilson



appealed and the Court of Appeals affirmed. Clayton v. Wilson, 145 Wn. App. 86,



186 P.3d 348 (2008), review granted, 165 Wn.2d 1019, 203 P.3d 378 (2009).



We likewise affirm.



FACTS



When Andrew Clayton was eight or nine years old, his family rented a house



owned by Douglas and Mary Kay Wilson. The Wilsons hired Clayton to perform yard



work around the rental property and other properties owned by the Wilsons. Almost



immediately Mr. Wilson began sexually abusing Clayton when he completed the day's



work. From the beginning Mr. Wilson linked the abuse to the yard work. Mr. Wilson



started giving Clayton clothed back massages under the pretense of relieving sore



muscles. Those massages gradually progressed into shirtless back massages, nude full-



body massages, genital fondling, masturbation, and oral sex. All told, Mr. Wilson



abused Clayton more than 40 times between Clayton's 9th and 15th or 16th year of



age. Mr. Wilson did not pay Clayton until that day's sexual abuse was finished. Mr.



Wilson used community assets to pay Clayton, his employee and tenant.



When he turned 18, Clayton described the sexual abuse to his mother, who



notified police. Police arrested Mr. Wilson on December 5, 2002. Ms. Wilson visited



him in jail on December 7, 2002, at which point Mr. Wilson told her he had victimized



other boys. On December 11 -- two days after Mr. Wilson was released from jail and



awaiting charges -- the Wilsons met with an attorney to seek marital dissolution and



property distribution. The Wilsons knew Clayton and other victims could file lawsuits



against them. On December 19 and 20 the Wilsons executed a property settlement



agreement transferring $1,639,501, which totaled 90.5 percent of community assets, to



Ms. Wilson. The property agreement went into effect upon execution, not upon



dissolution of the marriage. Ms. Wilson permitted Mr. Wilson to live at the couple's



Seabeck property rent free while awaiting sentencing. The Wilsons dissolved their



marriage on March 31, 2003.



In June 2004 Clayton filed suit against the Wilsons. After a bench trial the King



County Superior Court awarded Clayton approximately $1.4 million ($1.2 million for



emotional distress, $200,000 for future lost wages, $4,024.50 for past medical



expenses, and $14,200 for future medical costs). The trial court also found the marital



community liable and entered judgment against Mr. Wilson separately and against Ms.



Wilson as a jointly and severally liable judgment debtor. The court also enjoined the



Wilsons from disposing of any former community property without court approval



until an accounting was complete as to Mr. Wilson's separate property.



Additionally the trial court found the Wilsons' property agreement fraudulent



on four separate grounds, and voided it. Ms. Wilson appealed to the Court of Appeals,



which unanimously affirmed.1 We granted review to decide (1) whether the Wilsons'



marital community is liable for Mr. Wilson's intentional torts, (2) whether the property



transfer between the Wilsons is void as fraudulent, and (3) whether Clayton proved



future lost wages.



ANALYSIS



Whether a marital community is liable for the intentional tort of one of its



members and whether a property transfer is fraudulent are mixed questions of law and



fact. We review mixed questions of law and fact de novo. Franklin County Sheriff's



Office v. Sellers, 97 Wn.2d 317, 329-30, 646 P.2d 113 (1982). We review conclusions



of law under the same de novo standard. Sunnyside Valley Irr. Dist. v. Dickie, 149



Wn.2d 873, 880-81, 73 P.3d 369 (2003). The trial court determined Clayton's future



lost wages in findings of fact 18-22 (Clerk's Papers (CP) at 848-50). We review



findings of fact under a substantial evidence standard, defined as a quantum of



evidence sufficient to persuade a rational fair-minded person the premise is true.



Sunnyside Valley Irr. Dist., 149 Wn.2d at 880-81.



I. Marital community liability



Whether the Wilsons' marital community is liable for Mr. Wilson's intentional



torts hinges on whether the sexual abuse occurred in the course of managing



community business. In LaFramboise v. Schmidt, 42 Wn.2d 198, 254 P.2d 485



(1953), we held a marital community liable for indecent liberties committed by the



husband against a young girl entrusted to the community's care. The parents of six-



year-old Beverly LaFramboise left her in the care of Louis and Blanche Schmidt while



her parents toured Alaska. The parents paid the Schmidts $35 per week to care for



Beverly. At trial, a jury rendered a verdict against the marital community based on a



jury instruction that stated the marital community would be liable if the jury found the



indecent liberties occurred "'during the period while said child was in the care and



custody of said defendant and of the said community.'" Id. at 199 (quoting jury



instructions).



