In the Matter of the Marriage of Morgan

Wife appeals a judgment of dissolution, challenging

the trial court's division of the parties' property, spousal

support award to her, and determination of child support.

She contends that the property division was inequitable

because the trial court based its decision on erroneous findings

of fact and awarded husband too great a share of the

parties' marital property. She asks that we exercise our discretion

under ORS 19.415(3)(b) to review the property division

de novo. Wife also contends that the spousal support

award was inequitable because the trial court erred in calculating

husband's future income. Finally, she contends that

the child support determination was erroneous as a matter

of law because the court erred in calculating the presumed

income of both parties.

For the reasons explained below, we review the

trial court's property division and spousal support award

for abuse of discretion and conclude that the court did not

abuse its discretion. The trial court's calculation of the child

support obligation, however, fails to take into account the

court's finding regarding wife's disability at the time of trial.

Therefore, we remand for the trial court to recalculate the

child support obligation.

BACKGROUND

Before addressing wife's request that we exercise

our discretion to review the property division de novo, we

describe the pertinent findings that wife does not challenge.

1 The parties married in October 2000 without a prenuptial

agreement and separated in 2009. They have one

minor child together. At the time of trial, in 2012, wife was

43 years of age and husband was 44 years of age. Neither

was employed.

1 ORAP 5.40(8)(b) provides:

"In those proceedings in which the Court of Appeals has discretion to

make one or more factual findings anew on the record and the appellant

seeks to have the court exercise that discretion, the appellant shall identify

with particularity the factual findings that the appellant seeks to have the

court find anew on the record and shall concisely state the reasons why the

court should do so.”

158 Morgan and Morgan

At the time the parties married, wife's employment

history consisted primarily of waitressing, and husband

worked for a trailer-manufacturing business owned by his

father. The business consisted of two entities—Morgan Built,

Inc., and Morgan Built Holdings, LLC. In 2002, husband's

father gave husband a majority interest in Morgan Built,

Inc., and a minority interest in Morgan Built Holdings, LLC,

which owned the property on which Morgan Built, Inc., operated.

When husband's father died in 2005, husband inherited

the rest of the stock in Morgan Built, Inc., and became

the sole member in Morgan Built Holdings, LLC. Husband's

income from those business entities was the primary source

for payment of family expenses throughout the marriage. In

2008, the business ceased operations and began to liquidate

its assets.

In 2009, Morgan Built, Inc., was formally dissolved,

and Morgan Built Holdings, LLC, purchased the Vintage

Apartments, a mixed-use property in Seattle, Washington.

The purchase price of $3,200,000 was funded with money

from liquidated business assets plus a promissory note

signed by both husband and wife. Husband had been making

interest-only payments on the note and relying on proceeds

from the apartments of approximately $11,000 per

month as his sole source of income. At the time of trial, the

fair market value of the Vintage Apartments was approximately

$3,000,000 with approximately $850,000 still owed

on the note.

The trial court awarded husband and wife joint custody

of their child and ordered husband to pay child support

in an amount based on findings that husband would have

income of $11,000 per month and wife would have income

from full-time, minimum-wage work. The court ordered

that husband pay transitional support to wife in the amount

of $3,000 per month for a period of three years and spousal

maintenance in the amount of $1,000 for an additional

five years. In its property division, the trial court awarded

wife several assets including the family house, which had

equity of approximately $85,000, and a 2004 Volvo worth

$5,190. Assets awarded to husband included the Vintage

Apartments, which had equity of more than two million dollars,

a guitar collection worth $48,520, a 2009 BMW worth

Cite as 269 Or App 156 (2015) 159

$21,558, and a 2000 Dodge pickup worth $1,789. The court

also ordered that husband pay to wife an equalizing money

judgment in the amount of $150,000. Husband assumed

responsibility for the mortgage on the Vintage Apartments,

and wife assumed responsibility for the mortgage on the

family house. Each party also assumed responsibility for

any debt he or she incurred following the date of separation.

PROPERTY DIVISION

Wife argues that the court's award of the Vintage

Apartments entirely to husband without a larger equalizing

judgment was error. Unless we are convinced to exercise our

discretion to review the property division "anew upon the

record,” ORS 19.415(3)(b),2 we review the determination for

abuse of discretion. Morton and Morton, 252 Or App 525,

539, 287 P3d 1227 (2012). As set out above, wife asks that

we exercise our discretion to review the property division

de novo. We exercise that discretion sparingly and only in

exceptional cases. ORAP 5.40(8)(c); State v. S. N. R., 260 Or

App 728, 733, 320 P3d 569 (2014).

