Court of Appeals Division I
State of Washington

Opinion Information Sheet

			

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

IN RE THE MARRIAGE OF                       )       No. 65179-0-I
LOIS MARGARET GELMAN,                       )
                                            )       DIVISION ONE
                      Appellant,            )
                                            )       UNPUBLISHED OPINION
          v.                                )
                                            )
ERIC NEAL FASSLER,                          )
                                            )
                      Respondent.           )       FILED:  February 21, 2012

       SPEARMAN, J.  --  In this dissolution action involving two physicians, the 

trial court divided the community property 60/40 in favor of the husband.  The 

wife appeals, arguing that the record is insufficient for review, that the trial court 

erred in its consideration, valuation, and characterization of certain property, and 

that the court abused its discretion in failing to award her reimbursement for post-

separation expenses incurred on the family residence.  We affirm all but one of 

the court's rulings on the parties' assets and remand with directions to strike the 

value attributed to the wife's anesthesiology practice, to make any adjustments 

to the property distribution that the court deems necessary, and to provide 

reasons for the court's distribution.  

                                        FACTS

       Eric Fassler and Lois Gelman married in 1986 and separated in 2007.   

No. 65179-0-I/2

They had three children, all of whom are now adults.  In 2010, following a trial, 

the superior court entered a decree of dissolution.  

       At the time of trial, both parties were in their fifties and had practiced 

medicine for many years.  Fassler practiced as a gynecologist, gynecological 

surgeon, and obstetrician but had stopped working since undergoing treatment 

for cancer. Gelman had an active practice as an anesthesiologist.  

       Gelman testified that from 1988 to 1998 she practiced anesthesiology as 

a partner in Valley Anesthesia Associates, P.L.L.C. (VA). She had to "buy-in" to 

the practice, working initially as an employee, then a junior partner, and 

eventually a senior partner.  From 1999 until 2009, she had a solo 

anesthesiology practice with a contract to provide anesthesia services to a 

surgery center.  In 2009, she closed her solo practice and rejoined VA.  

       Gelman's 2009 employment agreement with VA has no "buy-in"

requirement.  Instead, it requires VA to sell her an ownership share for one 

dollar.  Gelman must sell the share back for one dollar if and when she leaves 

VA.  The agreement states that Gelman "shall become a Member . . . shall be 

issued One (1) Unit, and shall have a capital account of $1.00." The agreement 

also states that as of May 2009, each member of Valley Anesthesia, including 

Gelman, had one ownership share.   

       Gelman testified that her employment contract is not guaranteed and she

could be terminated at any time.  She also testified that VA has an exclusive 

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No. 65179-0-I/3

contract to provide anesthesiology services to Valley Medical Center.  Gelman's 

monthly net income is approximately $22,000.  

       Evidence established that Gelman inherited between $80,000 and 

$90,000 in 2002.  The inheritance was maintained as an IRA and managed by 

Fassler until 2007.  At that point, the account was worth $157,000.  In March 

2007, nine months before the parties separated, they cashed out the IRA and 

put the funds into a preexisting joint investment account that Fassler managed.  

Gelman testified that the account "had several types of investments" and she 

believed the IRA proceeds went into stocks.  Fassler testified that some of the 

money went into the children's college savings accounts and the rest was 

"invested, intermingled with our other investment money." The court 

characterized the joint account, which was worth $420,916 at the time of trial, as 

community property. 

       Fassler testified that his former practice was 30 to 40 percent obstetrics, 

and 60 to 70 percent gynecology and gynecological surgery.  He stopped 

working when he was diagnosed with a rare and aggressive form of bone 

cancer.  The cancer required highly toxic chemotherapy, which Fassler

completed shortly before trial.  He also underwent surgery to remove a large 

tumor and a significant portion of the bone in his dominant arm. 

       Expert testimony established that Fassler's cancer has "tremendous 

potential to metastasize" and he has a 45 to 55 percent chance of surviving it.  

