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Collins v. Wassell

Supreme Court of Hawai'i

February 28, 2014

COLLEEN P. COLLINS, Petitioner/Plaintiff-Appellant,
v.
JOHN A. WASSELL, Respondent/Defendant-Appellee

Page 1217

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. ICA NO. 30070; FC-D NO. 07-1-0206.

Joy A. San Buenaventura, for petitioner.

Andrew S. Iwashita, for respondent.

RECKTENWALD, C.J., NAKAYAMA, AND McKENNA, JJ., WITH ACOBA, J., CONCURRING SEPARATELY, AND POLLACK, J., DISSENTING SEPARATELY.

OPINION

Page 1218

[133 Hawai'i 36] RECKTENWALD, C.J.

In June 2000, Colleen Collins and John Wassell gathered at a park with their friends, families, and a minister, for the apparent purpose of getting married. After the wedding ceremony, the couple began having second thoughts about the marriage because of its financial implications. Specifically, they believed that Collins and her two daughters would be better able to afford college tuition if Collins was listed as a single parent on financial aid applications. Thus, the couple requested that the minister not submit the completed license and certificate of marriage to the State Department of Health. The minister returned the form to Collins and Wassell, and they subsequently wrote to the State Department of Health stating that they were not getting married.

Following a one-week honeymoon, Collins and Wassell began living together. They each maintained individual financial accounts, but also shared a joint bank account. The couple deposited monetary gifts from their wedding into the joint account and they each agreed to deposit funds into the account. Collins made regular monthly deposits to the joint account. Collins also deposited funds from the sale of her separately owned townhouse and a tax refund into the joint account. Funds from the joint account were used to pay off the mortgage on Wassell's separately owned house, and for the couple's shared utility and grocery bills. The couple legally married in January 2005, after Collins no longer needed financial aid to fund her daughters' college educations.

In 2007, Collins filed for divorce against Wassell, and argued that she was entitled to an equalization payment for her contributions during the period of premarital cohabitation. Wassell, however, maintained that an equalization payment was not warranted because he and Collins had agreed that they would each maintain separate financial identities until the time of their legal marriage. The family court agreed with Wassell and determined that the couple did not form a premarital economic partnership within the meaning of Helbush v. Helbush, 108 Hawai'i 508, 122 P.3d 288 (App. 2005).[1] The Intermediate Court of Appeals affirmed the divorce decree entered by the family court, and Collins sought review in this court.

For the reasons set forth below, we now affirm the rule set forth in Helbush, that, in dividing and distributing property of a married couple pursuant to Hawai'i Revised Statutes (HRS) section 580-47, premarital contributions are a relevant consideration where the parties cohabited and formed a premarital economic partnership. We further hold that the family court clearly erred in concluding that Collins and Wassell did not form a premarital economic partnership. We therefore vacate the judgment of the ICA and the family court's divorce decree and remand to the family court for further proceedings consistent with this opinion. Because our resolution of these two issues is dispositive, we do not consider Collins's arguments that: (1) in the absence of a premarital economic partnership the family court should have nevertheless considered her premarital contributions; and (2) premarital contributions are a valid and relevant consideration warranting deviation from partnership principles.

Page 1219

[133 Hawai'i 37] I. Background

The following factual background is taken from the record on appeal.

A. Family Court Proceedings

On August 8, 2007, Collins filed a complaint for divorce against Wassell, alleging that their marriage was irretrievably broken. In her position statement, Collins stated that she should be awarded an equalization payment for her contributions during the couple's premarital cohabitation:

Cohabitation occurred on June 18, 2000 when [Wassell] moved into [Collins's townhouse]. [Wassell] did not pay [Collins's] mortgage at that time although he was receiving rent from his house. From the time of cohabitation until the date of marriage, the parties had a joint financial relationship where [Collins] paid off the mortgage in the marital house, previously owned by [Wassell] and continued to pay into the joint account from where joint bills were paid. Although[] marriage did not occur until 2005 equalization is due [Collins] for the amount of: $74,122.00. [Collins] is further entitled to her prorata rental equity due to [Wassell's] sole use of the marital home during separation.

(Emphasis added).

After Wassell filed an answer, he filed a motion for partial summary judgment, requesting that the family court determine the following: (1) the couple was married on January 19, 2005; (2) the couple agreed after their wedding ceremony on June 19, 2000, that they would not file their marriage license and would not be married; (3) the purpose of the couple not filing their marriage license was to allow Collins to complete financial aid forms as a single parent; and (4) the couple's " arrangement, whereby the partners would cohabitate but keep their finances separate while maintaining their single status . . . in lieu of a traditional marriage indefinitely and expressly for [Collins's] personal financial interest" was a valid and enforceable premarital agreement.

