Because divorce is not about a spouse (man or woman) getting “half of everything”.
Depending upon whether a state is a “community property” state or an “equitable distribution” state, here is how property is divided between spouses in a divorce:
A community-property state is state in which spouses hold property that is acquired during marriage (other than property acquired by one spouse by inheritance, devise, or gift) as community property. Otherwise stated, all property that is acquired during the marriage by either spouse (other than property acquired by one spouse by inheritance, devise, or gift) or by both spouses together is jointly and equally owned and will be presumed to be divided in divorce equally between the divorcing spouses. Nine states are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
An equitable distribution state seeks to divide property in divorce in a fair, but not necessarily equal, manner. An equitable property state court can divide property between the spouses regardless of who holds title to the property. The courts consider many factors in awarding property, including (but not limited to) a spouse’s monetary contributions, nonmonetary assistance to a spouse’s career or earning potential, the efforts of each spouse during the marriage, the length of the marriage, whether the property was acquired before or after marriage, and whether the property acquired by one spouse by inheritance, devise, or gift. The court may take into account the relative earning capacity of the spouses and the fault of either spouse (See Black’s Law Dictionary, 11th ed.). Equitable distribution is applied in the non-community property states.
So, does a spouse “get half of everything” in divorce? Possibly, but not always, and now you know why.
GARY LEE FISCHER, Appellant, v. MELISSA KAY FISCHER, Appellee.
Opinion
No. 20200557-CA
Filed December 30, 2021
Seventh District Court, Moab Department
The Honorable Don Torgerson
No. 184700047
Steve S. Christensen and Clinton R. Brimhall, Attorneys for Appellant
Andrew Fitzgerald, Attorney for Appellee
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES JILL M. POHLMAN and RYAN M. HARRIS concurred.
ORME, Judge:
¶1Gary Lee Fischer challenges the district court’s division of the marital estate in the parties’ divorce decree, which awarded Melissa Kay Fischer the marital home, a vehicle, and profits from a business that Gary operated.1 Gary also challenges the court’s denial of his post-trial motion for a new trial regarding the division of a savings account Melissa first disclosed at trial. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
BACKGROUND2
¶2Following a nearly 29-year marriage, Gary and Melissa separated on April 8, 2018. Gary filed for divorce approximately two months later. The case proceeded to trial in June 2019. The main issues at trial involved the division of various bank accounts, personal property, vehicles, the marital home, and an insurance business Gary had started during the marriage with Melissa’s help.
¶3At trial, the parties testified regarding their assets. During cross-examination of Melissa, Gary learned for the first time that Melissa had an American Express bank account with a balance of $50,000. Melissa testified that she set up the account in “early” 2019, long after the parties had separated. She explained that the account was started with money from her share of various accounts she co-owned with Gary and that she was able to get the balance to $50,000 because she “worked so hard to save” money after they separated. Gary did not then inquire further regarding this account.
¶4After hearing all the relevant testimony, the court made an oral ruling from the bench, determining that Gary’s business was established using marital funds. It ruled, however, that because the business “is the equivalent of a professional degree, what you would expect to see with a solo practitioner, attorney or accountant, or a doctor in solo practice,” it had “to value this asset minus any goodwill component.”3 The court then explained that
the balance of the [business] bank account as of today is $5,000. [Melissa] is entitled to one-half of that amount. Additionally, it is apparent from the tax returns that the business has made a profit in excess of its expenses and [Gary’s] salary. Net profit has been $2,144 per month consistently through 2017, and [Gary] testified that it’s been constant since then. Accordingly, that profit is a profit of this asset, and so 14 months worth of that profit, [Melissa’s] share is $15,008.
So the asset is marital in the sense that it was established during the marriage and it was an asset to be considered in dividing, but the Court finds that there’s no future equity share that is divisible, and so other than those monetary amounts, the Court awards the interest in the LLC to [Gary] 100 percent, and I certainly understand that it’s frustrating. We help our spouses be successful, and they take our great ideas and they incorporate them into their business, and we give input to their endeavors, but in the end, I’m bound by the existing law, which says that this isn’t a marketable asset unless he’s running it, and . . . so that’s the basis for that finding.
¶5Regarding the tangible marital assets, the court found that there was $292,285 equity in the home, resulting in a share of $146,142.50 for each party. The court nevertheless awarded the home to Melissa, explaining that Gary’s share of the equity would be “used to offset the other property awards in this case.” The court also allocated a vehicle worth $25,000 to Melissa. The court awarded Gary four vehicles and a trailer. The first three vehicles were valued at $29,600, $17,833, $51,450. The fourth vehicle, which still had money owing on it, had $4,000 in equity. The trailer was valued at $8,000. The court additionally distributed to Gary jewelry, art, and other personal property having a combined value of $57,590. The court valued all these assets “as of the date of divorce.”
¶6With respect to the parties’ joint bank accounts, the court decided that it would be more appropriate to divide these accounts as they stood at the time of the parties’ separation rather than at the time of divorce. The court stated that it did this
because it was the clearest picture of what the parties’ asset actually was. Since then, they’ve each gone on to either save money [or spend money]. She saved money. It appears he spent money. So that seemed to be the fairest division of the cash accounts . . . given how long the separation has been, over a year.
¶7The court also ordered that Melissa’s retirement accounts, valued as of the date of divorce, be split equally between the parties. The court determined that the American Express account was not divisible in the divorce because it was Melissa’s separate property. The court then concluded that “if my math is correct, that should leave a wash on all of the property.”
¶8In response to this ruling, Gary filed a post-trial motion, in which he argued that the court’s division of marital assets was “not equal.” He asserted that the court awarded a total of $396,793 in marital assets to Melissa, which included (1) the home at $292,285, (2) half the business account at $2,500, (3) half the profits from the business from the time of separation to the time of divorce at $15,008, (4) a vehicle at $25,000, (5) half the balance in two bank accounts existing at the time of separation at $12,000, and (7) the American Express account at $50,000.4 Gary then argued that the court awarded him only $197,981 in marital assets consisting, of (1) half the business account at $2,500, (2) half the profits from the business from the time of separation to the time of divorce at $15,008, (3) the four vehicles valued at a total of $102,883, (4) the trailer at $8,000, (5) the personal property items at $57,590, and (6) half of the two bank accounts at $12,000. Gary asserted that, as a result, Melissa received $198,812 more than he did—$148,812 once the $50,000 American Express Account is subtracted from Gary’s calculation. See supra note 4. In essence, Gary’s position was that the court’s math was in fact quite wrong when it mused that, “if my math is correct, that should leave a wash on all of the property.”
¶9 The court subsequently issued a written order memorializing its findings and rulings at trial. In that order, regarding the award of the marital home to Melissa, the court conceded that
[a]lthough the Court endeavored to equally divide the assets in the case, with [Gary] receiving the majority of high-value personal property to offset his share of equity in the home, the final division of property does not equally divide the value in the marital home. Nevertheless, the Court believes the division is equitable, based on all circumstances in the case.
[Gary] would like the home sold, with the cash divided equally. But the costs of sale would likely deplete most of the difference in the equity division. Neither party would benefit from those lost funds and [Melissa] would be left without a home. Additionally, although the Court awards [the business to Gary], it is apparent that [Melissa] significantly contributed to making [the business] a success. Her contribution to the business is not quantifiable. But the overall division of property and assets in this case is equitable, when the business is considered.
The court also determined that the American Express account would be awarded to Melissa as her separate property because it had been initially funded with her share of sums from marital accounts, then enhanced with post-separation deposits. The court also reiterated that it valued “the cash accounts as of the date of separation” because “[a]fter separation, [Gary] spent significant money and incurred substantial debt” and “[g]iven the length of separation, the value at the time of separation provides for the most equitable division of the cash accounts.” The court then reaffirmed its oral ruling regarding the remainder of its award.
¶10 Gary subsequently filed another motion, this time requesting a new trial under rule 59(a) of the Utah Rules of Civil Procedure on the American Express account issue. He asserted that Melissa had “disclosed at trial and not before that she had a $50,000 American Express savings account” and that he “was genuinely surprised by this trial disclosure.” He claimed that he “should have had the opportunity to investigate this account and trace its origin to determine whether [Melissa’s] representations about it were accurate.”
¶11The district court denied Gary’s motion in another written order. It stated that “with reasonable diligence, [Gary] could have discovered the account before trial but did not utilize the discovery process to his advantage.” It additionally stated that “[Gary] did not object at trial to the introduction of the information related to the account and [Melissa] testified that the account was created after separation.”
¶12Gary appeals.
ISSUES AND STANDARDS OF REVIEW
¶13 Gary raises three issues on appeal. First, he asserts that the district court erred in determining that the American Express account was Melissa’s separate property and in denying his motion for a new trial on that issue. This issue implicates two standards of review. First, “whether property is marital or separate is a question of law, which we review for correctness.” See Brown v. Brown, 2020 UT App 146, ¶ 13, 476 P.3d 554 (quotation simplified). Second, “we review the decision to grant or deny a motion for a new trial only for an abuse of discretion.” State v. Loose, 2000 UT 11, ¶ 8, 994 P.2d 1237.
¶14 Next, Gary challenges the court’s award to Melissa of $15,008 of the business’s profits accrued during the fourteen months from the time of the couple’s separation until trial. We review the district court’s ruling on this issue for an abuse of discretion. See Jones v. Jones, 700 P.2d 1072, 1074 (Utah 1985).5
¶15 Finally, Gary asserts that the court abused its discretion when it awarded Melissa a disproportionate share of the marital estate without providing findings that justify the unequal division.6 “In a divorce proceeding, the trial court may make such orders concerning property distribution and alimony as are equitable. The trial court has broad latitude in such matters, and orders distributing property and setting alimony will not be lightly disturbed.” Id. (internal citation omitted).
ANALYSIS
American Express Account
¶16 Gary asserts that the district court erred in determining the American Express account was Melissa’s separate property and in denying his motion for a new trial on that issue. Although the marital estate is generally valued “at the time of the divorce,” see Rappleye v. Rappleye, 855 P.2d 260, 262 (Utah Ct. App. 1993), a district court, in its discretion, may determine that property acquired post-separation, but before entry of a final divorce decree, is separate property so long as this decision is “supported by sufficiently detailed findings of fact that explain the trial court’s basis for such deviation,” see Donnelly v. Donnelly, 2013 UT App 84, ¶¶ 41, 45, 301 P.3d 6 (quotation simplified). See also Shepherd v. Shepherd, 876 P.2d 429, 432–33 (Utah Ct. App. 1994).7
¶17 Here, the court’s decision to categorize the American Express account as Melissa’s separate property flowed logically from its ruling on the parties’ joint bank accounts. In that ruling, the court made specific findings supporting its decision to adjudicate the bank accounts as of the date of separation rather than at the time of divorce. It stated that it was doing so because it “seemed to be the fairest division” due to the fact that, “[a]fter separation, [Gary] spent significant money and incurred substantial debt,” while Melissa saved money. Moreover, the court relied on the length of the separation—some fourteen months—during which both parties lived independently of one another.8 Thus, given that the court decided to adjudicate the parties’ joint accounts as of the time of separation rather than at the time of divorce, the general rule that all assets obtained during the marriage are marital property did not apply, by extension of this same logic, to the American Express account.
