Shlitter and Shlitter

FILED: June 12, 2003

IN THE COURT OF APPEALS OF THE STATE OF OREGON

In the Matter of the Marriage of

NICOLAY N. SHLITTER,

Appellant,

and

LORRY LEE SHLITTER,

Respondent,

and

JAMES B. LOGAN
and LAWRENCE BURRY,
aka Larry Burry,

Respondents below.

99-1684-D-2(1); A113854

Appeal from Circuit Court, Jackson County.

Ross G. Davis, Senior Judge.

Argued and submitted April 7, 2003.

Douglas J. Richmond argued the cause for appellant. With him on the brief was Kellington, Krack, Richmond, Blackhurst & Sutton, LLP.

Barbara M. Palmer argued the cause and filed the brief for respondent.

Before Landau, Presiding Judge, and Armstrong and Brewer, Judges.

BREWER, J.

Property division reversed and remanded with instructions to divide property in accordance with this opinion; child support modified to eliminate automatic increase and affirmed as modified; otherwise affirmed.

BREWER, J.

Husband appeals from a judgment dissolving the parties' 17-year marriage. He contends that the trial court erred in failing to divide the parties' marital debts equitably and in providing for an automatic future increase in his child support obligation. (1) On de novo review, ORS 19.415(3), we modify the division of debts and the child support obligation.

The parties were married in 1982. Husband filed a petition for dissolution in October 1999. At that time, wife was 44 and husband was 43. They had two children, ages 8 and 11. Custody of the children was awarded to wife. While they were married, husband was self-employed as a construction contractor. Although his income varied, the trial court found that the income averaged $5,000 per month. Wife managed a retail store that the parties also owned, but it was not profitable. After a preliminary hearing, the trial court authorized husband to sell the store. (2) Wife occasionally worked for the new owner as a consultant, but she no longer managed the business.

The parties moved to Oregon from Hawaii in 1993. At the time, they owed husband's mother (Shlitter) $350,000 for loans that she had made to them for real estate investments in Hawaii. The parties liquidated those investments when they moved to Oregon. They repaid part of the loans in cash but used $185,000 to purchase a residence for Shlitter in Grants Pass. The parties took title to that property in their own names, not Shlitter's. At trial, Shlitter testified that she agreed that the Grants Pass residence could be conveyed to the parties "because they [are] young, they know what to do, how to, how to -- I let them have it and maybe sometime I come here and retire, and that's it." The parties rented the residence to a third party. Initially, the monthly rent payments were paid to Shlitter, but when the parties' retail business began to suffer financial problems, Shlitter allowed them to keep the rent. After the parties separated, they conveyed the Grants Pass residence to Shlitter.

During their marriage, the parties received three additional advances from their parents that are relevant to the division of their finances. Wife's parents loaned them $25,000. (3) In addition, Shlitter loaned them $40,000 in 1994 so they could purchase an undeveloped parcel known as the Whitmore property. In 1995, Shlitter advanced an additional $105,000 to the parties with the understanding that they would use the money to build two houses on the Whitmore property, one for themselves and the other for her. The houses were never built.

In her trial memorandum, wife acknowledged that each of the three above-mentioned advances constituted debts of the marriage. However, in closing argument at trial, wife contended that the evidence was unclear as to whether Shlitter expected repayment of the $105,000 advance. Wife proposed that, if payment of the $105,000 and $25,000 debts were sought thereafter, each of the parties should be solely responsible for the debt owed to his and her own parents.

The trial court adopted wife's proposal, stating, "The issue of the parties' indebtedness to their families is always difficult to sort out. I order that each party be responsible for the debts to their respective families." However, the court awarded the Whitmore property to wife, subject to the $40,000 debt owed to Shlitter for the funds she advanced to acquire that property. The court divided the parties' assets and liabilities as follows:

Assets
Marital home
Whitmore parcel
Personal property
Rental house
Rental duplex
Personal property
Husband's business

    Gross Assets


Liabilities
Encumbrance on marital home
Encumbrance on Whitmore parcel (4)
Encumbrance on rental duplex
Consumer debts

    Gross Liabilities

Net Award
Wife
$176,000
90,000
36,410