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S43076 Massee and Massee
State: Oregon
Docket No: CC93C-31338
Case Date: 01/22/1999

Filed: January 22, 1999

IN THE SUPREME COURT OF THE STATE OF OREGON

In the Matter of the Marriage of

DAVID MASSEE,

Respondent on Review,

and

CONSTANCE GENEVIEVE MASSEE,

Petitioner on Review.

(CC 93C-31338; CA A84859; SC S43076)

On review from the Court of Appeals.*

Argued and submitted March 7, 1997.

J. Michael Alexander, of Burt, Swanson, Lathen, Alexander, McCann & Smith, Salem, argued the cause and filed the briefs on behalf of petitioner on review.

John Hemann, of Garrett, Hemann, Robertson, Paulus, Jennings & Comstock, P.C., Salem, argued the cause and filed the briefs on behalf of respondent on review.

Before Carson, Chief Justice, and Gillette, Van Hoomissen, Durham, and Kulongoski, Justices.**

KULONGOSKI, J.

The decision of the Court of Appeals is affirmed in part and reversed in part. The judgment of the circuit court is reversed. The case is remanded to the circuit court for further proceedings.

* Appeal from Marion County Circuit Court,

Rodney W. Miller, Judge.

138 Or App 589, 911 P2d 320 (1996).

** Fadeley, J., retired January 31, 1998, and did not participate in this decision. Graber, J., resigned March 31, 1998, and did not participate in this decision.

KULONGOSKI, J.

We address two questions in this marital dissolution action. The first question is whether the appreciation, during the marriage, of assets brought to the marriage by husband and held separately by him is a marital asset under ORS 107.105(1)(f) (set forth below). The trial court divided the marital property without deciding this question. We conclude, as did a divided Court of Appeals sitting en banc, that such appreciation is a marital asset.

The second question is whether wife is entitled to share in that marital asset. The trial court concluded that wife was not entitled to share in the appreciation of husband's separately held assets and awarded husband all the interest in those assets, including any appreciation in the value of those assets that occurred during the marriage. On appeal, the Court of Appeals concluded that husband successfully rebutted the presumption in ORS 107.105(1)(f) that both spouses contributed equally to the acquisition of marital assets and affirmed the trial court's division of the marital property. Massee and Massee, 138 Or App 589, 599, 601, 911 P2d 320 (1996) (en banc). As we explain post, we affirm in part and reverse in part the decision of the Court of Appeals, reverse the judgment of the circuit court, and remand the case to the circuit court for further proceedings.

The Court of Appeals reviewed this case de novo. Pursuant to ORS 19.125(4), this court also may review de novo, or it may limit its review to questions of law. The facts relevant to the resolution of the issues before us are not in dispute, although their legal significance is. Accordingly, there is no reason to review de novo. Denton and Denton, 326 Or 236, 238, 951 P2d 693 (1998). We take the following undisputed facts from the opinion of the Court of Appeals and from the record.

The parties were married in February 1991, and husband filed for dissolution of the marriage in February 1993. Husband has been a farmer for most of his adult life. At the time of the marriage, he owned substantial farming, business, and real estate holdings. Those holdings included the Mission Nut Company, the Mission Cherry Company, a farm, a residence, a large tract of land known as the "bayou property," and commercial buildings in Salem and Wilsonville. The Wilsonville building contained a retail hardware business and related equipment that husband owned.

Wife brought into the marriage a car and some personal items. Before the marriage, wife worked as a clerk at a local bank and had completed a variety of classes at Chemeketa Community College. Her principal source of income before the marriage was the sale of stocks given to her by her mother. At the time of the marriage, wife was employed part-time as a manicurist. Wife also brought into the marriage a small amount of personal debt, less than $5,000. Husband paid that debt during the marriage.

During the first year of the marriage, wife worked infrequently as a manicurist. She also worked, without pay, for no more than four months as manager of husband's hardware store. Wife worked between 45 and 70 hours during one hazelnut harvest and was paid by husband for that work. She worked for husband between 10 hours and 50 hours during one cherry harvest. Husband did not pay her for that work. On occasion, wife also provided refreshments to farmers while they waited to unload crops at husband's cherry and hazelnut businesses.

Early in the marriage, wife expressed a desire to attend school and acquire additional vocational training. Husband requested that wife stay home and manage the household, and he assured her that he would take care of her in the future and that she need not work outside the home. Wife acquiesced in that matter.

The parties separated briefly in August 1991, approximately six months after their marriage. The parties separated again in late 1991. In November 1991, wife stopped working at the hardware store. She took approximately $5,000 from the hardware store business account. Contemplating filing for dissolution of the marriage, she spent about $1,500 of that money on legal fees and about $300 on food and incidentals. She later returned the remainder to husband's accounts.

Husband did not place wife's name on any of his properties. Wife did not contribute any of her separate money to the upkeep or improvement of the businesses, equipment, or properties that husband brought into the marriage. Throughout the marriage, husband kept all his bank accounts separate from wife's, with two exceptions. Wife was on the hardware store business account during her tenure as manager of that business. The parties also maintained a joint checking account for household expenses. Husband typically deposited $550 each month into that joint checking account, which wife then used for groceries, clothing, and incidental expenses. Husband paid the home mortgage and all improvements, repairs, and utilities from his separate accounts.