¶18 The district court therefore did not err when it determined that the American Express account was Melissa’s separate property.9 It follows, then, that the court likewise didnot abuse its discretion in denying Gary’s motion for a new trial on this issue. See State v. Loose, 2000 UT 11, ¶ 8, 994 P.2d 1237.
Business Profits
¶19 Gary next contends that “the district court abused its discretion when it determined that Melissa should be awarded half of the ‘profits’ accrued by the business in the 14 months prior to trial.” “In Utah, marital property is ordinarily divided equally between the divorcing spouses and separate property, which may include premarital assets, inheritances, or similar assets, will be awarded to the acquiring spouse.” Olsen v. Olsen, 2007 UT App 296, ¶ 23, 169 P.3d 765. “The primary purpose of a property division . . . is to achieve a fair, just, and equitable result between the parties.” Riley v. Riley, 2006 UT App 214, ¶ 27, 138 P.3d 84 (quotation simplified).
¶20 Gary essentially argues that there were no profits from the business because all the money earned was simply his income and any award to Melissa would therefore essentially be alimony, which the district court had already determined neither party needed. But Gary’s attempt to equate the profits with his salary, or with alimony, is unavailing because the court found that the net profits had “been $2,144 per month consistently through 2017, and [Gary] testified that it’s been constant since then.” The court also found, with our emphasis, that “[t]axreturns show that, since separation, the business has made a profit in addition to expenses and [Gary’s] salary.” And Gary has not shown on appeal how these findings underpinning the court’s ruling were erroneous. See State v. Thompson, 2020 UT App 148, ¶ 20, 476 P.3d 1017 (“To successfully challenge a district court’s factual findings on appeal, an appellant must establish a basis for overcoming the healthy dose of deference owed to factual findings, generally by identifying and dealing with supportive evidence through the process of marshaling.”) (quotation simplified). See also State v. Nielsen, 2014 UT 10, ¶ 40, 326 P.3d 645 (“[A] party who fails to identify and deal with supportive evidence will never persuade an appellate court to reverse[.]”).
¶21Therefore, because Gary has not meaningfully addressed the supportive evidence behind these findings, which findings adequately explain the court’s ruling, we hold that the court did not abuse its discretion in distributing the business profits as it did.
III. Equitable Distribution of Assets
¶22 Gary’s final argument is that the district court abused its discretion when it awarded nearly $150,000 more of the real and personal property comprising the marital estate to Melissa than it did to him. Specifically, Gary asserts that “the district court abused its discretion in two ways: it did not follow the guideline that marital assets are to be split equally and it did not provide adequate findings to support its departure from the equal division presumption.” We agree.
¶23 In dividing the marital estate in a divorce proceeding, “[e]ach party is presumed to be entitled to . . . fifty percent of the marital property.” Burt v. Burt, 799 P.2d 1166, 1172 (Utah Ct. App. 1990). “But rather than simply enter such a decree, the court should then consider the existence of exceptional circumstances and, if any be shown, proceed to effect an equitable distribution in light of those circumstances[.]” Id. Thus, “once a court makes a finding that a specific item is marital property, the law presumes that it will be shared equally between the parties unless unusual circumstances, memorialized in adequate findings, require otherwise.” Hall v. Hall, 858 P.2d 1018, 1022 (Utah Ct. App. 1993) (emphasis added). See Bradford v. Bradford, 1999 UT App 373, ¶ 27, 993 P.2d 887 (“An unequal division of marital property . . . is only justified when the trial court memorializes in . . . detailed findings the exceptional circumstances supporting the distribution.”) (quotation simplified).
¶24 On appeal, both parties expend significant effort in arguing how the court’s award of real and personal property was either equitable or inequitable. We need not endeavor to directly resolve this debate, however, because the court’s ruling lacked adequate findings to support the disparate distribution. Here, Melissa was awarded the entirety of the net value in the home, $292,285, and a car valued at $25,000. In total, Melissa was awarded $317,285. Gary, on the other hand, was awarded four vehicles with a total value of $102,883, the trailer at $8,000, and the other personal property items with a total value of $57,590. Gary was therefore awarded $168,473. This left a $148,812 discrepancy in favor of Melissa.10
¶25 Although the district court “has broad latitude” in equitably distributing the marital estate, see Olsen v. Olsen, 2007 UT App 296, ¶ 8, 169 P.3d 765 (quotation simplified), it cannot unequally divide that estate unless it “memorializes in adequate findings” the “unusual circumstances” that justify doing so, Hall, 858 P.2d at 1022 (emphasis added) (quotation otherwise simplified). Here, the court unequally divided the marital estate but did not enter adequate findings detailing the unusual circumstances that justified such an award. The court’s justification for its disparate award is limited to three observations.
¶26First, the court opined, without pointing to any evidence, that the cost of selling the home would deplete any disparity that might exist between the parties and benefit neither. In the absence of evidence to this effect, this is purely speculative, and we are hard-pressed to see how the commissions and other fees in selling the home would be anywhere near large enough to overcome the substantial discrepancy in the value of the property awarded to each party. The court also rationalized the disparity by concluding that Melissa would otherwise be without a home, but presumably this would have been a momentary event given her assets, her employment, and her share of the sale proceeds. These are simply not the kind of exceptional circumstances that would justify such a disparity. Cf. Bradford, 1999 UT App 373, ¶ 27 (“In this case, the trial court’s only finding justifying the award of the [entire] home to Mr. Bradford was that ‘the house and property is in fact not partitionable as it contains a residence, road and river frontage. If an interest were to be conveyed the house would have to be refinanced or sold.’ This finding is insufficient, by itself, to support an award of the marital home entirely to Mr. Bradford.”) (footnote omitted). Indeed, district courts “often order a sale of marital property and equitably divide the proceeds between the parties” or “allow one spouse to ‘buy out’ the other spouse’s interest in marital property,” and the district court here “made no adequate finding explaining why either of these two remedies was not appropriate for the parties in this case.” See id.
¶27 Second, the court stated that while “the final division of property does not equally divide the values in the marital home,” it was nonetheless “equitable, based on all circumstances in the case.” This is a conclusory statement and not a finding that justifies the unequal distribution of marital assets. General comments about the equitability of an award are simply not enough to overcome the presumption that marital property should be “shared equally.” Hall, 858 P.2d at 1022.
¶28 Finally, the court noted that although it awarded the business to Gary, “it is apparent that [Melissa] significantly contributed to making [the business] a success. Her contribution to the business is not quantifiable. But the overall division of property and assets in this case is equitable, when the business is considered.” Once again, this is not a finding sufficient to explain such a large departure from the presumptively appropriate equal distribution of the marital estate. See Bradford, 1999 UT App 373, ¶ 27. The court found that the business had no marketable value, and thus it is unclear how it quantified Melissa’s contribution. Further, the court’s observations about Melissa’s contributions do not demonstrate “exceptional circumstances” that justify a nearly $150,000 difference in the property awards to each party. See Burt v. Burt, 799 P.2d 1166, 1172 (Utah Ct. App. 1990).
¶29 Without adequate findings detailing why Melissa should be entitled to such an unequal split of the marital estate, we cannot affirm the court’s award. We therefore remand the case to the district court either (1) to make adequate findings specifically detailing (and quantifying) the exceptional circumstances that would justify the unequal distribution of the marital estate, or (2) if such findings are not appropriate on this record, then to equally distribute the marital estate.11
CONCLUSION
¶30 The district court did not err in determining that the American Express account was Melissa’s separate property or exceed its discretion in awarding to her half of the profits the business accrued from the time of separation until trial. The court did err, however, in unequally dividing the marital estate without entering adequate findings justifying that unequal distribution. We therefore affirm in part and reverse in part, and we remand to the district court for further proceedings consistent with this opinion.
Utah Family Law, LC | divorceutah.com | 801-466-9277
Law from a legal assistant’s point of view, week 18: Financial Declarations and Initial Disclosures
By Quinton Lister, legal assistant
My minimal exposure to the legal profession as a legal assistant to a divorce attorney has given me the opportunity to learn about financial declarations and initial disclosures. These forms are necessary for any party going through the process of litigation for a divorce, and they are straightforward as to what they require.
The financial declaration is a statement of income, expenses, debts, assets, and financial accounts for each party to a divorce action.
One’s initial disclosures form identifies people with information relevant to the case, the potential witnesses, and documents and other physical evidence a party asserts supports his/her case.
Completing the financial declaration and initial disclosures forms completely and correctly, along with gathering all the necessary supporting documentation, is a time-consuming process. With rare exception, divorce litigants do not want to prepare these forms. I know this because anyone I have tried to help through this process always fails to complete the forms and/or complains about the work that needs to be done on these forms. I get it, but what the clients often don’t seem to get is that your financial declaration and initial disclosures are not optional. Court rule require both you and your spouse to fill them out, fill them out correctly, and fill them out fully. Failing to do so can result in the court penalizing you and/or making erroneous rulings based upon incorrect and/or incomplete forms.
I am not a lawyer and thus cannot give any legal advice, but as someone who has taken part in the process of helping clients prepare their financial declarations and initial disclosures, I can see that preparing these forms completely, accurately, and on time greatly benefits you and your lawyer, saving you both time and frustration, as well as sparing you grief, on the back end.
Utah Family Law, LC | divorceutah.com | 801-466-9277
Married a short time. He demands discovery going back years. Can he?
Married 16 months. He became abusive almost immediately after. I filed for divorce. He and his attorney is requesting bank statements and my previous divorce information -real estate sales, bankruptcy, etc. from my last marriage prior to this marriage. Can They? They may be well within their rights to seek this kind of information, if the reason he and his attorney are doing so because you are seeking alimony. Things like your bank statements, real estate sales, and bankruptcy documents provide information as to your earning capacity, how capable you are of supporting yourself, and lifestyle costs—that’s all highly relevant and thus clearly discoverable information on the issue of alimony. If you are concerned that your husband and his attorney are engaging in irrelevant, burdensome, harassing, abusive discovery tactics, get your own attorney to find out, and if your attorney honestly believes the discovery is inappropriate/unnecessary, your attorney can ask the court to review the matter to see if the court agrees. If the court agrees, it can bar your husband and attorney from engaging in that kind of thing.
What are ways divorcees reach a mutual agreement when splitting up their assets?
What they often do (but shouldn’t): rationalize and justify their greed and pettiness in advancing their “arguments”* for why they should get what they want. This results in claims for obviously lopsided divisions of marital property and to false and fatuous claims that what is marital property is actually “my separate property” and “that was a gift from my parents to us, so now that we are divorcing, it’s mine.” Being greedy and petty in the division of marital assets is self-defeating because it often leads to wasting more time, effort, and money than the property is worth.
