Hillery Lore Nye Lee v. Ralph Bryan Lee, 74405-4

Background

Hillery Nye and Ralph Lee married in 2007 after cohabiting; both brought preexisting real property (Nye: Vashon house; Lee: Madrona house). They acquired an adjacent Vashon lot and executed an AT&T lease during the marriage.
Both parties experienced severe post-2008 financial decline (legal fees, business failures, investment losses); HELOCs on both houses were established pre-marriage but drawn during the marriage.
Trial court issued a dissolution decree characterizing and allocating several assets and debts (e.g., Madrona house and furnishings to Lee as separate; Madrona HELOC as community; Vashon HELOC to Nye as separate; Vashon lot and AT&T lease to Lee as separate; engagement ring as community).
Nye challenged characterization, valuation, and adequacy of findings; trial court denied reconsideration. Nye filed bankruptcy then dismissed it; dissolution decree entered while bankruptcy stayed/dismissed.
The Court of Appeals reviewed de novo the legal characterizations and substantial-evidence for factual findings, concluding several mischaracterizations affected the division and remanding for a new evidentiary hearing and a just and equitable redistribution.

Issues

Issue	Plaintiff's Argument (Nye)	Defendant's Argument (Lee)	Held
Characterization of Madrona house and furnishings	Madrona house and contents are separate to Lee (purchased pre-marriage); trial court erred making house community and furnishings separate to Lee	Lee argued house/title and pre-marriage purchase supported separate characterization	Court: Madrona house is Lee's separate property (error to call it community); furnishings properly characterized as Lee's separate property
Characterization of Madrona HELOC debt	HELOC used during marriage so should be community	Lee relied on pre-marriage establishment of HELOC	Court: Madrona HELOC properly characterized as community debt
Characterization of Vashon HELOC debt	HELOC drew post-marriage for marital expenses so should be community	Trial court labeled it Nye's separate debt based on pre-marriage HELOC	Court: Vashon HELOC debt is community (trial court erred assigning it as Nye's separate)
Characterization of Vashon lot and AT&T lease	Acquired and titled during marriage; lease payments received by Nye; should be community	Lee offered a withdrawal slip from his account to show separate funding	Court: Vashon lot and AT&T lease are community (trial court erred in treating as Lee's separate)
Characterization of engagement ring	Given before marriage as a gift; therefore Nye's separate property	Lee conceded it was a gift but trial court called it community	Court: Engagement ring is Nye's separate property (trial court erred)
Adequacy of findings and effect on division	Trial court failed to explain consideration of RCW 26.09.080 factors or why distributions were just and equitable; mischaracterizations materially affected division	Trial court issued spreadsheets but no sufficient written/oral findings	Court: Findings inadequate; remand required to make explicit statutory analysis and redivide assets/debts on correct characterizations

Key Cases Cited

In re Marriage of Valente, 179 Wn. App. 817 (discusses statutory factors and review standard for property division)
In re Marriage of Mueller, 140 Wn. App. 498 (presumption favoring community property and characterization principles)
In re Marriage of Griswold, 112 Wn. App. 333 (substantial evidence standard for factual findings)
In re Marriage of Lawrence, 105 Wn. App. 683 (requirement for adequate findings of fact and conclusions of law)
In re Marriage of Rockwell, 141 Wn. App. 235 (need to explain "just and equitable" division under RCW 26.09.080)
In re Estate of Borghi, 167 Wn.2d 480 (burden to overcome property characterization presumption; writing required for real property rebuttal)
In re Marriage of Hurd, 69 Wn. App. 38 (test for characterizing debt: purpose of borrowing)
In re Marriage of Shannon, 55 Wn. App. 137 (remand required if mischaracterization likely influenced division)
Johnson v. Dar Denne, 161 Wash. 496 (premarital gifts, including jewelry, remain separate property)