In Re: Marriage Of Cheng, 47937-1

Background

Victor and Julia Cheng married in 1996, had three children, and separated in July 2013; Victor owned and operated Fast Forward Media (FFM), which grew into a highly profitable business by 2013.
FFM produced roughly $927,000–$942,000 in income to Victor in 2013; experts valued FFM at $3.6 million using a capitalization-of-excess-earnings method after deducting Victor’s replacement compensation.
The trial court divided community property equally, awarding Julia 50% of FFM’s value and the family home (equity ~$513,000), and ordered Victor to pay Julia the equalizing amount over 15 years with 6% interest.
The court awarded Julia time-limited spousal maintenance ($20,000/month for 8 months; $15,000/month for 2 years; $10,000/month for 1 year) and monthly child support of $5,000 plus proportional shares of additional expenses, finding support should exceed the statutory schedule because of the children’s lifestyle.
The trial court denied Victor credit in the final property division for certain post-separation payments (FFM pension obligations and 2013 income taxes) despite a pretrial order suggesting possible credit.
On appeal the court addressed: whether maintenance duplicates Julia’s property award (double recovery), the appropriateness of the 6% interest on deferred payments, credits for post-separation payments, and child support calculations (including treatment of interest as income and adequacy of findings to exceed the schedule).

Issues

Issue	Plaintiff's Argument (Victor)	Defendant's Argument (Julia)	Held
Whether spousal maintenance duplicates property award (double recovery)	Maintenance based on Victor’s FFM income duplicates Julia’s award of half of FFM’s income stream/value	Maintenance is independent; FFM is a going concern whose income stream was not fully distributed when Julia received half the company value	No double recovery; maintenance valid because FFM produces ongoing income and valuation excluded Victor’s replacement compensation, leaving Victor ability to pay maintenance without eroding company value
Whether 6% interest on deferred property payments was improper	Six percent is excessive; should be no interest or a lower rate (e.g., 3%)	6% reasonable given Victor’s significant future earnings and company growth	Affirmed; trial court did not abuse discretion in setting 6% (trial may set lower than statutory 12% with adequate reasons)
Whether Victor should receive credit for post-separation pension and tax payments	He paid community obligations and should get credit in property division	Payments were attributable to FFM (employer) and/or Julia did not equally benefit from post-separation profits; trial court-equitable division justified denial of credit	No error in denying credit; pension/tax obligations were properly treated as business/FFM matters and the court’s equitable allocation stands
Child support: (a) whether interest on deferred property payments counts as income to Julia; (b) whether income should be imputed to Julia; (c) whether Victor may deduct interest and pension payments; (d) whether trial made sufficient findings to exceed the statutory schedule	(a) Interest should not be counted; (b) Julia is voluntarily unemployed so income should be imputed; (c) interest/pension payments should be deductible from Victor’s income; (d) support above schedule is excessive and lacks adequate findings	(a) Interest is income under RCW 26.19.071; (b) Julia is not voluntarily unemployed — needs retraining; (c) interest and the pension payments are not deductible from Victor’s personal income; (d) trial properly considered lifestyle evidence	(a) Reversed as to interest: interest must be included as Julia’s income for child support; (b) no imputation: trial did not abuse discretion in declining to impute income to Julia; (c) deductions: trial properly denied deductions for Victor’s interest payments and pension payments; (d) insufficient findings: remand because trial did not make the required written findings to justify above-schedule support

Key Cases Cited

In re Marriage of Valente, 179 Wn. App. 817 (2014) (business valuation and maintenance; replacement compensation deducted from company value)
In re Marriage of Barnett, 63 Wn. App. 385 (1991) (double recovery when property is a diminishing asset and maintenance is paid from same shrinking asset)
In re Marriage of Mathews, 70 Wn. App. 116 (1993) (error where maintenance plus award of retirement interest forced payor to pay from the same retirement asset)
In re Marriage of Davison, 112 Wn. App. 251 (2002) (trial court may set interest below statutory rate on deferred property payments but must state reasons)
In re Marriage of McCausland, 159 Wn.2d 607 (2007) (requirement for written findings to support child support above statutory schedule; Daubert/Rusch factors)
In re Marriage of Daubert, 124 Wn. App. 483 (2004) (insufficient findings to justify above-schedule support)
In re Marriage of Rusch, 124 Wn. App. 226 (2004) (factors relevant to above-schedule child support)
In re Marriage of Stenshoel, 72 Wn. App. 800 (1994) (property payments generally not treated as income for child support)