What they could—and usually should—do: 1) think like your divorce court judge will think and do what the law requires your judge to do, i.e., divide all marital property equally (meaning an equal division of the value of the property), unless there are clearly evident exceptional circumstances that equitably warrant an uneven division of marital property.
*the definition of the word “argument” is not what many people believe. An argument is not the same as a quarrel. An argument is “a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.”
How can I protect my assets before getting married without prenup? Short answer: One option (not a very good one, frankly, but about the best there is under the circumstances as you describe them in your question) is:
1) own no major/valuable property before you are married (in other words, your spouse would probably not seek (and the court would probably not award to your spouse any part of) a portion of things like your clothes and personal effects, so you could live in a house and drive a car you lease and thus have no such “big ticket” items that could be sold and the proceeds of sale awarded to your spouse in divorce;
2) save nothing in the bank or in investments and retirement accounts, so that there is nothing like in which your spouse could try to claim an interest; and
3) ensure that you do not earn more than your spouse does, so that your spouse cannot make an easy argument for alimony.
Your real question may be this instead: How can I prevent losing too much (being treated unfairly) financially in divorce? If that is your question, it is a very good and very common one. After all, most reasonable people would agree that what a couple acquires together during marriage is considered “their” property, “our” property, instead of “there’s yours and there’s mine”. For example: a couple marries and buys a house together in which they live for years. Sure, it may have been that one spouse worked full time while the other stayed home to take care of the kids and the house, but they are a team, partners (in both a legal sense and a practical sense).
Another example: Saving up for retirement. It is common for one spouse to be better able to pursue a career and advance in it (thus making more money for retirement) when the other spouse stays home with the children (at least while they are quite young) and keeps house. Both spouses understand that one hand washes the other. The decision to purchase the house and the decision to have one spouse be the primary breadwinner and the other the children’s primary caretaker was made together, for mutual benefit. The spouse with the full-time job knew in advance that he/she would be sharing the house and retirement funds with his/her spouse and worked for the money needed to fund these things. It is understood that these things are marital property that would be divided equally in the event of divorce. It makes sense. But there are other issues that are not so clear cut. Many people—mostly husbands, but a growing number of wives—have this sense that:
a) “divorce should not result in my being financially exploited”;
b) “divorce should not result in being robbed of what was mine before marriage and what I acquired for myself during marriage”;
c) “I shouldn’t have to continue to support a spouse financially if I’ve done nothing to make divorce necessary; if my spouse wants out of the marriage and files for divorce, then he/she should do so with the understanding and expectation that with the end of the marriage comes the end of any and all of my obligations to support my spouse due to the fact that he/she is no longer my spouse”;
d) spouses who: don’t carry their fair share of the weight during the marriage, who don’t do their best to contribute, and/or become financially dependent upon the other spouse as a result of being lazy (as opposed to spouses who are or become, due to disabilities beyond their control, financially dependent on the other spouse); and/or spouses who abuse the other spouse and/or children, commit adultery, or waste marital resources (i.e.,, refuse to uphold their marital responsibilities with impunity); and
e) spouses who are moochers in divorce when they demand that the people to whom they are no longer married nevertheless keep supporting them financially. There is something inherently unfair in that concept.
In response to these questions and concerns the best answers for me personally are:
One, if I am truly worried that my marriage could end in divorce to a gold digger, the solution does not lie in trying to figure out a way to protect my assets but in not marrying the suspected gold digger.
Two, I did not marry to keep tabs on how much I have to lose in divorce. Yes, there are risks in trusting my spouse with my welfare (both physical and emotional), but the opportunity to enjoy a happy marriage is worth the risk to the right person.
Now please understand: I get that sometimes you can do everything right and marry someone who was great but who later changed and turned on you. That is sad, but not enough of a reason to avoid marriage, in my opinion. Well-rounded married people are generally much happier than well-rounded single people. Do not deny yourself the joys and blessings of marriage out of the fear of divorce. There is no meaning to success without the risk of and the fight against failure.
Three, there is no more reliable and cost-effective way to protect your assets in divorce than with some wise financial planning and a well-drafted prenuptial agreement.
Warning: even the most well-drafted prenuptial agreements are not iron-clad, but they are better than nothing (far better) if you are concerned about protecting yourself from being raped and pillaged financially in divorce.
Utah Family Law, LC | divorceutah.com | 801-466-9277
Will my spouse be legally an owner of a company that I start just because of being my spouse?
It is possible. A nonowner spouse can be awarded a portion of the other spouse’s separate property, and separate property can include a business. The arguments go like this:
Jensen v. Jensen, 203 P.3d 1020, 1024 (Utah Ct.App. 2009):
¶ 12 A succinct summary of contribution cases is provided in Kunzler v. Kunzler, 2008 UT App 263, 190 P.3d 497, where this court addressed the wife’s argument that she was entitled to part of her husband’s separate business property because, although “she was not his partner in the business [at issue,] she was his partner in the business of marriage.”5 Id. ¶ 19 n. 5. In his partially dissenting opinion, Judge Davis discussed Dunn v. Dunn, 802 P.2d 1314 (Utah Ct.App.1990), and Elman v. Elman, 2002 UT App 83, 45 P.3d 176. See Kunzler, 2008 UT App 263, ¶ 19 n. 5, 190 P.3d 497. In both of those cases, the nonowner spouse was awarded a portion of the other spouse’s separate property. See Dunn, 802 P.2d at 1318; Elman, 2002 UT App 83, ¶ 24, 45 P.3d 176. As stated in Kunzler, “the wife [in Dunn] ‘performed bookkeeping and secretarial services without pay’ for the husband’s medical practice, and therefore the business ‘was founded and operated through the joint efforts and joint sacrifices of the parties.’ ” 2008 UT App 263, ¶ 19 n. 5, 190 P.3d 497 (quoting Dunn, 802 P.2d at 1318). Judge Davis also discussed Elman, where
the wife “not only managed the household, but also grew the parties’ marital properties. She secured the land for and was in charge of building the parties’ Park City home.” … The Elman court awarded the wife half of the increase in value of the properties during the marriage “given the unusual responsibilities she assumed.”
Id. (emphasis in original) (quoting Elman, 2002 UT App 83, ¶ 24, 45 P.3d 176).
¶ 13 As noted in the parties’ briefs, there are cases predating Mortensen, Elman, and Dunn that appear to apply a more liberal standard in determining the appropriateness of awarding separate property to a nonowner spouse on the basis of contribution. In Lee v. Lee, 744 P.2d 1378 (Utah Ct.App.1987), this court reversed the trial court for failing to award the wife an equitable share of the husband’s corporation, acquired during the marriage, where “the wife assisted in the operation of the corporation by assuming clerical duties, including typing, answering the phones, and paying bills. Moreover, the wife also reared the parties’ two children and performed domestic duties, allowing the husband to participate full-time in the business.” Id. at 1380. In Savage v. Savage, 658 P.2d 1201 (Utah 1983), the Utah Supreme Court noted that the trial court’s property distribution—granting the wife forty percent of the value of the husband’s company—was within its allotted discretion, in part, “while it is true that the [wife] took no responsibility for the business, it was her assumption of the domestic burdens which made possible the [husband’s] full-time participation in the business.” Id. at 1204.
¶ 14 Mortensen, Dunn, and Elman appear to require more active participation and contribution by the nonowner spouse in order to qualify under the contribution category of Mortensen. As noted in Mortensen, the results are different where there is “effort made by the nondonee or nonheir spouse to preserve or augment the asset,” as compared to situations where there is a “lack of such efforts.” 760 P.2d at 306.
Child v. Child, 194 P.3d 205 (Utah Ct.App. 2008):
“The general rule is that equity requires that each party retain the separate property he or she brought into the marriage, including any appreciation of the separate property.” Dunn v. Dunn, 802 P.2d 1314, 1320 (Utah Ct.App.1990). Such separate property can, however, become part of the marital estate if
(1) the other spouse has by his or her efforts or expense contributed to the enhancement, maintenance, or protection of that property, thereby acquiring an equitable interest in it, or (2) the property has been consumed or its identity lost through commingling or exchanges or where the acquiring spouse has made a gift of an interest therein to the other spouse.
Dunn v. Dunn, 802 P.2d 1314, 1317-1319 (Utah Ct.App 1990):
The Professional Corporation
Marital property is ordinarily all property acquired during marriage and it encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived.” Gardner v. Gardner, 748 P.2d 1076, 1079 (Utah 1988) (quoting Englert v. Englert, 576 P.2d 1274, 1276 (Utah 1978)). In Sorensen v. Sorensen, 769 P.2d 820 (Utah Ct.App.1989), we affirmed the trial court’s conclusion that the accounts receivable, tangible assets, and goodwill of a professional practice were includable in the marital estate, to the extent they were accumulated during the marriage, in a situation where the husband began his dental practice six years before the marriage began. Id. at 832.
Mrs. Dunn’s position is more conservative than the prevailing view in Sorensen in that she does not assert an interest in her husband’s ongoing practice. Rather, Mrs. Dunn asserts an interest in the tangible assets of a corporation that was established during the marriage.
In Lee v. Lee, 744 P.2d 1378 (Utah Ct.App.1987), we considered a nine year marriage during which the husband established a corporation. The wife contributed some bookkeeping. More significant were her domestic contributions which freed her husband to participate full time in running the business. We held in Lee that the wife was entitled to her full equitable share of the corporation because of the parties’ joint efforts in establishing and maintaining the corporation. Id. at 1380–81.
Here, Mrs. Dunn argues, and we agree, that the trial court abused its discretion by characterizing Dr. Dunn’s professional corporation as a nonmarital asset. The corporation was founded and its assets accrued during the marriage and she performed bookkeeping and secretarial services without pay for the corporation. Thus, the corporation was founded and operated through the joint efforts and joint sacrifices of the parties. In addition, because Dr. Dunn chose to work sixty to seventy hours per week, he left Mrs. Dunn with the sole responsibility of running the household and managing the household accounts. Further, she was left without his companionship and domestic contributions during those hours. While she was not his partner in the business of orthopedic surgery, she was his partner in the “business” of marriage and her efforts were necessary contributions to the growth of his practice and the business. As such, she is entitled to her fair share in any marital assets derived from their joint efforts in that endeavor. Lee, 744 P.2d at 1380–81.
The lower court found that the “net tangible assets are not marital assets and are not subject to division in this action.” Other than this assertion, the court gave no reason for this finding and we can find no support for it in the record. We therefore reverse and remand for an equitable, which in this case means equal, distribution of the net tangible assets of the professional corporation.
Royalty Rights
This court recently affirmed that the right to future income is a marital asset where that right is derived from efforts or products produced during the marriage, even in cases where that right cannot be easily valued. Moon v. Moon, 790 P.2d 52, 56–57 (Utah Ct.App.1990) (right to use sculpture molds is a marital asset); see also Sorensen, 769 P.2d at 827; Woodward v. Woodward, 656 P.2d 431, 432–33 (Utah 1982).