Throughout the marriage, except for the periods when the parties were separated, wife worked as a homemaker, in addition to the occasional paid and unpaid employment in husband's businesses noted above. She did the shopping, cooking, errands, and laundry, and she generally managed the marital household. Wife also spent approximately 1,000 hours improving the exterior appearance of the family residence, including spraying for weeds, power-washing the house and carport, and maintaining and improving landscaping.

The parties' final separation occurred in early 1993, and husband filed for dissolution of the marriage in February 1993. The trial court concluded that the parties had not commingled their financial affairs, that the parties easily could be restored to their premarital financial positions, and that the property division should be in the nature of a "rescission," "notwithstanding whatever appreciation occurred in the assets." Massee, 138 Or App at 592. Accordingly, the trial court did not determine husband's exact net worth either at the time of marriage or at the time of dissolution. The trial court awarded husband all the assets that he brought into the marriage, including any appreciation of those assets that occurred during the marriage. Id. The trial court awarded wife the property she brought into the marriage and six months of spousal support at $1,750 per month, as well as most of the personal property acquired jointly during the marriage, with an approximate total value of $17,250. Id.

Wife appealed, assigning error to the trial court's division of property. She argued that the trial court should have awarded her a share of the appreciation, during the marriage, of the assets that husband brought into and held separately during the marriage, because such appreciation is a marital asset. Id. at 592-93. Wife also argued that the trial court's application of the rescission doctrine, without regard to ORS 107.105(1)(f), failed to recognize her efforts as a homemaker and ignored the statutory presumption of equal contribution to the acquisition of marital assets. Id. at 593. The Court of Appeals concluded that the appreciation, during the marriage, of husband's separately held assets is a marital asset, and that the statutory rebuttable presumption of equal contribution, ORS 107.105(1)(f), applied to the acquisition of that appreciation. Id. at 594-96. The court then affirmed the trial court's property division after concluding that wife did not contribute, either directly or indirectly, to the appreciation of husband's separately held assets, and that husband thus had overcome the statutory rebuttable presumption of equal contribution. Id. at 599-600. We allowed wife's petition for review.

We begin our analysis with the pertinent statutory wording. ORS 107.105(1)(f) governs the division of marital property in a marital dissolution action. That paragraph is long, complicated, and somewhat cumbersome. The first, third, and fourth sentences of paragraph (1)(f) are relevant to this case. We quote those sentences as they appear in the statute:

"(1) Whenever the court grants a decree of marital annulment, dissolution or separation, it has power further to decree as follows:

"* * * * *

"(f) For the division or other disposition between the parties of the real or personal property, or both, of either or both of the parties as may be just and proper in all the circumstances. * * * The court shall consider the contribution of a spouse as a homemaker as a contribution to the acquisition of marital assets. There is a rebuttable presumption that both spouses have contributed equally to the acquisition of property during the marriage, whether such property is jointly or separately held."(1)

In interpreting the wording of a statute, this court's task is to discern the intent of the legislature. PGE v. Bureau of Labor and Industries, 317 Or 606, 610, 859 P2d 1143 (1993). We discern that intent by examining, first, the text and context of the statute. Id. at 610-11. The context includes "other provisions of the same statute and other related statutes," id. at 611, as well as relevant judicial construction of those statutes. See Owens v. Maass, 323 Or 430, 435, 918 P2d 808 (1996) (context includes judicial constructions of earlier versions of relevant statutes). If our analysis of those sources discloses the legislature's intent, we proceed no further. PGE, 317 Or at 611.

The legislative intent underlying ORS 107.105(1)(f) is clear from the text and context of the statute. The overall goal of paragraph (1)(f), as indicated by its first sentence, is a distribution of marital property(2) that is "just and proper in all the circumstances." See, e.g., Denton, 326 Or at 246 ("The goal continues to be the establishment of a property division that is just and proper."). The remainder of ORS 107.105(1)(f) lists specific circumstances that the court may encounter in making a division of marital property and specifically directs the court as to how it should treat those circumstances when making a property division. The statute thus announces principles that are the guide to the court's exercise of its discretion when dividing marital property. See Pierson and Pierson, 294 Or 117, 120, 653 P2d 1258 (1982) (so holding; construing former ORS 107.105(1)(e), renumbered as ORS 107.105(1)(f)); Haguewood and Haguewood, 292 Or 197, 199-204, 638 P2d 1135 (1981) (same). Each of the three quoted sentences in paragraph (1)(f) states a significant component of the legislature's policy regarding the division of property in a marital dissolution action. Accordingly, we analyze each sentence in detail.

As noted above, the first sentence of paragraph (1)(f) grants the court broad authority to make a "division or other disposition" of the parties' property "as may be just and proper in all the circumstances." ORS 107.105(1)(f). That authority is limited, however. The third and fourth sentences of paragraph (1)(f) create two requirements that guide the court in deciding how to exercise the authority granted by the first sentence.