Here, wife contends that we should exercise de novo

review of the trial court's property division because its

award of the Vintage Apartments exclusively to husband

and without a larger equalizing judgment relied on factual

findings that are "just plain wrong.” We carefully consider

wife's arguments because, as we observed in S. N. R., a lower

court's reliance on a crucial finding that "does not comport

with the evidence in the record” can be a reason to exercise

our discretion to review de novo. 260 Or App at 733; see also

Hanscam and Hanscam, 247 Or App 207, 219, 268 P3d 715

(2011).

As pertinent to this inquiry, the trial court reasoned:

"While the goal of 'economic self-sufficiency' is worthwhile,

it cannot be achieved in this case without selling

the proverbial 'golden goose' because the only other asset

of consequence is the family home which has an equity of

approximately $85,000. A common option—an equalizing

2 The 2009 legislature changed the scope of our review in most equitable

proceedings to make review "anew upon the record” a matter for the court's discretion

in appeals filed after June 4, 2009. Or Laws 2009, ch 231, §§ 2, 3.

160 Morgan and Morgan

judgment—is also unrealistic because the current income

stream from the apartments does not accurately reflect

the cost of doing business (Husband is making interest

only payments on the mortgage and has not set aside adequate

reserves to resolve several existing maintenance

needs); therefore, to increase the amount of the mortgage

(assuming that option is available) to pay a judgment in the

amount sought by Wife would appear to only * * * postpone

the inevitable. * * *

"* * * [T]he negative consequences of the liquidation of

the Vintage Apartments far outweigh the equities that

favor Wife's position. Although the record does not contain

the information needed to calculate the tax consequences

or closing costs of a sale with precision, the evidence is

that both factors would reduce the net proceeds substantially

before Wife received her equal share. Thus, the asset

would be lost, and Wife would receive a significant portion

of [Husband's father's] estate—clearly in violation of

[Husband's father's] testamentary intent. While Wife may

be entitled to a monetary judgment in a lesser sum, it is not

'just and proper' to award an amount that would compel

the sale of the Vintage Apartments.”

Wife first challenges the finding that "substantial” tax

liability and closing costs would result from a sale of the

Vintage Apartments. She also, relatedly, asserts that the

trial court wrongly found that a larger equalizing judgment

would compel husband to sell the Vintage Apartments. The

trial court's findings that closing costs would reduce the proceeds

from a sale of the property and that a larger equalizing

judgment could force the sale of the property are permissible

inferences from the evidence, and we reject wife's

challenge to those findings without further discussion.

There is also some evidence that a sale of the apartments

would result in a significant taxable event. The evidence

establishes that equity in the Vintage Apartments

ranged from $2.085 to $2.155 million at the time of trial.

The key dispute between the parties' experts was the extent

to which income from a sale of the property would be treated

as ordinary income—which would be taxable—or as capital

gain—which would not be taxable due to complexities of the

tax code that are not necessary to explain in this opinion.

The trial court credited the testimony of husband's expert

Cite as 269 Or App 156 (2015) 161

that a substantial amount of sale proceeds would be taxable

as ordinary income and listed that concern as one of the

reasons for its property distribution.

On appeal, wife cites legal authority that she contends

clearly demonstrates husband's expert was wrong

and, thus, that the trial court's finding was wrong. See IRC

§ 1250 (2012) (explaining circumstance under which proceeds

from the sale of depreciable realty can be treated as

"ordinary income” subject to tax). In the trial court, however,

wife did not cite any legal authority addressing the issue of

tax consequences from a sale of the Vintage Apartments.

Rather, the key finding disputed by wife—the tax consequences

of a forced sale—was presented to the trial court as

merely a choice between conflicting expert testimony, and

the testimony of husband's expert provided some support

for the trial court's finding. Accordingly, even if we accept

wife's explanation that the finding contradicts governing

tax law, the factual mistake is a product of the manner in

which wife litigated the issue below. We are not persuaded

that this is an exceptional case in which we should exercise

our discretion to review de novo. See ORAP 5.40(8)(d).3 We,

thus, review the trial court's determination of a "just and

proper” property division for an abuse of discretion. In doing

so, we are bound by the trial court's express and implicit

factual findings if they are supported by any evidence in the

record. Sconce and Sweet, 249 Or App 152, 153, 274 P3d 303,

rev den, 352 Or 341 (2012).

ORS 107.105(1)(f) provides for the division of marital

property "as may be just and proper in all the circumstances.”