Dr. Dunn argues that the development of the surgical instruments for implanting artificial knees came as a result of twenty-six years of education and training, most of which predated this marriage. He implies that since all of the necessary knowledge, skill and expertise was not acquired during the marriage, Mrs. Dunn should not share in the resulting profits. We find this argument without basis in law or in equity.
Mrs. Dunn asserts, and we agree, that the lower court abused its discretion in finding she had no marital interest in Dr. Dunn’s royalty rights for his invention of surgical instruments used for implanting artificial knees. She argues that the instruments were invented during the marriage, that nothing in the royalty contract conditions the payment of royalties upon Dr. Dunn’s personal services, and that Dr. Dunn himself characterized the income as “installment payments from the sale of property” on the parties’ joint 1987 income tax return. This contract, executed December 1, 1985, entitles Dr. Dunn to fixed quarterly payments totaling $375,000 between 1986 and 1990; $243,750 of the royalties earned during the marriage remained to be paid at the time of trial.
The lower court found that the contract would be “worthless” without his future personal services. However, although Dr. Dunn did spend time demonstrating the instruments, it was not specifically required by the contract. This contract, unlike the one pertaining to the artificial hip devices, is a royalty agreement and not a personal services agreement.
The record indicates that the knee contract is not conditioned upon Dr. Dunn’s personal services and that the primary benefit to Zimmer for the contract is the right to distribute the artificial knee instruments. Because the lower court found that Dr. Dunn traveled twenty-eight days per year doing business that related “equally to the hip agreement and the knee agreement,” and because Dr. Dunn is entitled to be recompensed for his time, we remand this issue to the lower court to deduct an amount equal to fourteen days of personal service from the value of the knee contract and to treat the remainder as a marital asset and to value it as of the date of the divorce and distribute to Mrs. Dunn her equitable share, which, in this case, would be one half.
———————
Utah Family Law, LC | divorceutah.com | 801-466-9277
Great question. The answer is (for Utah, where I practice divorce and family law), generally, no, your spouse is not entitled to half of property you inherited during the marriage.
Here is the answer for the jurisdiction where I practice law (Utah):
Premarital property, gifts, and inheritances may be viewed as separate property, and in appropriate circumstances, equity will require that each party retain the separate property brought to the marriage. However, the rule is not invariable. Burke v. Burke, 733 P.2d 133, 135 (Utah 1987) (footnotes omitted). Watson v. Watson, 837 P.2d 1 (Utah Ct. App. 1992).
In Utah, trial court making “equitable” property division pursuant to divorce statute should generally award property acquired by one spouse by gift and inheritance during marriage, or property acquired in exchange thereof, to that spouse, together with any appreciation or enhancement of its value, unless other spouse has by his or her efforts or expense contributed to enhancement, maintenance, or protection of that property, thereby acquiring equitable interest in it, or property has been consumed or its identity lost through commingling or exchanges or when acquiring spouse has made gift of interest therein to other spouse. Utah Code Ann. §30-3-5. Mortensen v. Mortensen, 760 P.2d 304 (Utah 1988).
Premarital property, gifts, and inheritances may be viewed as separate property, and in appropriate circumstances, equity will require that each party retain separate property brought to marriage; however, the rule is not invariable. Burke v. Burke, 733 P.2d 133 (Utah 1987).
In property division incident to divorce, inherited or donated property, including its appreciated value, is generally separate from marital estate and hence is left with receiving spouse. Burt v. Burt, 799 P.2d 1166 (Utah Ct. App. 1990).
Wife’s inheritance maintained its separate character even though inherited funds had been substantially changed in form, where inheritance was readily traceable to segregated accounts, portfolios and real estate. Burt v. Burt, 799 P.2d 1166 (Utah Ct. App. 1990).
As general rule, premarital property, gifts, and inheritances may be viewed as separate property when making distribution of property in divorce proceeding; however, in appropriate circumstances one spouse may be awarded property which other spouse brought into marriage. Naranjo v. Naranjo, 751 P.2d 1144 (Utah Ct. App. 1988).
Utah Family Law, LC | divorceutah.com | 801-466-9277
ROBBEN ANN OLDROYD,
Appellant,
v.
FARRELL LYNN OLDROYD,
Appellee.
Opinion
No. 20180257-CA
Filed September 26, 2019
Second District Court, Morgan Department
The Honorable Noel S. Hyde
No. 134500028
Brent D. Wride and Bryant McConkie, Attorneys
for Appellant
Brian E. Arnold and Lauren Schultz, Attorneys
for Appellee
JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion, in which JUDGES KATE APPLEBY and DAVID N. MORTENSEN
concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 Robben Ann Oldroyd (Wife) appeals the district court’s determination that Farrell Lynn Oldroyd (Husband) was entitled to an equitable interest in property she acquired prior to the parties’ marriage. We reverse and remand for further proceedings.
BACKGROUND
¶2 This case previously came before us in Oldroyd v. Oldroyd (Oldroyd I), 2017 UT App 45, 397 P.3d 645. At that time, Wife challenged the district court’s determination that Husband had acquired a premarital interest in a home constructed prior to their marriage and titled in her name. Id. ¶¶ 2, 5.
¶3 We vacated the award and remanded for the district court to make additional findings disclosing “the steps by which the district court reached its ultimate conclusion.” Id. ¶¶ 5, 11. Although courts have discretion to grant one spouse an equitable portion of premarital property belonging to another spouse in certain circumstances, see Lindsey v. Lindsey, 2017 UT App 38, ¶ 33, 392 P.3d 968, the district court had not made findings regarding any of those circumstances. Instead, it concluded that Husband had “acquired a separate premarital interest in the improvements on the property.” Oldroyd I, 2017 UT App 45, ¶ 4 (quotation simplified). Yet the court did not articulate “what legal theory gave” Husband a premarital interest in the property as opposed to an equitable interest in a portion of a premarital asset belonging to Wife. Id. ¶ 8. Thus, we were “unable to trace with accuracy the steps by which the district court reached its ultimate conclusion that [Husband] had obtained a premarital interest in the house.” Id. ¶ 11 (emphasis added).
¶4 On remand, the court made additional findings regarding Husband’s contribution to the value of the home. The court found that Wife had contributed $350,000 toward the out-of-pocket costs of constructing the home and that “[t]he value of the specialized expertise and labor provided” by Husband, which included providing “the vast majority of supervision and conceptual direction for the construction of the home,” “was equivalent to the value of [Wife’s] financial contributions to the home’s construction,” i.e., $350,000.[1] The court further found that Husband “conferred upon [Wife] the benefit of his unique and specialized knowledge and skills in constructing the . . . home,” that Wife “was aware of and appreciated the unique and substantial benefit being conferred upon her,” and that permitting Wife “to retain the benefit of [Husband’s] knowledge and skills without granting [Husband] equal value in the home would unjustly enrich” Wife. Based on these findings, the court determined that the parties “should each be awarded a 50% premarital interest” in the home based on a theory of unjust enrichment. Wife again appeals the district court’s decision.
ISSUE AND STANDARD OF REVIEW
¶5 Wife asserts that the district court erred in recognizing a 50% premarital interest for Husband based on unjust enrichment. “We review the district court’s legal conclusions for correctness, and will reverse its factual findings only if they are clearly erroneous.” 438 Main St. v. Easy Heat, Inc., 2004 UT 72, ¶ 49, 99 P.3d 801.
ANALYSIS
¶6 Wife asserts that the district court erred in awarding Husband a premarital interest based on unjust enrichment, because that theory was neither pleaded nor tried by consent. Husband maintains that his pleadings adequately asserted an unjust enrichment claim and that, even if they did not do so explicitly, Wife was aware of the claim and defended against it at trial, thereby impliedly consenting to its consideration. We agree with Wife.
¶7 First, Husband’s pleadings cannot be construed as asserting an unjust enrichment claim. The pleadings alleged that Husband “has exerted hours and money into the home, including trade work,” and that he “should be awarded a sum certain from [Wife’s] equity in the home for all the work he has completed on the home, and for value of his trade work that he has performed for investment on the marital home.” This is not a claim for a premarital interest in property based on unjust enrichment or any other theory but a claim for an equitable award of a portion of Wife’s premarital asset.[2] See Lindsey v. Lindsey, 2017 UT App 38, ¶ 33, 392 P.3d 968.
¶8 Second, Husband has not pointed us to anything in the
trial record suggesting that the issue was tried by implied consent. “When an issue not raised in the pleadings is tried by the parties’ express or implied consent, it must be treated in all respects as if raised in the pleadings.” Utah R. Civ. P. 15(b)(1). “Implied consent to try an issue may be found where one party raises an issue material to the other party’s case or where evidence is introduced without objection, where it appears that the parties understood the evidence is to be aimed at the unpleaded issue.” Hill v. Estate of Allred, 2009 UT 28, ¶ 48, 216 P.3d 929 (quotation simplified). But “when evidence is introduced that is relevant to a pleaded issue and the party against whom the amendment is urged has no reason to believe a new issue is being injected into the case, that party cannot be said to have impliedly consented to trial of that issue.” Id. (quotation simplified).
¶9 Husband’s contribution to the value of the home was a major issue at trial, and much evidence was presented by both parties on this point. However, all of this evidence was relevant to Husband’s equitable claim that his efforts on the home entitled him to a portion of Wife’s premarital asset. There is nothing inherent in this evidence that would have suggested to Wife that the evidence was introduced to prove an unpleaded unjust enrichment claim. And in fact, Husband represented the opposite, explicitly acknowledging at trial that his opportunity to assert unjust enrichment had passed, since more than eighteen years had elapsed since the completion of the home. The fact that any unjust enrichment claim was several years too late is the reason Husband sought an equitable award of a portion of Wife’s property as part of the divorce action. It was the court that ultimately construed Husband’s claim as an assertion of a premarital interest in Wife’s separate property and articulated it as such in its order.
¶10 In Oldroyd I, we concluded that the district court had failed to “explain what legal theory gave rise” to Husband’s premarital interest in the property and clarified, “[T]he court did not discuss whether unjust enrichment, promissory estoppel, quasi-contract, or some other theory applied.” Oldroyd I, 2017 UT App 45, ¶ 8. While acknowledging that it also did not appear that Husband had “identified to the court a particular theory under which he was entitled to a premarital interest,” we left open the possibility that there could be some legal theory under which the court could reach such a conclusion. Id. Upon further review, however, it is apparent that this is not the case. Husband raised no contract, quasi-contract, or equitable claim that he had acquired a premarital interest in the home, and no such claim was tried by consent. Further, by Husband’s own admission, it does not appear that any such claim was available to him within the statute of limitations. See Utah Code Ann. § 78B-2-307(1) (LexisNexis 2018). Thus, the district court erred in determining that Husband had established a premarital interest in the property.