The third sentence of paragraph (1)(f) applies if, during the marriage, one spouse was a "homemaker." The statute provides no definition of that term. Thus, we rely for the meaning of the term "homemaker" on its common dictionary definition:

"one that makes a home: one whose occupation is household and family management -- usu. used of a wife or mother as distinguished from a paid housekeeper." Webster's Third New Int'l Dictionary, 1083 (unabridged ed 1993).

The parties oftentimes will agree, as they apparently did here, that one spouse functioned during the marriage as a homemaker. If the parties do not agree, the court must decide from the evidence whether the party who claims to have functioned as a homemaker during the marriage has proved that fact.

The third sentence of ORS 107.105(1)(f) requires recognition of the homemaker spouse as an economic contributor to the marriage, rather than as a passive recipient of economic benefits provided by the breadwinner spouse. See, e.g., Pierson, 294 Or at 122 (stating principle). A homemaker spouse contributes to the acquisition of marital assets, because the performance of domestic tasks by one spouse frees the other spouse to devote energy and concentration to other tasks that may generate marital assets. See, e.g., Denton, 326 Or at 243 (wife's full-time work outside of the home and her performance of homemaker tasks frees husband to devote energy and concentration to medical school studies and dermatology internship).

The third sentence of paragraph (1)(f) has two significant features. First, that sentence requires the court to determine that a homemaker spouse made "a contribution" (emphasis added) to the acquisition of marital assets. That sentence prohibits the court from determining that the homemaker spouse made no contribution to the acquisition of marital assets simply because that spouse attended to the home and family and, consequently, played no direct role in the business or other activity that created marital assets. Second, that sentence does not assign any particular evidentiary weight to the homemaker's contribution. The court must determine the magnitude and, thus, the legal effect of a homemaker's contribution to the acquisition of marital assets in accordance with the evidence in each case.

The fourth sentence of paragraph (1)(f) addresses the manner in which the court determines the comparative evidentiary weight of the parties' respective contributions to the acquisition of marital assets. That sentence creates a rebuttable presumption that both spouses have contributed equally to the acquisition of marital assets.(3)

The rebuttable presumption created by the fourth sentence of paragraph (1)(f) functions in the same manner as any other rebuttable presumption. The basic fact required for the operation of the presumption of equal contribution in paragraph (1)(f) is that the parties acquired property during their marriage. If a party establishes that fact, the court, in the absence of rebuttal evidence, is bound to accept as true that the parties contributed equally to the acquisition of the marital assets. If neither party seeks to rebut the presumption of equal contribution, the court has no occasion to consider or compare the parties' actual contributions, including the contribution of a homemaker spouse, to the acquisition of marital assets. In that type of case, paragraph (1)(f) directs that the court presume that the parties' relative contributions to the acquisition of marital assets were equal. The case at bar is not that type of case.

If either or both of the parties seek to rebut the presumption of equal contribution, the burden of proof identified in Stice and Stice, 308 Or 316, 326, 779 P2d 1020 (1989), applies:

"OEC 308, which is applicable to marital dissolution cases, provides:

"'In civil actions and proceedings, a presumption imposes on the party against whom it is directed the burden of proving that the nonexistence of the presumed fact is more probable than its existence.'

"The spouse disputing the presumption of equal contribution has the burden of proving by a preponderance of the evidence that it is more probable than not that the other spouse did not contribute equally to the acquisition of the property. OEC 308; ORS 107.105(1)(f)." (Emphasis in original.)

In deciding whether either party has rebutted the presumption of equal contribution, the court may consider any admissible evidence that is probative of the question whether the parties contributed unequally to the acquisition of marital assets.

In assessing the magnitude of the homemaker spouse's contribution, and in comparing the homemaker spouse's contribution to that of the breadwinner spouse in order to determine whether the presumption of equal contribution is rebutted, the court must refrain from either overvaluing or undervaluing the contribution of the homemaker spouse merely because the homemaker spouse made that contribution in the context of the household or the family, rather than in a commercial or other nondomestic context. The court also must keep in mind that, in the categorical sense, a homemaker spouse's contribution in a domestic setting is indistinguishable analytically from a breadwinner spouse's contribution to the acquisition of marital assets in a business or other nondomestic setting. Stice, 308 Or at 329.

In deciding whether the presumption of equal contribution is rebutted, the court first must determine the magnitude of each spouse's overall contribution to the acquisition of marital assets from evidence in the record. If one spouse is a homemaker, that determination necessarily will include an assessment of the homemaker spouse's contribution to the enterprise of homemaking.(4) A homemaker spouse's overall contribution may consist of a combination of domestic contributions and economic or other nondomestic contributions.(5)

Once the court has determined each spouse's overall contribution to the acquisition of marital assets, the court compares the respective contributions of the spouses. The ultimate question is whether the spouse seeking to rebut the presumption of equal contribution has proved, by a preponderance of the evidence, that the other spouse did not contribute equally to the acquisition of marital assets. If the court determines that the presumption of equal contribution is rebutted, the presumption drops from the case and the court divides the property according to the magnitude of each spouse's contribution to the acquisition of marital assets. In other words, the court distributes the marital assets without regard to any presumption, but in a manner that is just and proper in all the circumstances, including the proven contributions of the parties to the acquisition of marital assets.