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No. 65179-0-I/4

He may not fully recover from some of his chemotherapy side effects, including 

hearing loss, cognitive impairment, and kidney damage.  Given the physical 

demands of his surgical specialty, it is "quite possible he'll never operate again"

and there is a "real likelihood" that he will not retain "the vitality to practice 

medicine."  At the time of trial, Fassler was receiving social security disability 

and private insurance disability and had a total monthly net income of $11,593.  

An additional social security benefit paid his child support obligation.  If Fassler 

returns to work, he will lose a percentage of his disability benefits.

       Accountant Steven Kessler testified as a joint expert on the value of the 

parties' practices.  Because of Fassler's medical condition, and because he 

would not receive any payments for his interest in the practice, Kessler 

concluded his practice had no goodwill or other value.  With respect to Gelman's 

practice, Kessler concluded that VA's exclusive contract was an intangible asset 

and valued Gelman's interest in it at $112,000.  He testified that the exclusive 

contract creates a restricted marketplace and a relationship that generates 

income "slightly above what I would term the replacement compensation or 

benchmark compensation . . . ."  To calculate the value of the contract to 

Gelman, Kessler determined her base future annual income ($375,000), 

subtracted from the replacement compensation value ($324,075), and calculated 

after tax excess earnings of $33,611.  Using a capitalization rate of 30 percent, 

he concluded the value of the contract to Gelman was $112,019.  

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No. 65179-0-I/5

       In closing, Gelman's counsel argued that the exclusive contract had no 

value to Gelman because "[i]f she leaves [VA] she gets nothing" and she is "in 

effect, an at-will employee" who is "far more analogous to a contract laborer than 

a professional with goodwill." Fassler's counsel countered that Gelman "is a 

partner" at VA, that the exclusive contract is an intangible asset owned by VA, 

and that Gelman therefore benefits from it.  

       The court awarded Fassler 60 percent ($2,053,085) and Gelman 40 

percent ($1,368,743) of the community property.  The court offered no oral or 

written explanation for this division.  It expressly adopted Steven Kessler's 

valuation of Gelman's practice, stating in part: "the court is persuaded that the 

characterization of Dr. Gelman's business interest in her group practice need not 

be called 'goodwill' . . . Dr. Gelman has an economic benefit expectancy in 

contractual rights."  Gelman moved for reconsideration on a number of grounds.  

The court denied the motion.  She appeals.

                                      DECISION

       The goal of property division in a dissolution action is a just and equitable 

distribution of the parties' property and liabilities.  RCW 26.09.080.  "The key to 

an equitable distribution . . . is not mathematical preciseness, but fairness." In re 

the Marriage of Clark, 13 Wn. App. 805, 810, 538 P.2d 145 (1975). In dividing 

the property, the trial court must consider the nature and extent of the community 

and separate properties, the duration of the marriage, and the economic 

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No. 65179-0-I/6

circumstances of the parties at the time of the dissolution. RCW 26 .09.080.  The 

court should also consider the age, health, physical condition, education and 

future earning prospects of the parties. Friedlander v. Friedlander, 80 Wn.2d 

293, 305, 494 P.2d 208 (1972).  The court has broad discretion in this area and 

will be reversed only upon a showing of manifest abuse of discretion.  In re 

Marriage of Rockwell, 141 Wn. App. 235, 242-43, 170 P.3d 572 (2007).  

Decisions in dissolution proceedings will "seldom be changed upon appeal . . .

The emotional and financial interests affected by such decisions are best served 

by finality." In re Marriage of Landry, 103 Wn.2d 807, 809-10, 699 P.2d 214 

(1985).