Determining what division is "just and proper”

involves consideration of several factors set out in ORS

107.105(1)(f) as well as equitable considerations that the

Supreme Court has instructed trial courts to consider in the

interest of promoting "consistency and predictability in dissolution

decrees[.]” Kunze and Kunze, 337 Or 122, 132, 92

3 ORAP 5.40(8)(d) sets out a nonexclusive list of considerations relevant to

our decision to exercise our discretion, including whether the trial court made

express factual findings or credibility findings; whether the trial court's decision

comports with "uncontroverted” evidence or "express findings” supported by the

record; and whether the appellant alerted the trial court to the disputed factual

matter and its importance.

162 Morgan and Morgan

P3d 100 (2004) (citation omitted). Under the abuse of discretion

standard, we will not disturb factual findings that

"are supported by evidence in the record,” and "we will disturb

the court's decision only if it misapplied the statutory

and equitable considerations required by ORS 107.105(1)(f).”

Christensen and Christensen, 253 Or App 634, 640-41, 292

P3d 568 (2012).

As the Supreme Court explained in Kunze, the

framework for arriving at a "just and proper” distribution of

property ordinarily should begin with determining whether

the asset was brought into the marriage or was acquired

during the marriage (a "marital asset”). 337 Or at 133-34.

There is a general presumption that both spouses contributed

equally to "marital assets” and that, "absent other considerations,

the 'just and proper' division” of those assets is

an equal division. Id. at 134; ORS 107.105(1)(f)(C). Wife,

however, does not dispute the trial court's determinations

that the equity in the Vintage Apartments is represented

by the investment of husband's inheritance and is not subject

to the presumption of equal contribution. See ORS

107.105(1)(f)(D)(i) (property acquired by gift to one party,

including inheritance, and separately held by that party is

not subject to the presumption of equal contribution).

In the absence of an applicable presumption, the

trial court must distribute the property according to what is

" 'just and proper' under the circumstances.” Cf. Benson and

Benson, 263 Or App 554, 557, 328 P3d 819 (2014) (describing

process if presumption is rebutted). That determination

"concerns the equity of the property division in view of all

the circumstances of the parties.” Kunze, 337 Or at 135.

Appropriate equitable considerations include

"the social and financial objectives of the dissolution, as

well as * * * the preservation of assets; the achievement of

economic self-sufficiency for both spouses; the particular

needs of the parties and their children; and * * * the extent

to which a party has integrated a separately acquired asset

into the common financial affairs of the marital partnership

through commingling.”

Id. at 135-36 (citations omitted). If no evidence supports

those or other equity considerations, it is "just and proper”

Cite as 269 Or App 156 (2015) 163

to award a marital asset that was acquired "free of any contributions

from the other spouse” to the spouse who separately

acquired it. Id. at 135 (citing Pierson and Pierson, 294

Or 117, 123, 653 P2d 1258 (1982)).

Wife contends that the "commingling” consideration

cuts strongly in favor of an equal division of the equity

in Vintage Apartments and that the trial court abused its

discretion by focusing exclusively on the goal of "preserving

assets.” Wife relies on Finear and Finear, 240 Or App

755, 766-68, 247 P3d 1238 (2011), rev dismissed, 351 Or

580 (2012), in which we said that the husband's reliance

on inherited property as the sole financial resource for

the family favored "allocating some portion of the original

inheritance to [the] wife.” (Emphasis added.) As wife correctly

points out, the trial court expressly found, "it is clear

that Husband 'integrated' his inheritance 'into the common

financial affairs of the marital partnership through commingling'

in the same fashion as in [Finear]” and that the

inherited business "morphed into the income stream from

the Vintage Apartments which has provided financial support

for both parties since that time.”

Wife, however, reads too much into the trial court's

finding and into our statement in Finear. In Finear the parties

were married 21 years and, after the husband received

a substantial inheritance, lived entirely off of the inheritance

and the income that it generated. The husband used

a substantial portion of his inheritance to purchase and

improve property that, by the time of trial, had increased

in value by approximately $900,000 over the original purchase

price. The trial court awarded the wife assets worth

$418,000 and awarded the husband the remainder of his

inherited assets, worth more than $1.4 million. Finear, 240

Or App at 759.

We explained that the husband's demonstrated

intention to keep his inheritance as separate property

weighed "strongly against dividing the inheritance/trust

assets” but that the parties' reliance on the inheritance as

their sole family income weighed in favor of allocating "some

portion of the original inheritance to [the] wife.” Id. at 765-

66. Ultimately, we held in Finear that the trial court's award

164 Morgan and Morgan

to the wife of assets amounting to half of the increased property

value gave her "a significant portion of the inheritance/

trust property” and was "well within its discretion[.]” Id. at

768. We emphasized:

" '[B]ecause it is an equitable consideration, commingling

is not an all or nothing proposition. Instead, commingling

falls along a spectrum. In some cases, a particular asset

may be commingled to such an extent that it would be inequitable

to divide it in any manner other than equally. In

other cases, an asset may be less commingled and therefore

subject to a split into unequal shares.' ”

Id. at 765 (quoting Tsukamaki and Tsukamaki, 199 Or App

577, 586, 112 P3d 416 (2005) (citations omitted)).