The Schmidts claimed the community could not be liable because Louis



committed the act individually and because Louis acted outside the scope of his



employment (i.e., no respondeat superior). Id. We rejected defendants' claims



holding, "the community is not liable for the torts of the husband, unless the act



constituting the wrong either (1) results or is intended to result in a benefit to the



community or (2) is committed in the prosecution of the business of the community."



Id. at 200 (emphasis added). We reasoned because Louis committed the intentional



tort while conducting community business, the community bore responsibility. Id.



Ms. Wilson claims deElche v. Jacobsen, 95 Wn.2d 237, 622 P.2d 835 (1980),



modified our LaFramboise two-pronged approach to community liability. In deElche



a married man raped a woman who was sleeping on a sailboat. The victim sued the



husband-rapist and won damages, but the husband-rapist had no separate assets with



which to satisfy the judgment. We held where a plaintiff wins a judgment against an



insolvent tortfeasor spouse for a separate tort (i.e., not committed during community



business), the plaintiff may recover from the tortfeasor's one-half interest in the



marital community's personal property. Id. at 246.2 We embraced the rule in deElche



to provide courts a clean, reasonable, and fair means of giving plaintiffs relief against



insolvent separate tortfeasors, instead of condoning the preexisting practice among



lower courts of stretching community liability to apply to situations where it was



questionable. See deElche, 95 Wn.2d at 242. For torts involving management of



community business, however, we left our LaFramboise approach undisturbed. "Torts



which can properly be said to be done in the management of community business, or



for the benefit of the community, will remain community torts with the community



and the tortfeasor separately liable." Id. at 245 (emphasis added). As Professor Cross



pointed out in his influential article, "the reasoning that there was a community



enterprise being conducted [in LaFramboise] during which the tort occurred probably



leaves the community liability intact." Harry M. Cross, The Community Property Law



(Revised 1985), 61 Wash. L. Rev. 13, 139 (1986).





Unfortunately we generated confusion by criticizing LaFramboise as a case that



found community liability "upon tenuous contacts with the community" and based on



"'emotional factors or overtones.'" DeElche, 95 Wn.2d at 242, 245 (quoting Smith v.



Retallick, 48 Wn.2d 360, 365, 293 P.2d 745 (1956)). Ms. Wilson claims these



criticisms led to "misguided reliance" on LaFramboise by the Court of Appeals. Pet.



for Review at 10 (emphasis removed).



Even though we decided LaFramboise more than a half-century ago -- not to



mention that we cast stones at it in deElche -- LaFramboise's approach to community



liability remains good law. The deElche case altered our approach to liability only for



separate torts, not community torts. As Professor Cross stated:



It appears probable then, that deElche stands only for the proposition that a separate tort creditor can reach the tortfeasor spouse's half interest in community personal property and perhaps in community real property, in those situations involving purely personal wrongs having no conceivable connection with community property or affairs.



Cross, supra, 61 Wash. L. Rev. at 140 (emphasis added). Of the cases in our



jurisprudence, LaFramboise most closely parallels the facts in the instant matter. It



controls here.



The Wilsons' marital community is liable for Mr. Wilson's intentional torts



under LaFramboise's second prong. From the beginning Mr. Wilson linked Clayton's



sexual abuse with management of community business. We broadly construe



LaFramboise's second prong. According to Professor Cross:





There obviously would be some difficulty in saying that the husband was managing community property at the time or that [child molestation] was intended to benefit the marital community, although the employment to care for the child was so intended. In this area the concept of "business" is not narrow and the looseness of the test which the cases developed is better identified as requiring that the spouse be engaged in some community errand, affair, or business at the time of the tort to establish community liability.



Id. at 137 (emphasis added).



Mr. Wilson used yard work as a means to groom the young boy. The abuse



always occurred within the context of yard work, which consisted of community



business. Mr. Wilson sexually abused Clayton while overseeing him as an employer,



supervisor, landlord, and caretaker. The marital community benefited from Clayton's



labor. Mr. Wilson paid Clayton for his work with community funds,3 and only after he



finished abusing Clayton on each occasion. Given the breadth of LaFramboise's



second prong, these facts point confidently toward community liability because Mr.



Wilson's torts occurred while he was on "some community errand, affair, or business



at the time of the tort." Id. The facts here closely parallel those of LaFramboise, in



which we assigned liability to the marital community. 42 Wn.2d at 199-200.



