In re Marriage of Watanabe, 100,045-6

Daniel Watanabe and Solveig (Pedersen) Watanabe married in 1999; Pedersen inherited substantial funds and a 50% interest in an Arlington property from her mother.
Lender required Watanabe be added to the Arlington deed to obtain a loan for a later purchase; Pedersen executed a quitclaim deed “to establish community property,” but testified she did so only because the loan required it and did not recall intending a transmutation.
Pedersen’s inherited funds (and later distributions) were used to purchase the Ford property and additional adjacent parcels; some Clayton parcels were purchased with Pedersen’s separate funds and one with joint funds.
At dissolution the trial court found the Arlington, Ford, and two Clayton parcels were Pedersen’s separate property (one Clayton parcel was community), concluding funds tracing and lack of intent to transmute supported separate characterization.
The Court of Appeals affirmed, applying In re Estate of Borghi and holding the joint title gift presumption is inapplicable; it also upheld admission of extrinsic evidence to show intent behind the quitclaim deed.
The Washington Supreme Court affirmed: the joint title gift presumption does not apply in dissolution matters regardless of acquisition timing, and extrinsic/parol evidence may be used to determine a grantor’s intent in signing a deed.

Issue	Watanabe's Argument	Pedersen's Argument	Held
Whether the joint-title gift presumption applies when property purchased during marriage with separate funds (so adding both names creates a presumption of gift to community)	Borghi applies only to pre-marriage title additions; Skarbek controls and supports a gift presumption when separate funds are used to buy property in both names during marriage	Borghi rejected the joint-title gift presumption generally; whether property is separate depends on tracing and intent, not names on title	Rejected Watanabe’s distinction; joint-title gift presumption does not apply whether property was acquired before or during marriage; characterization depends on tracing and intent
Whether extrinsic/parol evidence may be admitted to show a grantor’s intent to transmute separate property despite an unambiguous deed stating its purpose	The deed’s plain language (“to establish community property”) is unambiguous; objective-contract rules bar extrinsic evidence	Parol/extrinsic evidence can be used to show the grantor’s intent to transmute separate property even if the deed is unambiguous as to its form; evidence was used to determine intent, not to dispute the deed’s execution	Court held extrinsic evidence admissible to establish intent behind signing a quitclaim deed when characterizing property

In re Estate of Borghi, 167 Wn.2d 480 (2009) (holds names on title do not create a joint-title gift presumption; separate property remains separate absent clear evidence of intent to convert)
In re Marriage of Skarbek, 100 Wn. App. 444 (2000) (previous authority endorsing joint-title gift presumption for purchases during marriage; discussed and limited by Borghi)
Volz v. Zang, 113 Wash. 378 (1920) (historic rule that a deed evidencing clear intent can transmute separate property to community)
Guye v. Guye, 63 Wash. 340 (1911) (presumption that separate property remains separate absent direct and positive evidence of conversion)
Dean v. Lehman, 143 Wn.2d 12 (2001) (property acquired during marriage is presumptively community unless classified otherwise by statute or tracing)
Baker v. Baker, 80 Wn.2d 736 (1972) (separate property remains separate through changes if traceable)