We now turn to the question whether the Court of Appeals correctly applied ORS 107.105(1)(f) in this case. We begin by inquiring whether the appreciation, during the marriage, of husband's separately held assets is a marital asset.

As noted above, ___ Or at ___ n 2 (slip op at 7-8 n 2), ORS 107.105(1)(f) creates two classes of property -- marital property and marital assets. Pierson, 294 Or at 121-22. Marital property is "the real or personal property, or both, of either or both of the parties," and constitutes the entire class of property subject to the dispositional authority of the court in a marital dissolution action. ORS 107.105(1)(f); Pierson, 294 Or at 121. "Marital assets" include all the "real or personal property, or both, acquired by either of the spouses, or both, during the marriage." ORS 107.105(1)(f); Stice, 308 Or at 325; Pierson, 294 Or at 121-22.

To determine whether the appreciation, during the marriage, of husband's separately held assets constitutes a marital asset under ORS 107.105(1)(f), we first must determine whether the appreciation of those assets is "property." Second, we must determine whether the "acquisition" of that property occurred during the marriage. ORS 107.105(1)(f); Stice, 308 Or at 325; Pierson, 294 Or at 121-22.

The word "property" means something that is or may be owned or possessed, or the exclusive right to possess, use, enjoy, or dispose of a thing. Webster's Third New Int'l Dictionary at 1818. Thus, the appreciation of property is itself property. It may be owned or possessed, and rights of possession, use, and enjoyment attach to it. We conclude that the appreciation, during the marriage, of husband's separately held assets is "property" as that word is used in ORS 107.105(1)(f).

"Acquisition" means "the act or action of acquiring." Webster's Third New Int'l Dictionary at 19. The parties here agree that the marital asset at issue in this case was acquired during the marriage.

Because the appreciation, during the marriage, of husband's separately held assets is property, and because the acquisition of that property occurred during the marriage, we hold that any such appreciation is a marital asset. ORS 107.105(1)(f).

That holding is consistent with this court's prior decisions interpreting the term "marital assets" in ORS 107.105(1)(f). In Pierson, 294 Or at 122-23, the court held that property inherited solely by the wife, during the marriage, constituted "marital assets." In Stice, 308 Or at 328, the court held that stock acquired during the marriage and held separately by one spouse constituted "marital assets," as did the appreciation, during the marriage, of that stock. "Marital assets" also include property received as a gift by one spouse during the marriage, Jenks and Jenks, 294 Or 236, 240, 656 P2d 286 (1982), and property acquired by one spouse after separation but before dissolution of the marriage. Lemke and Lemke, 289 Or 145, 148, 611 P2d 295 (1980). The fact that property acquired during the marriage is solely in one spouse's name does not change its characterization as a marital asset. ORS 107.105(1)(f); Stice, 308 Or at 325; Jenks, 294 Or at 241.

Because the appreciation, during the marriage, of husband's separately held assets is a marital asset, the rebuttable presumption of equal contribution in ORS 107.105(1)(f) applies. The record in this case indicates that wife generally managed the marital household, attending to the cooking, cleaning, shopping, and laundry, and that she also helped maintain the family home, grounds, and landscaping. She thus was a homemaker. ORS 107.105(1)(f); Jenks, 294 Or at 241; Pierson, 294 Or at 122; Engle and Engle, 293 Or 207, 213-15, 646 P2d 20 (1982).

As noted above, there is no difference in kind, analytically, between husband's contribution to the acquisition of the marital assets at issue here and wife's homemaker contribution to that acquisition. The only difference may be one of magnitude. Husband, here the spouse challenging the presumption of equal contribution, must prove by a preponderance of the evidence that wife did not contribute equally to the acquisition of the appreciation, during the marriage, of husband's separately held assets. Stice, 308 Or at 236.

The Court of Appeals concluded that husband successfully rebutted the presumption of equal contribution. In reaching that conclusion, the court said:

"The businesses, real property and equipment have always been in husband's name alone. All business accounts have been kept separate from wife, and wife had no power to draw funds from them. Husband made all financial contributions to the maintenance, operation and improvement of the businesses, and he alone was responsible for and paid all debts that were incurred in operating them. Husband alone was responsible for managing the businesses.

"Wife did briefly work as a manager of husband's hardware store. She also worked for approximately one week on a single hazelnut harvest. She occasionally did 'errands.' And she provided refreshments to visiting farmers one season as they unloaded their crops. The record shows that, apart from those isolated instances of assistance, wife did not regularly contribute to the operation of the business or in any other way directly or indirectly contribute to the appreciation in the value of the assets at issue." Massee, 138 Or App at 599-600.