¶11 Because the district court premised its ruling on the conclusion that Husband had acquired a premarital interest in the home, it did not rule on his equitable argument. On remand, the court is not precluded from evaluating this argument, which was specifically pleaded and tried.[3]
CONCLUSION
¶12 Because a claim of unjust enrichment was neither pleaded nor tried by consent, the district court erred in determining that Husband had acquired a premarital interest in the home. We therefore reverse and remand for further proceedings.
Utah Family Law, LC | divorceutah.com | 801-466-9277
———————————————————–
[1] At trial, a general contractor called as an expert witness for Wife estimated that he would have charged approximately $804,000 to build the home in 1997.
[2] In Oldroyd I, we declined Husband’s invitation to construe the district court’s decision as granting him an equitable interest in Wife’s premarital property because the court’s findings did not support such a determination: “[T]he district court did not rule that the house was marital property that should be divided unequally” and “did not purport to award an interest in [Wife’s] separate property to [Husband] to achieve an equitable result.” Oldroyd I, 2017 UT App 45, ¶ 9 & n.5, 397 P.3d 645. “Rather, the court determined that [Husband] had ‘acquired a separate premarital interest’ in the house.” Id. ¶ 9.
[3] Previous cases addressing equitable division of premarital assets have involved contributions made to those assets during the course of the marriage. See, e.g., Lindsey v. Lindsey, 2017 UT App 38, ¶¶ 6–7, 13, 392 P.3d 968; Elman v. Elman, 2002 UT App 83, ¶ 20, 45 P.3d 176. Thus, Utah courts have not had the opportunity to assess the extent to which one spouse’s premarital contributions to another spouse’s premarital assets may be considered in the context of a divorce court’s equitable division of property. However, Wife does not appear to have asserted that the court was precluded from considering Husband’s premarital contributions, and the parties’ presentation of evidence at trial indicates that both were acting on the assumption that Husband’s premarital contributions were relevant to his equitable claim for a portion of Wife’s premarital asset. We therefore assume, without deciding, that premarital contributions may be relevant in assessing whether equity requires division of a premarital asset.
DEIDRE SUE JANSON,
Appellant,
v.
JEFFREY ALAN JANSON,
Appellee.
Opinion No. 20170541-CA
Filed June 20, 2019
Third District Court, Salt Lake Department
The Honorable Andrew H. Stone
No. 164906327
Jamie Carpenter, Attorney for Appellant
Kara L. Barton and Ashley Wood, Attorneys for Appellee
JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion, in which JUDGES GREGORY K. ORME and DIANA HAGEN concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 Deidre Sue Janson appeals the district court’s order denying her motion to set aside a written stipulation (the Stipulation) entered in her divorce action against Jeffrey Alan Janson. We affirm.
BACKGROUND
¶2 The parties entered into the Stipulation following mediation on November 14, 2016, to resolve the issues in their divorce. As part of the Stipulation, Deidre[1] agreed to pay Jeffrey alimony of $2,500 per month for eighteen months and $1,500 per month for an additional eighteen months.
¶3 The Stipulation awarded the marital home to Jeffrey.
Deidre was awarded half of the equity in the home, less $45,000 that constituted Jeffrey’s inherited funds. The Stipulation also divided the equity in the parties’ vehicles, requiring Deidre to pay Jeffrey $13,178 from her share of the parties’ bank accounts to equalize the vehicle equity disparity.
¶4 The parties had a number of retirement funds and accounts. Regarding the retirement, the parties agreed as follows:
[Deidre] has the following retirement accounts: Utah Retirement in the amount of approximately $72,440; General Electric in the approximate amount of $100,435; Roth IRA in the approximate amount of $18,252; FDIC in the approximate amount of $16,719 and $17,431; and Utah Pension in the amount of $15,281.
[Jeffrey] has the following retirement accounts: Fidelity in the approximate amount of $22,012; Bernstein in the approximate amount of $18,305.
The above retirement accounts will be divided equally between the parties. In addition [Deidre] has a premarital IRA in the approximate amount of $17,682 which is her separate property.
[Jeffrey’s] Alliant Technical Systems Pension plan which will be divided pursuant to the Woodward formula.
The parties will share equally the cost of any qualified domestic relation order.
¶5 On January 12, 2017, Deidre moved to set aside the Stipulation on the ground that there was not a meeting of the minds regarding various provisions in the agreement. She asserted that she “did not receive [Jeffrey’s] financial disclosures until the morning of mediation and was not able to consult with her attorney prior to mediation.” She asserted that because her Utah pension was listed with its approximate value alongside the other retirement accounts, her understanding was that Jeffrey was to receive only half of the listed $15,281 partial lump sum value of that pension rather than half of the entire monthly payment amount as determined by a qualified domestic relations order (QDRO). According to Deidre, the total value of Jeffrey’s half of the pension if the monthly payment option were utilized would amount to approximately $80,000. Deidre claimed that had she understood that Jeffrey would be entitled to half of the entire Utah pension, she would not have agreed to provisions granting Jeffrey premarital equity in the home. She pointed to the lack of specific dates for the accounts to be divided and the impracticality of preparing a QDRO for every retirement account as support for her assertion that the Stipulation should be interpreted as granting Jeffrey only half of the stated partial lump sum value of her Utah pension account.[2]
¶6 Jeffrey opposed the motion to set aside the Stipulation, pointing out that his financial declaration was provided to Deidre well in advance of mediation and that she was represented by counsel at the mediation. He also explained the discrepancy between how the Stipulation described the division of his pension account and how it described the division of Deidre’s—his account had been partially accrued prior to the marriage, whereas Deidre’s had been accrued entirely during the period of the marriage. He asserted that Deidre was aware that an equal division of her pension could result in him receiving half of the monthly payments rather than half of the partial lump sum payout value because her own financial declaration included a summary of the various payout options. Jeffrey also asserted that only three QDROs, at maximum, were necessary to divide the retirement accounts.
¶7 In responding to Jeffrey’s memorandum in opposition to her motion, Deidre raised additional issues impacting the Stipulation’s alimony award—she indicated that after filing the motion to set aside, she was involuntarily terminated from her job without notice, that the loss of her job precluded her from continuing to pay alimony, and that Jeffrey had become eligible to draw on his social security and retirement accounts to support himself. She asserted that these changes in circumstances justified setting aside the Stipulation.
¶8 Following a hearing, the district court denied Deidre’s motion. The court found that both parties understood that Deidre’s Utah pension had the potential for an annuitized benefit. The court determined that the language in the Stipulation dividing the pension equally was clear as to how the retirement accounts would be treated and contained sufficient detail to enforce the Stipulation. The court stated that it was reasonable to anticipate that additional details would be filled in when the QDROs were prepared. The court also determined that issues related to Deidre’s alleged change in circumstances should be handled separately as a petition to modify.
¶9 Deidre now appeals.
ISSUES AND STANDARDS OF REVIEW
¶10 Deidre asserts that the Stipulation is unenforceable because there was no meeting of the minds regarding various aspects of the Stipulation.[3]
Whether the parties had a meeting of the minds sufficient to create a binding contract is an issue of fact, which we review for clear error, reversing only where the finding is against the clear weight of the evidence, or if we otherwise reach a firm conviction that a mistake has been made.
LD III, LLC v. BBRD, LC, 2009 UT App 301, ¶ 13, 221 P.3d 867 (quotation simplified).
¶11 Deidre also asserts that the district court erred in declining to consider her substantial change in circumstances argument as a basis for setting aside the Stipulation and instead determining that a petition to modify was the necessary route for her to pursue this argument. Whether a district court erred in accepting and enforcing a proffered stipulation is reviewed for an abuse of discretion. See In re N.M., 2018 UT App 141, ¶ 17, 427 P.3d 1239.
ANALYSIS
The District Court Did Not Clearly Err in Rejecting Deidre’s Assertion That There Was No Meeting of the Minds.
¶12 “It is a basic principle of contract law there can be no contract without a meeting of the minds.” Granger v. Granger, 2016 UT App 117, ¶ 14, 374 P.3d 1043 (quotation simplified). “A binding contract exists where it can be shown that the parties had a meeting of the minds as to the integral features of the agreement and that the terms are sufficiently definite as to be capable of being enforced.” LD III, LLC v. BBRD, LC, 2009 UT App 301, ¶ 14, 221 P.3d 867 (quotation simplified). “Whether there is a meeting of the minds depends on whether the parties actually intended to contract, and the question of intent generally is one to be determined by the trier of fact.” Terry v. Bacon, 2011 UT App 432, ¶ 21, 269 P.3d 188 (quotation simplified).
¶13 “[I]n divorce cases, the ability of parties to contract is constrained to some extent by the equitable nature of the proceedings . . . .” Granger, 2016 UT App 117, ¶ 15. “Because retirement funds are prospectively marital property if acquired or contributed to during the marriage, the distribution of such marital funds must fit within the overarching principle of equity unless the parties have freely and knowingly agreed to a different result that has been appropriately sanctioned by the court.” Id. ¶ 16. Nevertheless, “it is not the court’s prerogative to step in and renegotiate the contract of the parties. Instead, courts should recognize and honor the right of persons to contract freely and to make real and genuine mistakes when the dealings are at arms’ length.” Id. ¶ 14 (quotation simplified).
A. Retirement Funds
1. The Court Did Not Err in Accepting Jeffrey’s Interpretation of the Stipulation.
¶14 At the evidentiary hearing, the district court considered both parties’ testimonies regarding their understanding of the Stipulation and their intent regarding the division of their retirement funds. Having considered this evidence, the district court found that both parties understood that Deidre’s Utah pension had the potential for an annuitized benefit and that the Stipulation was clear that the listed retirement accounts were to be divided equally between the parties. Deidre asserts that this conclusion was clearly erroneous because it is inconsistent with the principle that retirement funds that can be “presently valued” should be equally divided.
¶15 As a general matter, equitable division of a defined benefit plan is accomplished by the Woodward formula[4] and equitable division of a defined contribution plan is accomplished by dividing the value contributed during the marriage. Granger Granger, 2016 UT App 117, ¶ 23, 374 P.3d 1043. While Deidre’s pension fund had a “partial lump sum” payout option—which was listed as the “approximate value”[5] in the Stipulation—it also had a monthly payment option. Because pension funds are presumptively divided according to the Woodward formula, an interpretation of the Stipulation that requires dividing the entire fund rather than only the partial lump sum amount is more consistent with equity. It is also the most logical approach in light of Deidre’s own financial declaration, which acknowledged that her Utah pension had a monthly payment option.
¶16 Deidre also asserts that Jeffrey himself testified that he believed the “approximate” amount listed for Deidre’s pension, rather than the entire pension, would be divided equally. But the record does not support Deidre’s characterization of Jeffrey’s testimony. At the hearing, Jeffrey was asked, “So it was your understanding that [the] specific value you listed would be, at least with 401-Ks or whatnot, would be divided. You would get half of that value?” (Emphasis added.) Jeffrey responded, “It would be half the value as identified by the amounts listed in the stipulation.” Jeffrey was asked specifically about the division of the 401(k)s, not the pension. Thus, his answer to this question cannot be construed as a statement that he expected and agreed that the pension would be divided only according to the amount listed in the Stipulation.
