Cookson v. Cookson

Citations: 134 Or. App. 357; 895 P.2d 345; 1995 Ore. App. LEXIS 759Docket: 92-0811; CA A81976

Court: Court of Appeals of Oregon; May 17, 1995; Oregon; State Appellate Court

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Wife appeals the dissolution judgment, seeking spousal support and modifications to property distribution and child support, while Husband cross-appeals for the same modifications and contests a supplemental judgment for attorney fees. The court reviews the case de novo and remands for an amended judgment. At trial, Wife, aged 42, and Husband, 49, were married for 16 years and have two children, ages 15 and 13. Husband, a physician, earns over $10,000 monthly, while Wife, a high school graduate, currently earns $800 to $900 monthly from a small business they co-own. Throughout their marriage, Wife significantly contributed to Husband’s medical practice, especially during his alcohol rehabilitation, which he acknowledges. The couple accumulated substantial assets, including Husband's practice valued at $135,620, a pension worth $500,000, a clinic building valued at $304,966, and their business, Cookwell, Inc., valued at $75,000. The court awarded no spousal support, granted Wife custody of the children without Husband's visitation unless requested, and set child support at $1,010 based on their incomes. The court equally divided marital assets and liabilities, awarding Husband a total of $611,012 and Wife $524,996, along with a $43,008 equalizing judgment and a $50,000 judgment for attorney fees. Wife contends the court erred by not awarding spousal support, emphasizing that it should enable both parties to achieve a standard of living comparable to that during marriage, supported by evidence of her inability to work.

Evidence presented contradicts the wife's ability to work full-time, despite her efforts during the husband's alcohol rehabilitation and her part-time job at Cookwell. Although the court acknowledged her entitlement to spousal support, it did not award any, citing expected income from property division related to a medical clinic lease. However, considering the marriage's duration, the standard of living, and the wife's contributions, the court should have awarded indefinite spousal support, which is set at $1,000 per month.

The wife sought to introduce testimony regarding the husband's abuse to support her spousal support claim and challenge the child support award, but this evidence was excluded based on ORS 107.036(2) since child custody was not at issue. The court stated that if visitation was requested in the future, it could consider restrictions at that time.

Regarding property distribution, the wife contested the valuation of her interest in Cookwell, Inc. The court found a value of $75,000 for her half share, while valuations from both parties' experts significantly differed, with the husband's expert estimating $100,000 and the wife's at $21,000. The wife argued the husband's expert failed to account for a reasonable salary expense, overstating business income. The court agreed, determining a reasonable salary expense of $25,000, which adjusted the income stream to $18,625. Using a capitalization rate of 21.75%, the total business value was recalculated to $85,632, making the wife's half share worth $42,816.

Husband contests the court's property distribution, specifically the valuation of his pension, claiming the court failed to apply a 34 percent discount for future taxes. Both parties' experts agreed on the pension's asset value of $631,445, but differed on the discount. Husband's expert suggested a discounted value of $416,754 using a 34.5 percent tax rate, while Wife's expert argued that future tax rates are too uncertain for any discount to be applied. The court settled on a 20.5 percent discount, resulting in a pension value of $500,000. Citing precedents, the court found no justification for the 20.5 percent rate and adopted a 34 percent discount, valuing the pension at $416,754. Consequently, Cookwell, Inc. was valued at $42,816, leading to Wife receiving $492,812 and Husband $527,766, creating a property disparity that entitles Wife to an equalizing judgment of $17,477.

Both parties also challenged the child support calculations, claiming miscalculations of their incomes. Wife argued that the presumed child support amount was rebutted by evidence of the children's needs; however, the court affirmed the trial court's findings. The case was remanded solely for recalculating child support to consider spousal support awarded. 

Husband also objected to a supplemental judgment requiring him to pay $50,000 towards Wife's attorney fees. The court noted that awarding attorney fees is largely at the trial court's discretion and referenced a prior case where equal asset distribution negated the need for one party to cover the other's litigation costs. Here, both parties have sufficient resources to pay their own fees, making it inappropriate for Husband to pay Wife’s attorney fees.

On appeal and cross-appeal, the court remanded for an amended judgment that awards the wife $17,477 and spousal support of $1,000 per month starting October 19, 1993, along with child support, while reversing the supplemental judgment on the cross-appeal. No costs will be incurred by either party. Asset valuations were conducted by both parties' experts, with consensus values adopted where available, and discrepancies noted where they existed. The court applied a 20 percent discount to the pension's value to account for future tax liabilities, referencing prior case law that supports such discounts. The wife testified about her extensive work hours during the husband’s alcohol treatment to maintain his practice, and her need for therapy and counseling was considered in relation to spousal and child support. The wife's expert valued her half-interest in Cookwell at $34,000, using a book value approach with adjustments for a minority discount and salary expenses, while the husband’s expert applied different valuation methods. The husband argued for a 34 percent rate for asset valuation, consistent with his previous submissions, while acknowledging the speculative nature of future tax rates. The court noted that the reasonableness of attorney fees is fact-dependent, taking into account factors such as the complexity of the case, time required for preparation, and the results achieved, indicating that contributions to fees are part of the broader financial considerations in property division.