Ms. Wilson cites opinions that apply respondeat superior to determine whether



a marital community bears liability for a spouse's individual tort. Her reference to



these cases (including LaFramboise) is confounding because their underlying current



counsels when an agent or member of a marital community commits an intentional tort



connected to the community, the community bears liability.4 Ms. Wilson even cites



one case that finds community liability for an intentional tort arguably less connected



to the marital community than the instant facts. See McHenry v. Short, 29 Wn.2d 263,



186 P.2d 900 (1947) (assault committed by husband due to personal grudge, but while



evicting victim from community rental property, deemed community liability). The



cases cited by Ms. Wilson merely examine different facts under the same standard.5



Other factually divergent cases come to the opposite conclusion and, instead, impose



community liability. See, e.g., Blais v. Phillips, 7 Wn. App. 815, 502 P.2d 1245



(1972) (community liability for fight that arose in parking lot following a trial



concerning management of community property); Benson v. Bush, 3 Wn. App. 777,



477 P.2d 929 (1970) (assault committed during dispute involving community dog



deemed community liability).



In the end LaFramboise presents the closest facts to the instant matter. We



applied our reasoning in LaFramboise with respondeat superior in mind and found



community liability. 42 Wn.2d at 200. The aforementioned cases, at best, show



inconsistent application of our law and, at worst, undermine Ms. Wilson's position.



Ms. Wilson further contends her former husband's intentional sexual tort



brought him outside the scope of community business while sexually abusing Clayton,



thus excusing liability of the marital community. She cites numerous cases involving



the employer-employee (or master-servant) relationship. See, e.g., Niece v. Elmview



Group Home, 131 Wn.2d 39, 929 P.2d 420 (1997) (employer not liable for sexual



assault committed by employee); C.J.C. v. Corp. of Catholic Bishop of Yakima, 138



Wn.2d 699, 985 P.2d 262 (1999) (diocese held not liable for actions of pedophile



priest); Bratton v. Calkins, 73 Wn. App. 492, 870 P.2d 981 (1994) (school district not



liable for sexual relationship between teacher-employee and student); Thompson v.



Everett Clinic, 71 Wn. App. 548, 860 P.2d 1054 (1993) (hospital not liable for



molestation committed by doctor-employee); S.H.C. v. Lu, 113 Wn. App. 511, 54 P.3d



174 (2002) (religious organization not liable for molestation committed by



nonmanagerial guru). However, all are distinguishable because they do not address



liability of a marital community. The cases upon which Ms. Wilson erroneously relies



stand for the proposition that an employer is not liable for the intentional torts of its



employees -- an irrelevant issue here. Ms. Wilson also relies heavily on Francom v.



Costco Wholesale Corp., 98 Wn. App. 845, 991 P.2d 1182 (2000). Francom held the



victim of a nonmanagerial co-worker's sexual harassment could not recover from the



harasser's marital community because the tort occurred outside the employee's scope



of employment. Id. at 869. Francom, like the cases above, involved a nonmanagerial



employee, not an owner or manager.



A husband or wife would be more properly considered an owner, employer,



agent, or member of a marital community, not an employee. As the Court of Appeals



noted, a more apt analogy is found in Glasgow v. Georgia-Pacific Corp., 103 Wn.2d



401, 693 P.2d 708 (1985). In Glasgow we found employer liability when an owner,



manager, partner, or corporate officer personally participates in workplace harassment.



Id. at 407. As a member of his marital community, Mr. Wilson's actions fit Glasgow



better than the cases cited by Ms. Wilson.



We hold the Wilsons' marital community is liable for Mr. Wilson's intentional



torts because he committed them while conducting community business.



II. Property transfer



The trial court found four distinct bases for voiding the Wilsons' property



transfer: (1) actual fraud under RCW 19.40.041(a)(1), (2) conclusive common law



fraud, (3) constructive fraud as to present creditors under RCW 19.40.051(a), and (4)



constructive fraud as to present and future creditors under RCW 19.40.041(a)(2).



Ms. Wilson challenges only two of the trial court's four findings of fraud. "If



the Supreme Court accepts review of a Court of Appeals decision, the Supreme Court



will review only the questions raised in the motion for discretionary review . . . ."



RAP 13.7(b); see also State v. Radcliffe, 164 Wn.2d 900, 907, 194 P.3d 250 (2008).



In this case the two grounds not raised by Ms. Wilson each independently



applies -- and independently voids the transfer -- even if we were to reverse on the two



claimed grounds.6



In any event the two grounds claimed by Ms. Wilson do not merit reversal. The



trial court properly applied the law to the facts to void the property transfer.



a. Actual fraud under RCW 19.40.041(a)(1)



Under the Uniform Fraudulent Transfer Act (UFTA)7 a transfer is fraudulent



"whether the creditor's claim arose before or after the transfer was made or the



obligation was incurred" if the debtor conducted it with "actual intent to hinder, delay,



or defraud any creditor of the debtor." RCW 19.40.041(a)(1). Subsection (b) of the statute provides 11 nonexclusive factors for determining actual intent.8 Moreover



RCW 26.16.210 requires spouses to prove good faith in the transfer if a plaintiff



questions their motive. "In every case, where any question arises as to the good faith



of any transaction between spouses or between domestic partners, whether a



transaction between them directly or by intervention of third person or persons, the



burden of proof shall be upon the party asserting the good faith." RCW 26.16.210.