¶17 Indeed, Jeffrey testified that based on the document Deidre produced in her financial declaration outlining the various options for the distribution of the Utah pension, he understood that Deidre’s pension could be taken either “as a partial lump sum” or as “monthly payments” and that he “would have a choice” either to take half of the monthly payments or to add half of the partial lump sum to his share of the distributions of the other IRA and 401(k) accounts. Deidre also testified that she knew that a monthly payment could be an option for payout of her pension. Thus, the court’s interpretation of the Stipulation is supported by the evidence and is not clearly erroneous.
2. The Court Did Not Err in Enforcing the Stipulation.
¶18 Deidre also asserts that the Stipulation should not be enforced because it was not equitable. She argues that the district court should have considered the Stipulation as a whole and recognized that she had given up other valuable assets in exchange for treating the pension as a lump sum rather than as a monthly benefit calculated by utilizing the Woodward formula. However, there is nothing on the face of the Stipulation to indicate that such an exchange was made. The Stipulation states that Jeffrey was granted an extra $45,000 of equity in the home because he had contributed inherited funds to the home, not in exchange for the retirement.
¶19 Even if the court had accepted Deidre’s argument, it is by no means clear that she gave up anything in exchange for the pension, let alone something of comparable value such that the court should have recognized the retirement division as inequitable. Presumably, Jeffrey would have contested Deidre’s assertion that the inheritance funds were comingled, and she has not established that she was equitably entitled to share in the portion of the equity gained by investing the inheritance funds. Further, her half of that portion of the equity was significantly smaller than the amount of the pension Jeffrey would be giving up by accepting half of the partial lump sum value rather than half of the monthly payments. Additionally, Deidre herself asserted only that her belief regarding the pension made her “a little more flexible” on the issue of the allegedly comingled inheritance, not that she bargained for an exchange of one for the other.
¶20 To require the district court to examine and evaluate the Stipulation to the degree recommended by Deidre would be to undermine the parties’ right to contract freely. While courts should ensure that the provisions of a divorce stipulation comply with “the overarching principle of equity,” Granger v. Granger, 2016 UT App 117, ¶ 16, 374 P.3d 1043, they are also to “respect[] and give[] considerable weight” to the parties’ agreement, Maxwell v. Maxwell, 796 P.2d 403, 406 (Utah Ct. App. 1990). Thus, weighing every provision of a stipulation against every other to ensure that the parties have reached a perfectly fair agreement is beyond the scope of the court’s mandate.
¶21 Indeed, the court’s equity analysis generally focuses “not on the contract’s subject matter, but rather on whether the contract was fairly negotiated and does not result in an outcome so severely one sided that it prevents the district court from fulfilling its equitable obligations.” Ashby v. Ashby, 2010 UT 7, ¶ 21, 227 P.3d 246. We see nothing in the record to suggest that the district court was presented with such a situation. Both parties were represented by counsel, and the terms of the Stipulation were not so one-sided as to give the court reason to believe that the parties’ agreement had violated the principles of equity. Thus, the court did not exceed its discretion in determining that the Stipulation’s division of the retirement funds was enforceable.
B. Deidre’s Arguments Regarding Alimony and Vehicles Were Not Preserved for Appeal.
¶22 On appeal, Deidre renews the arguments made in her motion to set aside that there was no meeting of the minds with respect to the Stipulation’s provisions regarding alimony and the division of equity in the vehicles. However, the district court made no ruling on these issues.[6]
¶23 “[I]n order to preserve an issue for appeal the issue must be presented to the trial court in such a way that the trial court has an opportunity to rule on that issue.” Brookside Mobile Home Park, Ltd. v. Peebles, 2002 UT 48, ¶ 14, 48 P.3d 968. “[O]nce trial counsel has raised an issue before the trial court, and the trial court has considered the issue, the issue is preserved for appeal.” Id. (emphasis added).
¶24 We agree with Jeffrey that Deidre’s reference to the alimony and vehicle issues in her motion to set aside was not sufficient to preserve them for appeal when she did not present evidence or argue these issues to the district court at the evidentiary hearing and the district court did not rule on them. “[T]he mere mention of an issue in the pleadings, when no supporting evidence or relevant legal authority is introduced at trial in support of the claim, is insufficient to raise an issue at trial and thus insufficient to preserve the issue for appeal.” LeBaron & Assocs., Inc. v. Rebel Enters., Inc., 823 P.2d 479, 483 (Utah Ct. App. 1991). Further, a party may waive an issue by relinquishing or abandoning it before the district court, either expressly or impliedly. State v. Johnson, 2017 UT 76, ¶ 16 n.4, 416 P.3d 443.
¶25 “The fundamental purpose of the preservation rule is to ensure that the district court had a chance to rule on an issue before an appellate court will address it.” Helf v. Chevron U.S.A. Inc., 2015 UT 81, ¶ 42, 361 P.3d 63. Because the district court did not rule on the alimony and vehicle issues, and Deidre made no attempt to remedy that omission before raising the issues on appeal, her arguments regarding these issues are unpreserved, and we will not consider them for the first time on appeal. See Vandermeide v. Young, 2013 UT App 31, ¶¶ 8–9, 296 P.3d 787 (holding that a challenge to a district court’s failure to rule on an issue raised in the pleadings was not preserved for appeal, because the appellants did not object to the court’s findings or file a post-judgment motion requesting additional findings).
II. Deidre Will Have the Opportunity to Pursue Her Change of Circumstances Argument in the Context of a Petition to Modify.
¶26 Deidre also argues that the district court erred in declining to consider the change in her employment status as a basis for setting aside the Stipulation before a final order was entered. Although Deidre filed her motion to set aside prior to the entry of the final Decree of Divorce (the Decree), the court declined to consider whether the Stipulation should be modified based on a change of circumstances, stating, “[O]ur procedural rules contemplate that a petition to modify has to be made when the parties reached this state of the proceeding. The Parties reached a resolution in this case and new situations are handled differently.”
¶27 The district court has the discretion to reconsider a prior ruling any time before a final judgment is entered. See Utah R. Civ. P. 54(b); see also Hafen v. Scholes, 2014 UT App 208, ¶ 3, 335 P.3d 396 (per curiam); Durah v. Baksh, 2011 UT App 159, ¶ 5, 257 P.3d 458 (per curiam). However, to seek a modification of a divorce decree, a movant must show “a substantial change of circumstances occurring since the entry of the decree and not contemplated in the decree itself.” Gardner v. Gardner, 2012 UT App 374, ¶ 38, 294 P.3d 600 (emphasis added) (quotation simplified).
¶28 The change in Deidre’s employment status occurred after the Stipulation was signed but before the Decree was entered. Thus, Deidre asserts that the district court’s refusal to reconsider the alimony portion of the Stipulation as part of her motion to set aside was an abuse of discretion because it put her in a catch-22—the court would not let her seek a modification prior to the entry of the Decree, but she would be precluded from seeking one afterward because her alleged change in circumstances occurred before the entry of the Decree.
¶29 We agree with Deidre that the district court, contrary to its own assertion, had the discretion to reconsider whether to accept the parties’ Stipulation as to alimony prior to the entry of the Decree, since the alleged change in circumstances occurred prior to a final judgment being entered. This issue was relevant to the court’s consideration of whether the Stipulation complied with the “overarching principle of equity.” See Granger v. Granger, 2016 UT App 117, ¶ 16, 374 P.3d 1043. The court may have determined that the Stipulation as to alimony was no longer equitable in light of the change in circumstances and that the parties would not have entered into the Stipulation as to alimony had they been aware that Deidre would lose her employment.
¶30 However, while considering Deidre’s alleged substantial change of circumstances at an earlier stage of the proceedings may have been desirable as a matter of judicial economy, Deidre has not been prejudiced by the district court’s refusal to do so. Deidre filed a Petition to Modify on January 9, 2018, which is currently pending in the district court. The district court gave Deidre leave to pursue her substantial change of circumstances argument subsequent to the entry of the Decree, and Jeffrey has conceded that she should be allowed to do so. These circumstances avoid the catch-22 scenario Deidre feared. Because Deidre has not actually been precluded from raising her substantial change of circumstances claim, any error on the part of the district court in declining to consider her motion to set aside the alimony portions of the Stipulation on that basis was harmless.
CONCLUSION
¶31 The district court’s interpretation of the Stipulation’s retirement provisions is supported by the evidence presented at the evidentiary hearing. Deidre’s arguments concerning other aspects of the Stipulation were not preserved, and we therefore do not consider them. Further, while the district court could have considered Deidre’s arguments concerning her alleged change in circumstances in the context of the motion to set the Stipulation aside, the court’s refusal to do so was not prejudicial. Deidre will be permitted to pursue her claim in the context of the petition to modify already filed with the district court. Accordingly, we affirm the district court’s denial of Deidre’s motion to set aside the Stipulation.
Utah Family Law, LC | divorceutah.com | 801-466-9277
———————————————————–
[1] Because the parties share the same last name, we refer to them by their first names to avoid confusion, meaning no disrespect by the apparent informality.
[2] Deidre also challenged other provisions of the Stipulation that she asserted were inartfully drafted. Specifically, she claimed that there was a mathematical error in the calculation of the vehicle equity and that a lack of language regarding the parties’ incomes and needs in the alimony provision had the potential to preclude a future modification. However, she did not present argument or evidence on these issues at the evidentiary hearing, and the district court ultimately made no ruling on them. See infra ¶¶ 22–25.
[3] Deidre also asserts that the district court erred in determining that the Stipulation was unambiguous. Although the court stated that it considered the Stipulation’s language to be “clear,” it did not make an explicit ruling regarding whether the Stipulation was ambiguous. In fact, the district court’s consideration of extrinsic evidence suggests that the court actually did consider the Stipulation to be ambiguous, since the purpose of considering extrinsic evidence is to clarify ambiguous terms in the contract. See Ward v. Intermountain Farmers Ass’n, 907 P.2d 264, 268 (Utah 1995) (explaining that if a court determines that a contract is ambiguous, the next step is to admit extrinsic evidence “to clarify the ambiguous terms”). We therefore review only the district court’s evaluation of the extrinsic evidence and its determination that Jeffrey’s interpretation of the Stipulation was more reasonable, that there was a meeting of the minds regarding how the retirement was to be divided, and that the
Stipulation was enforceable.
[4] The Woodward formula grants a spouse one-half of the “portion of the retirement benefits represented by the number of years of the marriage divided by the number of years of the [acquiring spouse’s] employment.” Woodward v. Woodward, 656 P.2d 431, 433–44 (Utah 1982).
[5] Incidentally, the fact that the parties listed only the “approximate” values of the various retirement funds also undermines Deidre’s assertion that the parties intended to effectuate the division based on the listed values rather than the actual values of the funds.