Collins filed an opposition to Wassell's motion arguing that pursuant to the ICA's decision in Helbush, she and Wassell had formed a premarital economic partnership after their 2000 wedding ceremony. The family court granted the motion in part, determining that Wassell's and Collins's date of marriage (DOM) was January 19, 2005, but denied the motion as to the remaining issues.

Wassell argued in his position statement the following:

[Collins] argues for deviation from the Partnership Model division based upon DOM [(]January 19, 2005) valuations. [Collins's] argument is based upon a June 18, 2000 marriage ceremony which she put on for show. Although [Wassell] thought that the marriage was taking place, at the post-ceremony reception [Collins] told [Wassell] that she did not want the marriage for financial reasons. [Collins's] daughters were about to attend prestigious colleges[.] . . . [Collins] would need financial aid to pay for the $30,000 plus annual cost. If [Collins] was married the financial aid available would be less. [Collins] wanted to keep their finances separate so she could complete the financial aid forms showing her separate individual income and expenses. [Wassell] agreed not to be married on June 18, 2000 and to keep their finances separate.
It is [Wassell's] position that there was no joint financial relationship from June 18, 2000, as [Collins] contends. It is [Wassell's] position that they loved each other and wanted to live together. When they lived together as gestures of their love they bought each other meals, and shared their living arrangements and helped each other in various ways.

A one-day trial was held on the division of the parties' marital estate. Collins and Wassell were the only two witnesses to testify and they testified in relevant part as follows.

Collins testified that, on June 18, 2000, she and Wassell had a wedding ceremony with their friends, families, and a minister. After the ceremony, the couple signed the marriage license, but neither Collins nor Wassell mailed the marriage license to the State Department of Health because Collins " was afraid that [her] daughters would lose a lot of financial aid that they were receiving for college." Specifically, Collins was concerned that the colleges would consider both her and Wassell's incomes in determining financial

Page 1220

[133 Hawai'i 38] aid awards for her daughters if she were married. Wassell told Collins that he thought her daughters should pay their own way through college. Collins did not believe that it was Wassell's responsibility to help pay for her daughters' college educations.

Collins further testified that, following their honeymoon, for a few weeks the couple moved back and forth between Collins's separately owned townhouse and Wassell's separately owned house. Wassell then moved into Collins's townhouse. Wassell moved all of his furniture into the townhouse, but left some appliances in his house. While the couple was living at the townhouse, Wassell did not pay any part of the mortgage nor did he pay rent to Collins. Collins paid for all of the townhouse's utilities. Collins acknowledged that Wassell may have done small things around the townhouse, but testified that he did not make any major repairs. While Wassell was living in Collins's townhouse, he was able to rent out his house.

Collins testified that, even though they were not legally married between June 2000 and January 2005, she and Wassell conducted their finances as if they were married. Specifically, Collins testified that although she and Wassell agreed to maintain their individual bank accounts, they also agreed to contribute to a joint bank account, which would be used to pay for shared living expenses. The monetary gifts the couple received at their wedding ceremony, totaling $1,120, were deposited into this joint account. Collins regularly deposited between $500 and $700 a month into the joint account. Collins also deposited a personal income tax refund totaling $1,043.60 into the joint account. According to Collins, Wassell made a few contributions to the account.

Collins sold the townhouse in 2001, at which point the couple moved into Wassell's house. The money from the sale of Collins's townhouse, totaling $23,020.74, was deposited into the joint account. On the same day that deposit was made, $4,239.59 from the joint account was used to pay off the mortgage on Wassell's house. Funds from the joint account were also used to pay for the utilities of Wassell's house, the couple's groceries, and gas for Collins's and Wassell's vehicles. Collins and Wassell continuously cohabited until their separation on January 1, 2007. Collins testified that, as of 2004, all of her friends thought that she was married.

Wassell testified that he made repairs and improvements to Collins's townhouse, such as replacing a water heater, painting, and fixing the plumbing, louvered windows, and an outdoor clothesline. Wassell acknowledged that Collins had paid approximately $4,200 to pay off the mortgage on his house, and testified that, after they were separated in 2007, he offered to repay Collins the money.

With regard to the marriage license that was signed but never submitted to the State Department of Health, Wassell testified that Collins wanted to remain single for purposes of completing the financial aid forms. Wassell further testified that he and Collins therefore agreed to have separate finances. According to Wassell, that agreement lasted until January 19, 2005, when he and Collins were officially married. At that point, Collins no longer needed to submit financial aid applications.