The question becomes whether, in deciding that husband had rebutted the presumption of equal contribution, the Court of Appeals gave the statutorily required consideration to wife's contribution as a homemaker. We conclude that it did not. The court's findings regarding wife's contribution make no mention, let alone demonstrate consideration, of wife's homemaker role. The court noted that "wife did not regularly contribute to the operation of the business." However, the court also found that wife "did not in any other way directly or indirectly contribute to the appreciation in the value of the assets at issue." It may be that wife's contribution as a homemaker to the appreciation of the asset in question was not a "direct" one. However, the court's finding that wife, as a homemaker, failed to make even an indirect contribution improperly deprives wife of the consideration of her homemaker contribution to which she is entitled by ORS 107.105(1)(f). The court cannot decide lawfully whether husband has rebutted the presumption of equal contribution unless it first gives the required consideration to wife's contribution as a homemaker to the acquisition of marital assets. The Court of Appeals incorrectly concluded that husband had rebutted the statutory presumption of equal contribution to the acquisition of marital assets in ORS 107.105(1)(f), because that court, in its analysis, did not give proper consideration to wife's contribution as a homemaker. If proper consideration were given to the record before the court at this time, including wife's homemaker contribution, the question whether husband has carried his burden of proof and rebutted the statutory presumption of equal contribution is indeed a close one.

This court ordinarily would resolve this case in one of two ways. The first possibility is that this court review de novo pursuant to ORS 19.125(4), make findings of fact and conclusions of law, and modify the trial court's judgment accordingly. As noted above, ___ Or at ___ (slip op at 2), we reject that approach. The second possibility is that this court remand the case to the Court of Appeals for further consideration in light of this opinion. This would allow the Court of Appeals to give the necessary consideration to wife's homemaker contribution, and to then decide whether husband had rebutted the presumption of equal contribution. We reject that approach as well. The record in this case lacks evidence on several important facts, including husband's net worth at the time of marriage and at the time of dissolution, which likely will influence, if not control, any ultimate property division after remand. Resolution of this case thus requires further development of the factual record. Consequently, we remand the case to the trial court for the taking of additional evidence and reconsideration in light of this opinion.

We address one further issue that may arise on remand. The Court of Appeals affirmed the trial court's reliance on a "rescission" approach to the division of marital property. Under that approach, a court, in dividing the marital property upon dissolution of a "short-term" marriage, seeks to place the parties "as nearly as possible in the financial position they would have held if no marriage had taken place." See, e.g., York and York, 30 Or App 937, 939, 569 P2d 32 (1977) (so stating).(6) This court first applied that approach in Jenks. In Jenks, however, this court modified the rescission approach to marital property division and focused not on the duration of the marriage but, instead, on the extent to which the parties had "commingled" their financial affairs. 294 Or at 242.

A court's reliance solely on the concept of a "short-term" marriage, as defined either by York or by Jenks, as a criterion that compels restoration of property held by the parties before marriage will lead to analytical mistakes. The factors set forth in ORS 107.105(1)(f) are the guide to the court's discretion in dividing marital property. It is not proper for the court to focus solely on either the duration of the marriage or the extent to which the parties commingle their financial affairs when dividing that marital property. See Miller and Miller, 294 Or 660, 664-66, 661 P2d 1361 (1983) (emphasizing that statutory factors control property division on dissolution of marriage, and rescission is appropriate only after giving due consideration to those factors). Only after the trial court has completed its task under ORS 107.105(1)(f) will the court be in a position to achieve the just and proper disposition that the law requires. ORS 107.105(1)(f).

The decision of the Court of Appeals is affirmed in part and reversed in part. The judgment of the circuit court is reversed. The case is remanded to the circuit court for further proceedings.

1. The 1995 amendments to ORS 107.105 do not affect the outcome of this case. See Or Laws 1995, ch 22, § 1; Or Laws 1995, ch 608, § 3.

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2. ORS 107.105(1)(f) creates two classes of property -- marital property and marital assets. Pierson and Pierson, 294 Or 117, 121-22, 653 P2d 1258 (1982). Marital property is the "real or personal property, or both, of either or both of the parties," and constitutes the entire class of property subject to the dispositional authority of the court in a marital dissolution action. ORS 107.105(1)(f); Pierson, 294 Or at 121. "Marital assets" include all the "real or personal property, or both, acquired by either of the spouses, or both, during the marriage." ORS 107.105(1)(f); Stice and Stice, 308 Or 316, 325, 779 P2d 1020 (1989); Pierson, 294 Or at 121-22. "Marital assets" do not include assets brought into the marriage by either spouse, nor do they include assets acquired after dissolution of the marriage. Id. at 121. Marital property is a larger class of property than marital assets: "[p]roperty may be subject to the dispositional authority of the court, yet not be a marital asset." Stice, 308 Or at 325.

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3. A presumption is a rule of law requiring that, once a basic fact is established, the factfinder must find a certain presumed fact, in the absence of evidence rebutting that presumed fact. Laird C. Kirkpatrick, Oregon Evidence, 72 (3d ed 1996). A presumption "may be created by statute if there is some justification of public policy, or a rational connection between the fact proved and the fact presumed." State Land Board v. United States, 222 Or 40, 50, 352 P2d 539 (1960), reversed on other grounds, United States v. Oregon, 366 US 643, 81 S Ct 1278, 6 L Ed 2d 575 (1961).

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4. "Homemaking" is "the creation and maintenance of a wholesome family environment." Webster's Third Int'l Dictionary, 1083 (unabridged ed 1993).

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5. This court said in dictum in Stice, 308 Or at 329, that the homemaker provision in ORS 107.105(1)(f) may be applied only to support the presumption of equal contribution, but not to rebut the presumption of equal contribution in favor of the homemaker spouse. On further reflection, we withdraw that comment. ORS 107.105(1)(f) entitles either or both of the spouses to attempt to rebut the presumption of equal contribution.