[6] Deidre asserts that the court’s ruling that “[i]n order to have a contract, the Court doesn’t need perfect clarity on every factual point” constituted a ruling on all the issues she raised. However, Deidre omits vital language from the court’s ruling. The court actually stated, “In order to have a contract, the Court doesn’t need perfect clarity on every factual point that might fill in a QDRO here.” (Emphasis added.) Thus, it is clear from the context that the court’s ruling contemplated only the issues Deidre raised with respect to the retirement, not the alimony and vehicle issues.
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 144903963
Steve S. Christensen and Clinton R. Brimhall,
Attorneys for Appellant
James H. Woodall and Deborah L. Bulkeley,
Attorneys for Appellee
JUDGE DIANA HAGEN authored this Opinion, in whichJUDGES KATE APPLEBY and JILL M. POHLMAN concurred.
HAGEN, Judge:
¶1 In 2005, Heather and Renson Marroquin were married. Prior to the marriage, Renson owned and operated a vending machine business.[1] After Heather filed for divorce in 2014, the value of that business became a central question in valuing the marital estate and distributing its assets. On appeal, Heather challenges the district court’s valuation of the business, its failure to impose a due date or interest rate for payment of her half of the marital assets, and its denial of her motion to amend its findings and for a new trial. Because we conclude the district court did not exceed its discretion with respect to any of the issues raised by Heather on appeal, we affirm.
BACKGROUND
¶2 Before marrying Heather in 2005, Renson founded Deluxe Vending LLC and now owns a 99% interest in that company.[2] Deluxe Vending operates eighty-seven vending machines and three “micro-markets”[3] in numerous locations throughout Salt Lake City, Utah. For the first year of their marriage, and two summers following that, Heather helped Renson stock the vending machines throughout the day and count the money collected. Once she completed her education, Heather obtained other employment, but she continued to “help [Deluxe Vending] sporadically as needed or as requested.”
¶3 Renson managed and conducted all of Deluxe Vending’s business operations and had no other employees. He established personal relationships with the property owners, which allowed him to continue to operate his vending machines and micro-markets at their respective locations. Most of Deluxe Vending’s contracts are on a month-to-month basis and can be replaced by other vendors at any time after the monthly contract ends.
¶4 In 2014, Heather filed for divorce. The primary issue at the parties’ divorce trial was the value of Deluxe Vending and division of its assets. Each party obtained his or her own expert to testify to the business’s value. Heather’s expert is a certified public accountant who had “no credentials in the area of business valuation.” Heather’s expert initially valued Deluxe Vending between $725,000 and $900,000 but increased “his estimate to a range of $1,229,317 to $1,530,803” just before trial by using an “income approach to value the business,” which includes “goodwill associated with the business.” At trial, Heather’s expert reduced his estimated value of Deluxe Vending to $700,000.
¶5 Renson’s expert is a certified public accountant, with accreditations in business valuation and as a senior appraiser. He “devotes approximately 75% of his practice to performing business valuations and testifying as an expert.” Following accepted industry practices of using the net asset approach, Renson’s expert valued Deluxe Vending at $152,937. The value was determined by subtracting the fair market value of liabilities from the fair market value of assets and then subtracting “between a 5 and 10 percent marketability discount.” In this case, Renson’s expert “went on the low end and took [a] 5 percent” discount. Renson’s expert opined that Deluxe Vending did not have any “institutional goodwill,” but only personal or professional goodwill attributed solely to Renson. The expert explained that, “without the relationships that exist for the places where the vending machines are located, there is no potential for goodwill. There’s no income earning capacity that would be in excess of the value of the assets.” At trial, Renson’s expert testified that Heather’s expert was unreliable and opined that he “failed to follow accepted industry practices, that he relied on inaccurate information, and that he made unreasonable assumptions.”
¶6 In its findings of fact, the court rejected Heather’s expert’s valuation and found Renson’s expert to be more credible. It found that the business was worth $152,937, awarded Deluxe Vending to Renson, and ordered him to pay Heather “one-half of the value, or $76,468.50.” The court also awarded alimony to Heather and divided the equity of certain personal property in half. The court entered the divorce decree consistent with those findings of fact.
¶7 Heather filed a motion to amend the court’s findings of fact or for a new trial (the post-judgment motion). In the post-judgment motion, Heather argued that the court erred in determining the value of Deluxe Vending because Renson testified at trial that some of the business’s liabilities had been paid off since Renson’s expert prepared the valuation report. Relatedly, she argued that the court should amend its findings to account for the institutional goodwill of the business rather than attribute the goodwill solely to Renson. Heather asked the court to set a date for Renson’s payment to Heather for one-half the value of Deluxe Vending and the personal property award. She also asked the court to make findings “regarding Renson’s dissipation of marital funds.” Finally, she requested a new trial “because the court’s method of ruling was irregular and surprising.”
¶8 The court found that the post-judgment motion was Heather’s “attempt[] to modify and add additional terms that were not presented as evidence at trial nor were they presented when [she] was given an additional opportunity to provide information to the Court due to lack of information and evidence at trial.” Based on her “failure to provide the information as directed within the time frames set, the Court was left with only the information provided at trial upon which to make a determination.” The court therefore denied the post-judgment motion.
¶9 Heather appeals.
ISSUES AND STANDARDS OF REVIEW
¶10 Heather raises three principal issues on appeal. First, Heather claims that the district court’s valuation of Deluxe Vending was clearly erroneous in two respects. She contends the court erroneously determined that any goodwill associated with Deluxe Vending was personal to Renson. Relatedly, she contends the court erred in accepting the appraisal value assigned by Renson’s expert to Deluxe Vending several months before trial given that Renson testified at trial that the liabilities had been reduced. A district court is “entitled to a presumption of validity in its assessment and evaluation of evidence,” and we defer to the district court’s “findings of fact related to property valuation and distribution unless they are clearly erroneous.” Taft v. Taft, 2016 UT App 135, ¶ 63, 379 P.3d 890 (quotation simplified). We “will not disturb a court’s distribution of marital property unless it is clearly unjust or a clear abuse of discretion.” Id. ¶ 32.
¶11 Second, Heather contends the court erred when it failed to set a due date or impose an interest rate on Renson’s payment to Heather for one-half the value of Deluxe Vending and the one-half interest award of personal property. District courts “have considerable discretion in determining property distribution in divorce cases,” Stonehocker v. Stonehocker, 2008 UT App 11, ¶ 8, 176 P.3d 476 (quotation simplified), and we will not disturb the district court’s determination absent a clear abuse of discretion, Taft, 2016 UT App 135, ¶ 59.
¶12 Third, Heather contends the district court erred in denying the post-judgment motion because “the transcript showed that the district court had halted or interfered with [her] attempts to elicit testimony regarding dissipation of marital assets.”[4] We will reverse a district court’s denial of a motion for a new trial or to amend the findings and judgment for abuse of discretion. Bergmann v. Bergmann, 2018 UT App 130, ¶ 12, 428 P.3d 89. “To the extent that our review turns on facts presented at trial, we defer to the trial court’s underlying findings of fact, which shall not be set aside unless clearly erroneous.” Id. (quotation simplified).
ANALYSIS
I. The Value of Deluxe Vending
¶13 Heather contends the district court made two errors when
calculating the value of Deluxe Vending. First, she argues that the court should have included institutional goodwill in its calculation. Second, she argues the court’s calculations of the value of the company should have taken into consideration Renson’s testimony regarding the reduction in liabilities of Deluxe Vending. We address each argument in turn and conclude that the court did not err when calculating the value of Deluxe Vending.
A. Goodwill of Deluxe Vending
¶14 Heather contends the district court “should have included goodwill value in its calculations” of the value of Deluxe Vending. “In a divorce proceeding, determining and assigning values to marital property is a matter for the trial court and this court will not disturb those determinations absent a showing of clear abuse of discretion.” Dunn v. Dunn, 802 P.2d 1314, 1317 (Utah Ct. App. 1990) (quotation simplified). “Marital property is ordinarily all property acquired during marriage and it encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived.” Id. at 1317–18 (quotation simplified). Here, Renson does not dispute that Deluxe Vending is marital property subject to division. See id.
¶15 When valuing a business in marriage dissolution cases, district courts must consider whether goodwill is institutional or personal to one spouse. See Sorensen v. Sorensen, 839 P.2d 774, 775 (Utah 1992) (agreeing with “jurisdictions that do not treat [personal] goodwill as a marital asset to be divided”). Institutional, or enterprise, goodwill “is based on the intangible, but generally marketable, existence in a business of established relations with employees, customers and suppliers, and may include factors such as a business location, its name recognition and its business reputation.” See DeSalle v. Gentry, 818 N.E.2d 40, 47 (Ind. Ct. App. 2004). Personal goodwill is based on an individual’s “reputation for competency” and is not subject to distribution upon divorce. Sorensen, 839 P.2d at 775–76; see also Stonehocker v. Stonehocker, 2008 UT App 11, ¶ 44, 176 P.3d 476 (“There can be no good will in a business that is dependent for its existence upon the individual who conducts the enterprise and would vanish were the individual to die, retire or quit work.” (quotation simplified)).
¶16 Here, the district court concluded that the only goodwill associated with Deluxe Vending was personal to Renson. The court found that Deluxe Vending was the type of sole proprietorship where the owner’s goodwill is not a marital asset subject to division. Accordingly, the court did not consider Renson’s personal goodwill in calculating the value of Deluxe Vending.
¶17 Heather argues that Deluxe Vending is distinguishable from the type of sole proprietorship where goodwill is not subject to division. For example, she cites Sorensen, in which the district court valued a sole-practitioner dental practice at $100,060 and determined that $62,560 of that value represented the personal “goodwill” of the husband. 839 P.2d at 775. The husband appealed the district court’s decision, arguing that it “should not have included [personal] goodwill and reputation in its valuation of his dental practice.” Id. Our supreme court determined that “the goodwill of a sole practitioner is nothing more than his or her reputation for competency.” Id. “It may well be that if the sole practitioner retires at the time of a divorce and his or her practice is actually sold and an amount is realized over and above the value of the tangible assets, the full amount should be viewed as marital property.” Id. But where no actual sale of the business takes place, personal goodwill “should not be treated differently from a professional degree or an advanced degree,” and requiring the sole practitioner to pay the spouse “part of the value ascribed to the [personal] goodwill” would be inequitable. Id. at 775–76.
¶18 Relying on Sorensen, Heather asserts the district court made “no findings about [Renson] having a reputation that matters to the business’s operation.” Both the district court’s oral and written findings of fact refute this assertion. The court specifically found that “the goodwill of Deluxe Vending is solely attributable to Renson’s work, his efforts, and his reputation for competency” based on Renson “being the face of the business” and the “personal relationships” he has made with the property owners that have allowed him to continue to conduct business, largely on a month-to-month basis.