                                Adequacy of Findings

       Gelman first contends the trial court's property distribution is 

unreviewable because it is unexplained.  Noting that the court was statutorily 

required to consider "all relevant factors," including the nature and extent of the 

community and separate properties, the duration of the marriage, and the 

economic circumstances of the parties, she contends the absence of findings 

mentioning the statutory factors or explaining the court's distribution, leaves this 

court unable to determine whether the court fulfilled its obligation or properly 

exercised its discretion.  

       We conclude that the record is sufficient to review the court's 

consideration of the statutory factors.  Neither RCW 26.09.080 nor the caselaw 

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require formal findings on the statutory factors, but it must be evident from the 

record that the trial court considered those factors.  In re Marriage of Horner, 

151 Wn.2d 884, 895-897, 93 P.3d 124 (2004); cf. In re Marriage of Croley, 91 

Wn.2d 288, 588 P.2d 738 (1978); In re Marriage of Steadman, 63 Wn. App. 523, 

526, 821 P.2d 59 (1991); In re Marriage of Murray, 28 Wn. App. 187, 189-90, 

622 P.2d 1288 (1981).  In this case, the findings and the record are sufficient to 

infer the court's consideration of the statutory factors.  The findings demonstrate 

the length of the marriage and assign values to the assets and liabilities.  The 

court adopted child support worksheets showing the parties' income.  Those 

worksheets constitute findings of fact reflecting the parties' economic 

circumstances.  In re Marriage of Daubert and Johnson, 124 Wn. App. 483, 492,

99 P.3d 401 (2004).  In addition, it is clear from closing arguments and the 

parties' extensive briefing on reconsideration that the court was made aware of 

the statutory factors.

       We also conclude, however, that the absence of any reasons for the 

court's disparate distribution hinders our review and necessitates a remand for 

the court to articulate the basis for its decision.  See In re Marriage of Urbana, 

147 Wn. App. 1, 195 P.3d 959 (2008) (where court divided property 20 percent 

to husband and 80 percent to wife, court abused its discretion by not stating the 

basis of its property division); cf Lawrence v. Lawrence, 105 Wn.App. 683, 686, 

20 P.3d 972 (2001) (remanding because "the basis for the trial court's decision 

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No. 65179-0-I/8

to award custody to the father is not clear from the record"); Connell v. 

Francisco, 74 Wn. App. 306, 317, 872 P.2d 1150 (1994) (remanding for court to 

articulate basis for distribution where great disparity existed in economic 

circumstances of couple in meretricious relationship).  Because the other issues 

on appeal involve the trial court's treatment of significant assets, we elect to 

reach those issues so that the court on remand will have the correct status of all 

the property in mind when it articulates the reasons for its distribution.          

                          Value of Anesthesiology Practice

       Gelman contends the court erred in concluding that her anesthesiology 

practice had a value of $112,000 due to the contract between VA and the 

hospital.  She argues that the contract is neither goodwill nor an asset separate 

and apart from her future earning capacity.  She concludes, therefore, that the 

court erred as a matter of law in assigning any value to her practice.  Fassler 

agrees that the contract is not goodwill per se, but argues that it is an intangible 

asset that was properly valued by the court. We need not decide whether the 

contract is an intangible asset of VA because even assuming it is, the record 

fails to establish that Gelman will realize any benefit from that asset over and 

above her earning capacity.    

       For purposes of property distribution, Washington courts distinguish 

between a professional's earning capacity, which is a relevant factor but not 

distributable property, and intangible assets like goodwill, which are distributable 

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No. 65179-0-I/9

property. In re Marriage of Hall, 103 Wn.2d 236, 238-48, 692 P.2d 175 (1984).  

The courts have also held that when an intangible asset attaches to a business, 

it is distributable in a dissolution proceeding only if one of the parties has an 

ownership interest in the business.  See Id., 103 Wn.2d at 241-42 (salaried 

professional who has no ownership interest in the entity which employs him or 

her can have no professional goodwill); In re Marriage of Sedlock, 69 Wn. App. 