Wassell also testified that he made deposits into the joint account, which was previously held in his name only. Wassell explained that he and Collins set up the joint account so that they could both have access to its money, and so that bills could be paid automatically from the account.

Wassell indicated that he (1) paid Collins $1,000 on April 17, 2001, (2) paid for the propane, internet, and telephone bills with funds from his separate bank account, and (3) paid for food between ninety and ninety-five percent of the time that he and Collins went out to eat.

The family court made the following relevant findings of fact:

FINDINGS OF FACT

. . . .

16. Ms. Collins believed that if she were to marry Mr. Wassell and disclose financial information reflecting her change in financial status to the two colleges, she would likely be unable to afford the resulting tuition, with the consequence that her daughters would not be able to attend those colleges.

Page 1221

[133 Hawai'i 39] 17. In order to avoid that consequence, Ms. Collins and Mr. Wassell agreed that they would not mail their marriage license and certificate to the Department of Health, and that each of them would maintain separate financial identities, so that Ms. Collins could continue to qualify for the financial aid she needed to send her daughters to their schools of choice.

18. Ms. Collins believed that the financial responsibility for sending her daughters to college was hers alone, and that Mr. Wassell did not share in that obligation, and for his part, Mr. Wassell did not believe he was obligated to assist Ms. Collins with the financial burden arising from her daughters' college education.
. . . .
21. Mr. Wassell owned a residence in Hawaiian Paradise Park, and Ms. Collins owned a townhouse in Pacific Heights.
22. For a time, the couple went back and forth between the two residences, then settled on living in Ms. Collins'[s] townhouse.
23. Mr. Wassell's house in Paradise Park was rented out during some portion of the time that the couple lived in Ms. Collins'[s] townhouse.
24. The rent that Mr. Wassell received from the rental of his residence in Hawaiian Paradise Park was not shared with Ms. Collins.
25. Mr. Wassell did not pay rent to Ms. Collins during the period that the couple was living in Ms. Collins'[s] townhouse.
26. Shortly after the apparent marriage in June of 2000, Ms. Collins'[s] name was added to an account that Mr. Wassell had at CU Hawaii FCU, and the account thereafter remained a joint account.
27. The couple agreed that the joint account would be used for household expenses; both were to deposit funds in the account.
28. The couple received wedding gifts and gifts of cash at their apparent wedding in June, 2000; the cash gifts were deposited into the joint credit union account.
29. Following her addition to the joint account, Ms. Collins made regular monthly deposits, typically in the amount of $500.00, into the joint account.
30. Mr. Wassell made few, if any, deposits into the joint account during the years 2000 through 2007.
31. The funds in the joint account were used primarily for household expenses, i.e. food and household utilities.
. . . .
47. On the date of the legal marriage on January 19, 2005, Ms. Collins was owed a debt by Mr. Wassell in the amount of $4,239.59, which had been incurred when Ms. Collins used her funds to pay off the balance of Mr. Wassell's mortgage in December, 2001.
. . . .
67. On the [date of marriage (DOM)], [Collins] was owed a debt with a [net market value (NMV)] of $4,239.59 by [Wassell] (for the mortgage payoff on the HPP property). On the [date of the conclusion of the evidentiary part of trial (DOCOEPOT)], this debt remained unpaid, and thus unchanged in value. The DOM NMV of this debt is [Collins's] Category 1 asset.
. . . .

As relevant here, in its third conclusion of law, the family court stated that " [b]etween the dates of June 18, 2000, and January 19, 2005, the parties did not participate in an 'economic partnership' within the meaning of Helbush[], and the division of their marital assets by the court must therefore be based upon the date of their legal marriage." In summary, the family court analyzed this issue as follows.

The family court explained that, under Helbush, cohabitation alone is insufficient to establish an economic partnership. Specifically, the family court explained that " there must be a commingling of finances, assets, and energies sufficiently comprehensive to

Page 1222

[133 Hawai'i 40] establish a 'partnership.'" The family court stated that " there is no such thing, for these purposes, as a 'partial partnership.'" In this regard, the family court explained that " [p]arties who are emotionally involved with one another and who are cohabiting must inevitably [commingle] their energies and finances to some extent -- the exigencies of normal life and collective activity could scarcely allow it to be otherwise." Thus, the family court observed, " some measure of such commingling is to be expected in every instance of cohabitation, and does not by its mere existence rise to the level necessary to establish a Helbush 'economic partnership.'"