As in Finear, the findings here describe husband's

intention that his inherited business interest remain a separate

asset. Following his father's death, husband remained

the sole stockholder of Morgan Built, Inc., and sole member

of Morgan Built Holdings, LLC, which owns the Vintage

Apartments. As both president and CEO of the corporation,

husband was in charge of the business decisions. He

conferred with wife only on "minor matters.” As in Finear,

those factors weigh against giving wife a share of the asset

purchased by husband's inherited business, but the parties'

reliance on that inheritance as their source of income

weighs in favor of a property division that gives wife some

portion of husband's inheritance. In Finear, the trial court

adequately addressed that consideration by awarding the

wife half of the gain in value from investment of the husband's

inheritance. The parties here were married less than

half the time of the parties in Finear, and the investments

from husband's inheritance lost rather than gained value

during the marriage.4 The equalizing judgment that husband

has been ordered to pay wife is effectively a portion of

what remains of his inheritance. Under the circumstances,

there is no basis for concluding that the trial court's property

division constituted an abuse of discretion.

4 Although the apartments' purchase was partly funded by the loan for which

husband and wife both signed, husband was assigned full responsibility for that

obligation, and his failure to make any payments toward principal means the

equity in the apartments comes entirely from the investment of Morgan Built

Holdings' assets.

Cite as 269 Or App 156 (2015) 165

Moreover, we emphasized in Finear that "[a] just

and proper division of marital property concerns the equity

of the property division in view of all the circumstances of

the parties.” 240 Or App at 766 (citing Kunze, 337 Or at 135;

Gano-Ridge and Ridge, 211 Or App 393, 409, 155 P3d 84

(2007)). Here, the trial court was primarily concerned with

the circumstance that the apartments were "the proverbial

'golden goose' ” that allowed the parties to live on an income

stream significantly greater than either party could achieve

in the job market. Indeed, as explained below, the court set

both the spousal and child support awards based on the

$11,000 per month income stream from the apartments. It

was in this context that the court highlighted the need to

preserve the asset and not "award an amount that would

compel the sale of the Vintage Apartments.” See Haguewood

and Haguewood, 292 Or 197, 206-08, 638 P2d 1135 (1981)

(observing that providing for a "self-sufficient, post-dissolution

life apart” sometimes "cannot be well served by a simple

division of assets,” and that "we can expect no more golden

eggs if the decree kills the goose that lays them”; affirming

trial court's award of the family business entirely to the

husband). Ultimately, as in Finear, "there is no basis for concluding

the trial court misapplied the statutory and equitable

considerations that ORS 107.105(1)(f) requires * * *.” 240

Or App at 768 (citing Kunze, 337 Or at 136). As the trial

court acknowledged, "reasonable minds will differ concerning

the equitable priorities herein,” and we are unwilling

to say that the court's property division was an abuse of its

discretion.

SPOUSAL SUPPORT

As set out above, the trial court awarded wife

transitional spousal support of $3,000 per month for three

years and spousal maintenance of $1,000 per month for

an additional five years. Wife does not ask us to exercise

de novo review of this determination, but she contends that

the trial court abused its discretion because it treated husband's

income as limited to $11,000 and because it "seems

to have downplayed or ignored” several of the factors that

ORS 107.105(1)(d) directs the court to consider in awarding

spousal support. We disagree.

166 Morgan and Morgan

ORS 107.105(1)(d) provides for awards of spousal

support in "an amount of money for a period of time as may

be just and equitable[.]” In reviewing that determination for

an abuse of discretion, we are bound by the trial court's findings

of historical fact that are supported by any evidence in

the record, and we will disturb the trial court's determination

of what constitutes a "just and equitable” amount only if

the court "misapplied the statutory and equitable considerations

required by ORS 107.105.” Berg and Berg, 250 Or App

1, 2, 279 P3d 286 (2012) (citing Kunze, 337 Or at 136).

We disagree with wife that the trial court's spousal

support award assumed husband's income would remain

limited to the apartment proceeds or that the court failed to

consider the "health of the parties” or the "standard of living

established during marriage.” The order indicates that

the court based its spousal support determination on wife's

needs in the short and long term and that it considered the

required statutory factors, specifically that "the step-down

award is proper given Wife's heightened need for support

during the initial period given her slow recovery from her

medical condition; however, given Wife's age, an award of

indefinite support is not warranted.”