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6. York predates the adoption in 1977 of the modern version of the property division statute, former ORS 107.105(1)(e), renumbered as ORS 107.105(1)(f).

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Filed: June 30, 2011 IN THE SUPREME COURT OF THE STATE OF OREGON In Re: Complaint as to the Conduct of J. MARK LAWRENCE, Accused. (OSB 08-115; SC S058778) En Banc On review of the decision of a trial panel of the Disciplinary Board. Argued and submitted May 2, 2011. Paula Lawrence, McMinnville, argued and cause and filed the briefs for accused. Stacy Hankin, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar. PER CURIAM The complaint is dismissed. PER CURIAM The issue in this lawyer disciplinary proceeding is whether the accused, by releasing a partial transcript of a juvenile hearing to the press, violated Rule of Professional Conduct (RPC) 8.4(a)(4), which prohibits a lawyer from engaging in conduct that is prejudicial to the administration of justice. A trial panel found the accused guilty of violating RPC 8.4(a)(4) and suspended him for 60 days. We review the decision of the trial panel de novo. ORS 9.536(2); BR 10.6. Because we conclude that

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the Bar failed to prove by clear and convincing evidence that the accused's conduct caused prejudice to the administration of justice, we dismiss the complaint. The facts are straightforward and largely undisputed. In 2007, the accused represented a juvenile male who, along with another male friend, allegedly had touched or swatted several female classmates on the buttocks and had danced in front of the females in a lascivious manner. The incident occurred at the students' middle school. After being informed of the youths' behavior, the vice principal and a police officer interviewed the victims. Based on those interviews, the accused's client and his friend were arrested by a McMinnville Police Officer on February 22, 2007. On February 23, the Yamhill County Juvenile Department filed a delinquency petition alleging that the accused's client had committed acts that, if done by an adult, would have constituted five counts of first-degree sexual abuse and five counts of third-degree sexual abuse. At an initial detention hearing that same day, the court ordered the youths to remain in custody. The events giving rise to this disciplinary action arose out of a second detention hearing held on February 27, 2007, before Judge John Collins. The accused called two of the victims to testify on behalf of his client. The female victims testified that the youths were their friends and that they did not find the youths to be threatening in any way. Regarding the alleged sexual abuse, the female victims testified that the touching or swatting was not sexual in nature but rather was mere horseplay. The victims also testified that they felt pressured by the vice principal and the police officer to make the touching sound hurtful and uncomfortable when it was not. By the second detention hearing, the case was receiving substantial media 2

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attention. Judge Collins allowed the press to attend the detention hearing, but prohibited the press from recording the proceedings. The parties dispute whether the judge prohibited only video recordings or also prohibited audio recordings.1 A number of newspaper and television stories reported the events and testimony at the hearing. After the hearing, the accused obtained a copy of the official audio recording of the hearing and had a partial transcript prepared that contained the victims' testimony. In March 2007, a reporter contacted the accused about the February 27 hearing. The reporter, who was not present at the hearing, expressed disbelief that the female victims had felt pressured by the vice principal and the police officer to make the youths' actions seem sexual. The accused offered to give the reporter a copy of the partial transcript when it was available. The accused believed that it would have been improper to give the reporter the official audio recording of the hearing but thought that the transcript could be released. The accused contacted Deborah Markham, the deputy district attorney handling the case, to see if she objected to releasing the transcript. Markham told the accused that she believed that the court would have to consent. The accused then released the transcript to the reporter without obtaining permission from Judge Collins. Deputy District Attorney Deborah Markham testified that Judge Collins prohibited video recording. Judge Collins testified that he might have prohibited the press from recording the detention hearing, but that he did not remember whether he did so or not. He did remember allowing video recording at a later hearing in the proceeding. The accused testified that Judge Collins prohibited video recording but that he could not remember if the judge prohibited audio recording.
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When Judge Collins learned that the transcript had been released -following news reports that cited the transcript -- he called a meeting with Markham and the accused and told them to release no other transcripts. The testimony from the accused, Markham, and Judge Collins differs regarding that meeting. The accused described the meeting as relaxed and said that Judge Collins had stated that the release of the transcript was permissible. Markham testified that Judge Collins was "very concerned" about the release of the transcript and that Judge Collins said that the accused's disclosure violated the law. Judge Collins testified that the accused did not get his consent to release the transcript, but that he was not sure if the accused needed to do so under the circumstances of the case, particularly given the presence of the press at the hearing. In Judge Collins's description, the meeting was not contentious; although he requested that the parties refrain from releasing any additional transcripts, he did not "feel like [he] needed to be firm" and so did not issue an order barring further releases. In April 2008, several months after the juvenile case was resolved, Tim Loewen, director of the Yamhill County Juvenile Department, reported the accused's action of releasing the transcript to the Bar. After investigating the matter, the Bar charged the accused with violating RPC 8.4(a)(4)2 by releasing to the press "information
2

RPC 8.4(a) provides, in relevant part: "It is professional misconduct for a lawyer to: "* * * * * "(4) engage in conduct that is prejudicial to the administration of