Based on RCW 19.40.041(b)'s 11 factors, the facts of the present matter



strongly suggest fraud in the Wilsons' property transfer: The Wilsons were married,9



Mr. Wilson continued to live on one of the properties rent free after the transfer, the



transfer occurred at breakneck speed between Mr. Wilson's release from jail and



eventual incarceration, Ms. Wilson received over 90 percent of the assets, the spouses



knew and discussed their exposure to tort liability, Mr. Wilson gave no equivalent





consideration for transferring the property, and the transfer left



Mr. Wilson insolvent. Under the UFTA these factors overwhelmingly suggest



fraudulence in the transfer.



b. Common law fraud



Issues explicitly addressed in the UFTA "displace" common law principles.



RCW 19.40.902. But when the UFTA is silent on a particular issue, common law



tenets "supplement its provisions." Id. The UFTA does not explicitly address



transfers between spouses. However, the UFTA does mention "insider[s]" (a broad



group that includes relatives, as well as partnerships, general partners, and



corporations) in the statute determining fraudulent transfers affecting present



creditors. See RCW 19.40.051(b). "A transfer made by a debtor is fraudulent as to



a creditor whose claim arose before the transfer was made if the transfer was made



to an insider for an antecedent debt, the debtor was insolvent at that time, and the



insider had reasonable cause to believe that the debtor was insolvent." Id.



In contrast the common law pinpoints transfers between spouses instead of



lumping them among an amorphous group of entities. See, e.g., Davison v. Hewitt, 6



Wn.2d 131, 135-36, 106 P.2d 733 (1940) ("Irrespective of the motive actuating the



transfers by the husband of his separate property to his wife, it is clear that, at the



time the transfers were made to appellant, her husband was insolvent; hence, the act



of transferring the property is conclusive evidence of fraud, and the intent is



presumed from the act."). Both the trial court and Court of Appeals1 found the



UFTA did not displace the common law because the UFTA has no provision



specifically governing transfers between spouses. The question, then, is whether



RCW 19.40.051(b) and the definition of "insider" displace the common law approach



to transfers between spouses.



The plain language of the UFTA broadly encompasses relatives, among many



business relationships. However the common law rule is far more precise, dealing



specifically and exclusively with transfers between spouses. The common law



provides a thorough, long-standing, and examined history we should apply to



"supplement [the UFTA's] provisions" for interspousal transfers. RCW 19.40.902.



The common law's specificity on interspousal transfers deals more precisely with



interspousal property transfers than the "insider" statute, RCW 19.40.051(b).



c. Constructive fraud under RCW 19.40.051(a) and RCW 19.40.041(a)(2)



Ms. Wilson did not raise these two independent grounds, which the trial court



partly relied upon to void the property transfer. Under RAP 13.7(b) we review only



those claims raised in petitioner's petition for review.



III. Future lost wages



Ms. Wilson asserts Clayton must prove preinjury earning capacity to recover



future lost wages. Citing a century-old case, Ms. Wilson claims Clayton's earning



potential cannot be totaled without the "difference between the earning capacity before



and after the injury." Pet. for Review at 20 (citing Cook v. Danaher Lumber Co., 61



Wash. 118, 112 P. 245 (1910)).



This claim is not well taken. "Evidence of damage is sufficient if it affords a



reasonable basis for estimating loss and does not subject the trier of fact to mere



speculation or conjecture." State v. Mark, 36 Wn. App. 428, 434, 675 P.2d 1250



(1984). Clayton's expert witnesses marshaled substantial evidence regarding the



effect of Mr. Wilson's abuse. Clayton suffers emotional, physical, and mental trauma,



all of which clearly impair his professional opportunities. Clayton presented ample



expert testimony suggesting he will remain in entry-level employment his entire career.



In sum Clayton presented substantial evidence to support the trial court's finding his



future lost wages are $200,000.

We affirm the Court of Appeals because (1) under LaFramboise the Wilsons'



marital community is liable for Mr. Wilson's intentional torts, which he committed



while managing community business; (2) the property transfer between the Wilsons



was void as fraudulent; and (3) Clayton proved future lost wages.