484, 495, 849 P.2d 1243 (1993) (CPA husband acquired no goodwill before he 

acquired ownership interest in practice); Gilman v. Holman, 725 N.E.2d 425 

(Ind.App. 2000) (citing Hall and holding that salaried doctor with no ownership 

interest in clinic would receive no distribution of value for the clinic if his 

employment terminated, could take no goodwill with him if he left, and therefore 

had no interest in the clinic's enterprise goodwill).  

       In this case, the exclusive contract is an intangible asset of VA.  The 

asset is therefore distributable property only if Gelman has an ownership interest 

in VA.  While the record establishes that she is a "senior partner" and 

shareholder in VA, her employment agreement provides that she receives only 

one dollar for her share when her employment ends.  Nothing in the record 

demonstrates that Gelman is an equity partner in VA.  Accordingly, it was error 

to find that she had any valuable interest in VA's exclusive contract.  

                Accounts Receivable from Gelman's Solo Practice

       Gelman contends the court erred in awarding her $138,306 in accounts 

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No. 65179-0-I/10

receivable from her solo practice. She contends the receivables were not 

distributable property because they "had long been collected and no longer 

existed as an asset" at the time of trial.  She cites In re Marriage of Kaseburg, 

126 Wn. App. 546, 561, 103 P.3d 1278 (2005) for the proposition that "[t]he 

court cannot distribute an asset that no longer exists."  While that is the general 

rule, courts have discretion to value assets that exist at the time of separation.  

See Koher v. Morgan, 93 Wn. App. 398, 404, 968 P.2d 920 (1998); (court has 

broad discretion in determining the valuation date for an asset); In re Marriage of 

Griswold, 112 Wn. App. 333, 349, 48 P.3d 1018 (2002) (court did not abuse its 

discretion in valuing ring wife sold before trial).  Here, the trial court had 

discretion to value the accounts receivable because they existed at the time of 

the parties' separation.  

       Gelman argues in her reply brief that the court erred in awarding her the 

accounts because she used them to maintain the marital residence.  Citing In re 

Marriage of White, 105 Wn. App. 545, 20 P.3d 481 (2001), she contends a court 

cannot distribute a cash asset that has been used to maintain, and has therefore

merged into, other assets distributed by the court.  We need not consider this 

argument because it is raised for the first time in Gelman's reply brief, and for
the first time on appeal.1  RAP 2.5(a); Espinoza v. City of Everett, 87 Wn. App. 

       1 Gelman argued below that the receivables should not be valued separately because 
they were used in her business and were thus already included in the valuation of her practice.  
She did not argue, as she does now, that the receivables should not be valued separately 
because they were used to maintain the family residence.

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857, 872 -- 73, 943 P.2d 387 (1997); Cowiche Canyon Conservancy v. Bosley, 

118 

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No. 65179-0-I/12

Wn.2d 801, 809, 828 P.2d 549 (1992).2

                     Characterization of Gelman's Inheritance

       Gelman next contends the court mischaracterized her inheritance as 

community property.  We disagree. 

       Initially, Gelman's inheritance was separate property. White, 105 Wn.App. 

545 (assets are separate property if acquired during marriage by inheritance); 

RCW 26.16.010, .020. But a party loses the benefit of any separate property 

presumption and assumes the burden of proving the separate character of 

property when they put it "into an account where it [is] commingled with 
community funds." 3  In re Marriage of Skarbek, 100 Wn. App. 444, 449, 997 

P.2d 447 (2000).  The party claiming separate funds must clearly and 

convincingly trace them to a separate source.  Id. Gelman did not meet this 

burden.

       It is undisputed that prior to separation, the parties deposited the 

inheritance funds into a joint investment account  containing community funds.  

Gelman argued below that she had sufficiently traced the inheritance by showing 

       2 We note that Gelman's supporting authority is distinguishable.  In White, 105 Wn. App 
at 552, the court held that separate property used to pay the family's mortgage merged into that 
asset and could not be awarded as a separate asset at dissolution.  But the mortgage payments 
in White were made prior to the parties' separation.  Here, the accounts receivable still existed at 
the time of separation and were allegedly spent on the parties' residence post-separation. 