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appearing in the record" of a juvenile case without court consent, in violation of ORS 419A.255(1) and (3).3 The Bar alleged that the accused had "usurped" Judge Collins's authority to control the proceeding by not seeking the court's consent before releasing the transcript, and thereby had caused prejudice to the administration of justice. In the proceeding before the trial panel, the accused argued that his release of the transcript did not violate ORS 419A.255 for each of three independent reasons: (1) the transcript that he had prepared was not a part of the record of the case and so was not subject to ORS 419A.255; (2) Judge Collins had consented to the release of the information contained in the transcript when he allowed the press to attend and report on

justice[.]"
3

ORS 419A.255 provides, in relevant part:

"(1) The clerk of the court shall keep a record of each case, including therein the summons and other process, the petition and all other papers in the nature of pleadings, motions, orders of the court and other papers filed with the court, but excluding reports and other material relating to the child, ward, youth or youth offender's history and prognosis. The record of the case shall be withheld from public inspection but is open to inspection by the child, ward, youth, youth offender, parent, guardian, court appointed special advocate, surrogate or a person allowed to intervene in a proceeding involving the child, ward, youth or youth offender, and their attorneys. The attorneys are entitled to copies of the record of the case. "* * * * * "(3) Except as otherwise provided in subsection (7) of this section, no information appearing in the record of the case or in reports or other material relating to the child, ward, youth or youth offender's history or prognosis may be disclosed to any person not described in subsection (2) of this section without the consent of the court * * * ."

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the hearing; and (3) the information in the transcript could be released under ORS 419A.255(5)(b) and (d), which list certain exceptions to the confidentiality of juvenile records. Even assuming that he did violate ORS 419A.255, the accused asserted, he did not violate RPC 8.4(a)(4), because his conduct was not prejudicial to the administration of justice. That was so, according to the accused, because the defendant and the victims supported releasing the transcript and because the information contained in the transcript had already been made public as a result of the press attending and reporting on the hearing. Thus, in the accused's view, no harm -- actual or potential -- resulted from his conduct. The trial panel found by clear and convincing evidence that the accused had violated RPC 8.4(a)(4) and suspended the accused from the practice of law for 60 days. The trial panel first determined that ORS 419A.255(3) prohibited the accused from releasing the partial transcript to the press without the consent of the trial court and that the accused had violated the statute in doing so. With little discussion, the trial panel then found that the evidence that the accused had violated the statute also was sufficient to show prejudice to the administration of justice and thus that the accused had violated RPC 8.4(a)(4). The accused sought review in this court. To prove a violation of RPC 8.4(a)(4), the Bar must prove (1) that the accused lawyer's action or inaction was improper; (2) that the accused lawyer's conduct occurred during the course of a judicial proceeding; and (3) that the accused lawyer's conduct had or could have had a prejudicial effect upon the administration of justice. See In re Kluge, 335 Or 326, 345, 66 P3d 492 (2003) (citing In re Haws, 310 Or 741, 746-48, 6

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801 P2d 818 (1990)) (so stating for identically worded former DR 1-102(A)(4)). Because we find the issue to be dispositive, we begin by examining the third element -- whether the accused's conduct had or could have had a prejudicial effect on the administration of justice -- and assume, without deciding, that the accused's conduct violated ORS 419A.255(3) and otherwise satisfied the test set out in Kluge and Haws. Prejudice to the administration of justice "may arise from several acts that cause some harm or a single act that causes substantial harm to the administration of justice." Kluge, 335 Or at 345. This court has identified two components to the "administration" of justice: "1) The procedural functioning of the proceeding; and 2) the substantive interest of a party in the proceeding." Haws, 310 Or at 747. "A lawyer's conduct could have a prejudicial effect on either component or both." Id. The Bar argues that the accused's conduct, a single act, resulted in prejudice to the administration of justice because it had the potential to cause substantial harm to the procedural functioning of the court. The Bar asserts, "Substantial potential harm to the administration of justice occurs whenever a lawyer interferes in or usurps the court's ability to do its job in a proceeding pending before it." The Bar states that the accused "usurped" the court's authority by not seeking Judge Collins's consent prior to releasing the transcript. The Bar cites three disciplinary cases to support its position that the accused's conduct resulted in substantial potential harm to the administration of justice. First, in In re Eadie, 333 Or 42, 36 P3d 468 (2001), this court found a violation of former DR 1-102(A)(4) where the accused lawyer submitted a proposed order containing a 7