The family court then evaluated whether Collins and Wassell had " committed their energies and their assets to one another's purposes to the extent necessary to warrant a conclusion that they were engaged in a relationship akin to that found in a business partnership." The family court stated that although Collins and Wassell " quite explicitly commingled a portion of their funds for housekeeping purposes," they also " simultaneously maintained distinct separate financial identities."

The family court explained that the most obvious example of Collins's and Wassell's separate financial identities was the couple's conscious decision not to make their first marriage legal " for the express purpose of maintaining separate financial identities." The family court noted that Collins and Wassell had two motives in agreeing not to be married. First, Collins sought to take full advantage of the financial aid available to her, and, second, Wassell " could refrain from shouldering any share of that not insignificant burden." The family court stated that " [f]ar from reflecting the parties' intention to 'apply their financial resources to and for the benefit of each other's persons, assets, and liabilities,'" these facts reflected " the parties' express intention not to do so." (Citation and ellipsis omitted).

The family court specifically noted that Collins represented in her financial aid applications that she was single, and that Collins and Wassell signed a letter to the State Department of Health representing that they had decided not to be married. The family court further noted that both Collins and Wassell maintained separate individual checking, savings, and retirement accounts, and life insurance policies, and that Collins and Wassell each appeared to hold title to their own vehicle.

With respect to the joint account, the family court observed that Collins was the primary, if not the exclusive, contributor to the account, and that Collins's monthly deposits were " obviously insufficient to pay the living expenses of two adults." The family court concluded that the " joint account no doubt reflected a measure of financial cooperation by the parties, but it seems wholly inadequate to carry the weight of establishing an economic partnership between them."

Based on its findings and conclusions, the family court divided the marital estate and concluded that under a strict application of marital partnership principles, Collins would owe Wassell an equalization payment of $11,807.85. However, because Wassell had wasted assets after the family court's express order to the contrary, the court concluded that Collins was entitled to a deviation in the amount of $17,238.05. Accordingly, the family court ordered Wassell to pay a final equalization payment of $5,430.20, the difference between the deviation and Collins's equalization payment.

The family court filed its divorce decree, and Collins appealed.

B. ICA Appeal

On appeal, Collins argued that the family court incorrectly valued the parties' financial contributions on the date of marriage.[2] Instead,

Page 1223

[133 Hawai'i 41] Collins argued, the family court should have concluded that Collins and Wassell formed a premarital economic partnership on the date of their wedding ceremony, and should have calculated the value of the parties' assets and any equalization payments based on that date. Collins asserted that the majority of the family court's findings supported a conclusion that the parties had formed a premarital economic partnership. Collins argued that the family court's finding that the parties initially agreed not to become legally married in order to avoid negative financial aid consequences for Collins's daughters did not void this premarital economic partnership.

A majority of the ICA affirmed the family court's divorce decree. The ICA " decline[d] to overturn" the family court's determination that Collins and Wassell had not formed a premarital economic partnership, noting that the factors the family court cited in support of its decision " were relevant to evaluating the parties' intent and the degree to which they applied their resources and efforts 'to and for the benefit of each other's person, assets, and liabilities.'" In addition, the ICA concluded that the family court's decision was based on factual findings supported by substantial evidence. The ICA further concluded that because no premarital economic partnership was formed, it did not need to address Collins's argument that the family court erred in using the date of marriage in valuing Wassell's assets, dividing the parties' assets, and equalizing the parties' obligations.

In a dissenting opinion, Judge Reifurth stated that the family court erred in failing to utilize the analysis required by Helbush in determining that Collins and Wassell had not formed a premarital economic partnership. Judge Reifurth noted that the family court's analysis focused on Collins's and Wassell's attempt to maintain separate " financial identities," which he argued was not solely determinative of whether a premarital economic partnership was formed. Specifically, Judge Reifurth explained that:

The ultimate issues are whether, and the extent to which, prior to the [date of marriage], the parties applied their financial resources and individual energies for each other's person, assets, and liabilities, not whether, and the extent to which, the parties created joint bank accounts or added both of their names to their cars' titles. Thus, the thrust of the Family Court's inquiry must be to consider the nature and degree of such application, and it must do so adequately.
. . . .
I would vacate the Family Court's conclusion of law no. 3 [] that no premarital economic partnership was formed because the court took into consideration multiple irrelevant factors without considering multiple relevant factors that focus less on the form of the relationship and more on the day-to-day reality of how it worked, when making its decision.

(Footnote omitted).

II. Standard of Review


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