Wife argues that the amount and duration of the

spousal support award are not "in line” with awards we have

set as "just and equitable” in cases for which we exercised

de novo review. See Quant and Carrier, 234 Or App 336, 227

P3d 832, rev den, 348 Or 621 (2010); Gillis and Gillis, 234 Or

App 50, 227 P3d 809 (2010). Our role here, however, is not

to make our own determination of the "just and equitable”

amount of spousal support. The trial court appropriately

exercised its discretion in arriving at its determination of a

"just and equitable” amount of spousal support.

CHILD SUPPORT

The trial court ordered the parties' child support

obligations to be based on income of $11,000 per month for

husband and minimum wage earnings for wife. Wife contends

that the determination as to her obligation is wrong

because it conflicts with the trial court's finding that she

was unable to work through 2012. She also contends that

Cite as 269 Or App 156 (2015) 167

the determination as to husband is wrong because it fails

to take into account his potential income from employment.

We review whether the trial court correctly calculated

the parties' incomes under the guidelines for legal error.

McMurchie and McMurchie, 256 Or App 712, 721, 304 P3d

751 (2013).

The Division of Child Support promulgates rules

pursuant to ORS 25.275(1) that establish a formula for

determining child support awards based on presumed

income. Id. at 715. After the dissolution trial, the Division of

Child Support significantly modified the rule defining how

presumed income is calculated for purposes of child support

awards. OAR 137-050-0715 (2012), amended by OAR 137-

050-0715 (2013). However, we review the presumed-income

calculations for legal error under the previous rule because

the trial court calculated child support in this case prior

to those amendments, which became effective on July 1,

2013. See OAR 137-050-0700 (2013) ("Any change to the

guidelines applies to all calculations prepared on or after

the effective date of the change. * * *.”) A parent's presumed

income means "the actual or potential gross income of a

parent,” depending on the circumstances. OAR 137-050-

0715(1) (2012). For a parent who has a "verified disability,”

the presumed income is whatever actual income the parent

receives. OAR 137-050-0715(7)(b) (2012).

Wife's first challenge to the court's child support

calculation emphasizes the "verified disability” provision.

As set out above, the trial court set wife's child support

obligation according to a potential income from full-time

minimum-wage employment. Wife argues that this conflicts

with the trial court's express findings. Specifically, the

court's order sets out:

"[T]he medical evidence supports a finding that Wife

suffers from the impingement of a nerve in the pelvic

region, and that she suffers pain and the impairment of

bodily functions as a result. * * * [T]he best evidence is that

Wife should be physically capable of employment in 2013.”

We interpret the trial court's findings to mean that wife had

a "verified disability” through at least 2012, a determination

that required it to use her "actual income” to calculate

168 Morgan and Morgan

the child support obligation through at least 2012.5 See OAR

137-050-0715(7)(b) (2012). Therefore, we remand for a recalculation

of the child support obligation because the court's

calculation is not consistent with its express findings.

Wife also argues that the trial court miscalculated

husband's presumed income for purposes of child support.

She relies on McMurchie, in which we explained how—

under OAR 137-050-0715(7)(b) (July 2010)—trial courts

should evaluate the child support obligation of a parent who

is able to work but instead relies only on unearned actual

income. See 256 Or at 724-25. We decline to reach that

issue, however, because wife proposed a different interpretation

of the rule below and because our remand for recalculation

of wife's obligation will require the trial court to

recalculate child support as to both parents6 "using the new

guidelines[,]” OAR 137-050-0700, which have significantly

altered the language we interpreted in McMurchie.



* * *



5 There is no express definition of "verified disability” in the child support

guidelines or in case law interpreting those guidelines. Given its plain meaning,

however, "verified” in this context means "authenticated by affidavit” or

"substantiated by competent proof.” Webster's Third New Int'l Dictionary 2543

(unabridged ed 2002). The court's emphasis that medical evidence substantiates

an "impairment of bodily functions” sufficient to prevent wife from performing

gainful work throughout 2012 amounts to a determination that wife had a "verified

disability” through that time.

6 See, e.g., State v. Nguyen, 268 Or App 789, 797, ___ P3d ___ (2015) (observing

that remand for recalculation of one parent's support obligation would give trial

court an opportunity to revisit its determination of the other parent's income).

In summary, we hold that the trial court did not

abuse its discretion in its property division or determination

of spousal support. We do, however, conclude that the trial

court erred as a matter of law in calculating wife’s presumed

income for child support purposes.

Award of child support reversed and remanded for

recalculation; otherwise affirmed.