       3 Gelman's reliance on In re Estate of Borghi, 167 Wn.2d 480, 219 P.3d 932 (2009) is 
misplaced.  Borghi involved the effect of a change in title on the separate or community 
character of real property.  It did not address the effect of commingling on the character of liquid 
assets.

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No. 65179-0-I/13

that it was put into this account during the year of separation. But tracing 

requires a showing that separate funds remain separately identifiable after they 

are commingled with community property.  Gelman did not even attempt to make 

such a showing below.  As Fassler's counsel correctly pointed out in closing

argument, "you don't get to trace up to a point and then stop.  You have to trace 

it.  They put it into an account.  It went into certain stocks.  Those stocks could 

not be identified.  Dr. Gelman said she did not know where the money went."  

Gelman simply did not sufficiently trace her inheritance.  Compare Skarbek, 100 

Wn.App. at 449-50 (sufficient tracing where husband "exhaustively" documented 

the details of the bank account activity, thus "tracing . . . $46,000 as 

continuously separate property."). Absent adequate tracing, the law favors 

characterization of property as community property. In re Marriage of Brewer, 

137 Wn.2d 756, 766-67, 976 P.2d 102 (1999); In re Marriage of Chumbley, 150 
Wn.2d 1, 5, 74 P.3d 129 (2003).4

               Contributions to Family Residence During Separation

       Last, Gelman contends the court abused its discretion in awarding 

Fassler 60 percent of the family residence proceeds when she made 

disproportionate contributions to the residence between separation and trial.  

She alleges she contributed "at least several hundred thousand dollars . . . for 

       4 For the first time in her reply brief, Gelman argues that the evidence only established 
"intermingling," and therefore the court erred in treating the entire fund as community property.  
We need not consider this argument.  Cowiche Canyon Conservancy, 118 Wn.2d at 809.

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No. 65179-0-I/14

which she received no reimbursement or lien."  Fassler counters that when the 

rental value of the residence is considered, Gelman spent only $67,000 more in 

mortgage payments than he did. He argues that reimbursement is completely 

discretionary, that the disparity in contributions to the residence is "more than 

made up for by Gelman's far superior earning capacity," and that the court was 

well within its discretion in not awarding her any reimbursement.  We agree with 

Fassler.

       While inequities in the parties' living situations pending dissolution may 

be taken into account in property division, this is only one of many factors that 

must be analyzed in making a just and equitable distribution. See Miracle v. 

Miracle, 101 Wn.2d 137, 139, 675 P.2d 1229 (1984) ("The trial court must take 

into account all the circumstances in deciding whether a right to reimbursement 

has arisen. The trial court may impose an equitable lien to protect the 

reimbursement right when the circumstances require it."). Thus, whether to 

make an adjustment to the property division or order reimbursement due to the 

parties' living situations is discretionary.  Id.  See also White, 105 Wn. App. at 

553-54.  And contrary to Gelman's assertions, the court in this case could

consider the rental value of the home to her in deciding whether reimbursement 

was warranted.  See Lindemann v. Lindemann, 92 Wn. App. 64, 78, 960 P.2d 

966 (1998).  

       Under all the circumstances, including Fassler's health, the parties'

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No. 65179-0-I/15

disparate income and future earning capacities, and the court's discretion to 

consider the rental value of the residence, we cannot say the court abused its 

discretion in declining to reimburse Gelman for post-separation expenditures on 

the family residence.   

       We affirm in part but remand with directions to strike the $112,000 value 

attributed to Gelman's practice, to make any adjustments to the property 

distribution that the court deems necessary, and to provide reasons for the 

court's distribution.  

                                   WE                                       CONCUR:

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