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misrepresentation that was intended to influence the judge in changing the trial date. Id. at 58. That conduct substantially harmed the procedural functioning of the court because it resulted in the judge acquiescing to a trial date preferred by the accused and made it necessary for the judge to resolve a dispute resulting from the accused's misrepresentation and to redraft an order. Id. Second, in In re Morris, 326 Or 493, 953 P2d 387 (1998), this court concluded that the accused lawyer had engaged in a single act of conduct that had the potential to cause substantial harm, either to the procedural functioning of the court or to the substantive interests of the parties, when she knowingly filed a notarized document that she had altered. Id. at 502-03. Third, in In re Thompson, 325 Or 467, 940 P2d 512 (1997), this court found a violation of former DR 1-102(A)(4) where the accused lawyer physically confronted a judge after receiving an adverse decision. That conduct caused substantial harm to the administration of justice because the accused's ex parte communication with the judge "unfairly attack[ed] the independence, integrity, and respect due a member of the judiciary." Id. at 475. The conduct also had the potential to cause substantial harm, because it could have influenced the judge to change her decision or to recuse herself from the case. Id. In each of the preceding cases, the accused lawyer engaged in conduct that had the potential to disrupt or to improperly influence the court's decision-making process, Thompson, 325 Or at 475; that created unnecessary work for the court, Eadie, 333 Or at 58; or that had the potential to mislead the court, Morris, 326 Or at 503. Moreover, in Eadie and Morris, the accused lawyers made knowing misrepresentations to the court. Similarly, in Kluge, the accused lawyer's conduct in knowingly filing an 8

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untimely motion to disqualify the trial judge and then failing to serve the motion on opposing counsel caused prejudice to "the procedural functioning of the judicial system by imposing a substantial burden upon both opposing counsel and [the trial judge] to undo the accused's actions." 335 Or at 346. In this case, the Bar has made no showing, as required by Kluge and Haws, that the accused's conduct harmed the procedural functioning of the judicial system, either by disrupting or improperly influencing the court's decision-making process or by creating unnecessary work or imposing a substantial burden on the court or the opposing party. Nor has the Bar shown that his conduct had the potential to result in any of the above. Certainly, Judge Collins did not testify that the accused's actions interfered with Judge Collins's conduct of the juvenile proceeding. Although the Bar correctly asserts that ORS 419A.255 gives the trial court control over the release of protected information in a juvenile record -- and, as noted, we assume without deciding that the accused acted improperly in not seeking the trial court's consent -- the Bar's theory fails to take into account the fact that the information contained in the partial transcript that the accused released was presented in open court and had already been reported by the press.4 It is difficult to see how the accused's release of the same information, in the context of this case, had the potential to cause any harm to the proceeding, much less substantial harm.

Article I, section 10, of the Oregon Constitution grants members of the public, including the press, the right to attend juvenile hearings. State ex rel Oregonian Pub. Co. v. Deiz, 289 Or 277, 284-85, 613 P2d 23 (1980).

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See Kluge, 335 Or at 345 (prejudice to the administration of justice may arise from "several acts that cause some harm or a single act that causes substantial harm"). Indeed, the Bar makes no effort to show that the accused's conduct could have resulted in new information being made public or that the release of the partial transcript itself had any potential impact on the proceeding. In fact, after the press attended the hearing and the accused released the transcript, Judge Collins allowed members of the press to listen to the official audio recording of the hearing. Nevertheless, the Bar asserts that Judge Collins was sufficiently "concerned" about the release of the information to call the accused and Markham to his chambers to discuss the incident. The fact that Judge Collins was "concerned" and met with the accused and Markham does not, by itself, demonstrate the potential for substantial harm to the procedural functioning of the court. Judge Collins himself stated that, although "in a perfect world," he probably would not have wanted the transcript released, in the context of this case and the open court provision of Article I, section 10, of the Oregon Constitution, the release of the partial transcript was likely permissible without his consent because "if [the press is] * * * going to know the information and report the information, at least get it right." Judge Collins's testimony, then, does not demonstrate that the accused's conduct impacted the procedural functioning of the court, even if the accused's conduct was cause for "concern." Nor does the Bar offer any evidence to prove that the release of the partial transcript harmed the substantive interests of the accused's client, the victims, or the state. The accused released the transcript, with the support of his client, in response to an 10

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inquiry from the media and in order to respond to inaccuracies appearing in some media reports. The accused maintained the confidentiality of the victims' names in the transcript, referring to them by their initials, consistent with an earlier order by Judge Collins. In this proceeding, the accused also submitted letters from the two victims who testified (and their parents) that stated their support for the release of the partial transcript. Finally, there was no testimony from the Yamhill County Juvenile Department that the release of the partial transcript had any effect on its substantive interests or its ability to prosecute the case. The Bar appears, instead, to take the position that virtually any violation of a statute, rule, or court order that occurs during the course of a court proceeding and relates to the conduct or any procedural aspect of that proceeding necessarily is prejudicial to the administration of justice. The Bar asserts, in effect, that "substantial potential" harm is implicit in the accused's conduct. Our cases, however, require proof by clear and convincing evidence that an accused's conduct in a specific judicial proceeding caused actual or potential harm to the administration of justice and, when only one wrongful act is charged, that actual or potential harm must be "substantial." Kluge, 335 Or at 345; Haws, 310 Or at 748. Here, the Bar's evidence did not prove that substantial harm resulted or could have resulted from the accused's conduct. We conclude that the Bar has not proved by clear and convincing evidence that the accused violated RPC 8.4(a)(4). The accused's conduct did not result in such prejudice, because there is no evidence that the release of the partial transcript, which contained solely information already presented in open court and reported by the press, 11

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harmed the procedural functioning of the judicial system. Nor is there any evidence that the substantive rights of the accused's client, the other juvenile defendant, the victims, or the state were harmed. "Prejudice to the administration of justice" requires such a showing. Haws, 310 Or at 747-48. The complaint is dismissed.

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