[WSBARP] Watanabe v. Watanabe

Tue Apr 5 21:00:12 PDT 2022

As Jason suggests, it is worth reading the decision. I’ll take a stab at the question and pose a question and possible answer well beyond the scope of my practice.  I don’t practice in family law and dissolution proceedings.

The court did not interpret the language in the deed “to establish community property” as establishing the intent to recharacterize the property from separate property to community property.  Even if the deed did have language that stated such intent, to recharacterize the separate property to community property, the court would not consider that to be determinative in a dissolution proceeding where the parties to the marriage are the only parties affected by the recharacterization.    The court seems to focus the quoted language on the result of the characterization for purposes outside of a dissolution proceeding.  The court makes two important distinctions in its decision. First the court limits its conclusion that the joint title gift presumption does not apply only in connection with dissolution matters. Second, the court admits extrinsic evidence to show the transferring spouse’s intent for the purpose of “determining the character of property in a dissolution proceeding”.   Accordingly, the actual intent, as distinct from the objective manifestation of intent on the deed, of the transferring spouse is the focus in a dissolution proceeding.  Conversely there is hope that the objective manifestation of intent to recharacterize the property may very well still control outside of dissolution proceedings.   The impact appears to be that whether property is characterized as community or separate under these facts will be determined differently in a dissolution proceeding than outside of a dissolution proceeding.

I would venture to guess that where a dissolution proceeding exists, the trial court will be forced to look beyond the statements in the deed and peer instead into the minds of the parties to the marriage.  In this case, the court addressed only the intent of the transferring spouse and did not address the non-transferring spouse’s subjective or objective belief of the true intent of the transferring spouse.  The court here, for example,  did not address what might have happened if the transferring spouse executed the deed with secret intentions not to recharacterize the property but expressing the opposite to the non-transferring spouse in order to convince the non-transferring spouse to take out a loan for the business only to divorce the non-transferring spouse after the loan was satisfied while asserting that the intent was never to convert the separate property to community property.  Might the actual subjective and secret intentions of the transferring spouse control the characterization of the property transferred by deed from separate property to community property where the non-transferring spouse relies upon the objective believe that the transferring spouse subjectively intended to change the separate property to community property?   Perhaps the subjective intent of the transferring spouse means the property maintains its separate character but misleading nature of the transferring spouse’s behavior or estoppel is applied to the equitable division of assets.  In the end, the decision is clear that it only applies in dissolution proceedings.

Russell D. Garrett  |  Attorney
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Jason Burnett
Sent: Tuesday, April 5, 2022 9:30 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Watanabe v. Watanabe

Mates-

I’ve yet to see a listserve discussion of the Supreme Court’s unanimous opinion in In re Marriage of Watanabe.  https://www.courts.wa.gov/opinions/pdf/1000456.pdf<https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.courts.wa.gov%2Fopinions%2Fpdf%2F1000456.pdf&data=04%7C01%7Cjburnett%40reedlongyearlaw.com%7C01139fcd0e8249f33aca08da142969ef%7Cc42db07999e840ff9b106ba95e2918a6%7C0%7C0%7C637844465340914312%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=Z9z%2F6ffPxm%2F4pfJ1Qm2p1u9Ji7sR3izfALpH2drujNI%3D&reserved=0>  I’m curious to hear the analysis and opinions of my peers.
FACTS
Husband and wife seek a loan to purchase a horse property and offer Wife’s separate real property as security. The bank agreed to make the loan, but only on the condition that Wife add Husband to title of the property offered as security, since Husband had no credit history.  Wife quitclaimed her interest in her separate property to herself and Husband “to establish community property.”

The Supreme Court unanimously affirmed the admission of extrinsic evidence to determine whether Wife “had the intent to gift her separate property to the community.”  According to the Supremes “the inquiry here was not whether there was a valid quitclaim deed but, rather, whether or not Pedersen had the intent to gift her separate property to the community. The extrinsic evidence was not admitted to dispute what the deed actually says, and the title was not altered here. The evidence was used solely to show Pedersen’s intent, which the trial court used to determine the nature of the property.”

It’s a unanimous opinion, so I guess it’s super-obvious to the nine justices who signed it, but it’s a mystery to me how the extrinsic evidence was admitted for any purpose other than contradicting the intent stated in the deed itself: “to establish community property.”  Between Hudesman, Borghi and Watanabe, it feels like Washington courts are pretty far down an interpretive dead-end road when it comes to interpreting the effect of deeds—how can anyone rely on a deed anymore without first contacting the signer and asking them if they intended to do what they said they intended to do in the deed itself?

Jason W. Burnett
Attorney at Law
Reed Longyear Malnati Corwin & Burnett, PLLC
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