¶19 Deluxe Vending is more akin to the car dealership at issue in Stonehocker. In that case, the district court determined that a used car dealership formed by the husband during the course of the marriage was “in reality a sole proprietorship” and the success of the used car dealership was “solely attributable to [the husband’s] personal, professional reputation.” Stonehocker, 2008 UT App 11, ¶¶ 6, 40, 43. This court agreed that the used car dealership was “essentially [the husband’s] sole proprietorship,” because the wife had “only token involvement” in the business, and its success was “the product of [the husband’s] reputation, goodwill, and sole efforts.” Id. ¶¶ 40–42 (quotation simplified). The district court therefore correctly concluded that the value of the used car dealership “did not include any amount for goodwill.” Id. ¶ 43.
¶20 Here Renson owns 99% of Deluxe Vending and is the only employee of the business. He remains in contact with the entities that continue to allow Deluxe Vending to operate vending machines and micro-markets on the properties on a month-to-month basis. Heather’s involvement in the business was minimal and limited to stocking the machines and counting the money at the beginning of the marriage. Thus, Renson is akin to the sole proprietor in Stonehocker and Heather had “only token involvement” in Deluxe Vending’s operations. See id. ¶¶ 40–41 (quotation simplified).
¶21 Heather asserts that “anybody could step into [Renson’s] shoes and carry on with the business under its name and with its assets,” but she has not marshaled any record evidence that would support that assertion. See id. ¶ 9 (explaining that when a party challenges the findings of fact, the party “must first marshal the evidence in support of the findings and then demonstrate that the findings are unsupported by substantial evidence” (quotation simplified)). We therefore conclude that the district court did not exceed its discretion when it did not include institutional goodwill in calculating the value of Deluxe Vending.
B. Decreased Liabilities of Deluxe Vending
¶22 Heather contends the district court erred by basing its valuation of Deluxe Vending on the expert reports created prior to trial. Heather argues that the court should have valued the business as of the exact date of the divorce by accounting for Renson’s trial testimony that he had further paid down the business’s liabilities in the intervening months.
¶23 “Determining and assigning values to marital property is a matter for the trial court, and [we] will not disturb those determinations absent a showing of clear abuse of discretion.” Ebbert v. Ebbert, 744 P.2d 1019, 1023 (Utah Ct. App. 1987). Because Heather did not argue at trial that the district court should adjust the appraised value of Deluxe Vending based on a reduction in its liabilities, she cannot show an abuse of discretion.
¶24 Here, both parties submitted expert reports regarding the value of Deluxe Vending several months before trial. A valuation is necessarily a snapshot in time and both parties relied on the experts’ valuations when preparing for trial. Similarly, the district court relied on those expert reports and determined that Renson’s expert’s valuation was more credible. In the post-judgment motion, Heather cited portions of Renson’s testimony, noting that some of Deluxe Vending’s loans had been paid off or reduced. Heather argued that the court “should amend its findings consistent with the evidence at trial” by increasing the value of Deluxe Vending to account for the decrease in liabilities. Raising this factual issue for the first time in a post-judgment motion to amend the court’s findings of fact did not give Renson the opportunity to present evidence as to whether there were other changes that affected the valuation of Deluxe Vending, such as a decrease in assets. And Heather has failed to demonstrate that she could not have requested the court consider evidence outside of the experts’ valuation reports at trial. Cf. Hudema v. Carpenter, 1999 UT App 290, ¶ 40, 989 P.2d 491 (affirming the district court’s denial of a post-judgment motion for a new trial because “the evidence offered [in the post-judgment motion] could have been produced at trial with reasonable diligence”). Indeed, Heather elicited the testimony from Renson, but never asked the court to consider it when calculating the value of Deluxe Vending.
¶25 Heather cannot establish that the district court erred by not reducing the appraised value of Deluxe Vending, sua sponte, based on trial testimony regarding decreased liabilities. Nor has she shown that the district court abused its discretion in denying her post-judgment motion to amend its findings on grounds not presented at trial.
II. Failure to Set Due Date or Interest Rate for Heather’s Award of Marital Assets
¶26 Heather contends the district court “should have included an interest rate or due date” for her award of marital assets. Heather asserts that the court’s failure to do so places her “at such a disadvantage” that it amounts to “an abuse of discretion.” We disagree.
¶27 When the district court assigns a value to an item of marital property, the court must equitably distribute it “with a view toward allowing each party to go forward with his or her separate life.” Stonehocker v. Stonehocker, 2008 UT App 11, ¶¶ 13, 15, 176 P.3d 476. We will not disturb the district court’s payment determination absent a clear abuse of discretion. Taft v. Taft, 2016 UT App 135, ¶ 59, 379 P.3d 890; see also Stonehocker, 2008 UT App 11, ¶ 8.
¶28 Heather relies exclusively on Taft to support her argument. In Taft, the district court granted the husband “discretion to pay [the] judgment all at once or in monthly installments for a period of time.” 2016 UT App 135, ¶ 57 (quotation simplified). The court did not order any minimum payment and provided that if the husband chose to make monthly payments, he “shall begin equal monthly payments, and the duration of such monthly installment payments shall not exceed a period of ten years, whereupon the balance shall be paid to [the wife] in one final balloon payment.” Id. (quotation simplified). On appeal, the wife argued that this payment strategy was inequitable because it allowed the husband “to receive full immediate enjoyment of the assets awarded to him as well as the full use of [the wife’s] share of the assets while [the wife was] deprived of meaningful access to her award.” Id. ¶ 58 (quotation simplified). This court agreed, determining that the husband was “given nearly complete discretion regarding the payment to [the wife] of her share of the marital property over a ten-year period” at a low interest rate and that the wife, who had “been granted a substantial judgment in token of her share of the marital real property,” had “no ability to collect, access, or substantially enjoy until ten years pass[ed], unless [the husband] decide[d] otherwise.” Id. ¶ 59. This court therefore concluded “that the terms of [the wife’s] property judgment [were] inequitable and that the trial court exceeded its discretion by structuring the terms of [the wife’s] property judgment as it did.” Id. ¶ 62.
¶29 This case is distinguishable from Taft. The district court in Taft gave the husband discretion to delay payment to the wife in an inequitable way. Unlike the spouse in Taft, Heather does not lack the “ability to collect, access, or substantially enjoy” her award of marital property. See id. ¶ 59. Instead, she can collect on the judgment just as any other judgment creditor. See Utah R. Civ. P. 62(a) (providing that “[n]o execution or other writ to enforce a judgment may issue until the expiration of 14 days after entry of judgment, unless the court in its discretion otherwise directs”). Heather acknowledges this ability in her brief on appeal, stating that Renson “can hold onto the assets and reap the benefits while [Heather] waits for payment or expends time, effort, and money to enforce the divorce decree.” (Emphasis added.) Because Heather has not yet attempted to enforce the divorce decree, she cannot show that she has been deprived of meaningful access to her award or prevented from going forward with her separate life. We therefore conclude the district court did not abuse its discretion when it did not impose a due date or interest rate for the payment of Heather’s award of marital assets.
III. Irregularity of Proceedings
¶30 Finally, Heather contends the district court erred in denying her motion for a new trial based on an irregularity of the proceedings. Heather argues that she attempted to establish a claim that Renson dissipated marital assets, but the court declined to address it and “cut off [Heather’s] attempts to elicit testimony on the subject.”
¶31 Following a bench trial, “a new trial may be granted to any party on any issue” if, among other circumstances, “there was an “irregularity in the proceedings . . . or abuse of discretion by which a party was prevented from having a fair trial.” Utah R. Civ. P. 59(a)(1). “Because the grant of a new trial is ordinarily left to the sound discretion of the trial court, we will review the court’s decision in this regard under an abuse of discretion standard.” Child v. Gonda, 972 P.2d 425, 429 (Utah 1998). And “absent a showing by the appellant that the trial outcome would have differed, every reasonable presumption as to the validity of the [judgment] below must be taken as true upon appeal.” Id.
¶32 Here, Heather asserts that the district court, “on several occasions . . . cut off [Heather’s counsel’s] questioning” of Renson regarding the claim of dissipation of marital assets. She claims that, on one occasion, Heather’s counsel was “attempting to elicit testimony related to [Renson’s] credibility and the finer details of the evidence,” but the court “cut off the questioning” and “asked [Renson] point blank if he was hiding money.” Heather argues that this was “uniquely harmful” because it “was an unfair boon to [Renson]” and that the effect was to “shield[]” Renson “from questions about his waste of marital assets.” We disagree.
¶33 When determining “whether a party should be held accountable for the dissipation of marital assets,” there are “a number of factors that may be relevant,” including (1) “how the money was spent, including whether funds were used to pay legitimate marital expenses or individual expenses”; (2) “the parties’ historical practices”; (3) “the magnitude of any depletion”; (4) “the timing of the challenged actions in relation to the separation and divorce”; and (5) “any obstructive efforts that hinder the valuation of the assets.” Rayner v. Rayner, 2013 UT App 269, ¶ 19, 316 P.3d 455. “While marital assets are generally valued as of the date of the divorce decree, where one party has dissipated an asset, hidden its value or otherwise acted obstructively, the trial court may, in the exercise of its equitable powers, value a marital asset at some time other than the time the decree is entered, such as at separation.” Parker v. Parker, 2000 UT App 30, ¶ 13, 996 P.2d 565 (quotation simplified).
¶34 Our review of the record shows that Heather’s counsel asked questions about spending money, but never directly asked Renson whether the money came from either the company account or a joint checking account. See id. Instead, Heather’s counsel asked questions about where, when, and how much money Renson spent. The court interjected, stating, “Let’s just cut to the chase, do you have any other squirrel holes or nest eggs that you’ve been hiding or putting money in . . . that you didn’t report in your financial declarations and did not disclose to [c]ounsel?” Renson said he did not. Heather’s counsel then pursued a different line of questioning. When Heather’s counsel attempted to ask Renson again about where and when he spent his money, Renson’s counsel objected as to relevance, arguing that “unless [Heather] ties it to a business expense that’s been improperly claimed, he can spend his money on anything he wants.” See id. Heather’s counsel argued that it was relevant to the court’s consideration regarding attorney fees. The court sustained the objection and explained that “what people do with their income and how they spend it” is irrelevant. Cf. Rayner, 2013 UT App 269, ¶ 19.
¶35 Because Heather never asked the court to find that Renson’s personal spending decreased the value of the company or any other marital asset, the questions did not go to a material issue or fact in dispute. Heather had the opportunity at trial, on numerous occasions, to direct the court to specific assets that had been dissipated by Renson’s spending, but she did not. Heather therefore cannot show that she did not have the opportunity to present the issue to the district court or that she was denied a fair trial. See Utah R. Civ. P. 59(a)(1). Accordingly, the district court did not abuse its discretion when it denied her motion for a new trial based on an irregularity in the proceedings.
IV. Attorney Fees
¶36 Renson seeks attorney fees incurred on appeal under rule 33 of the Utah Rules of Appellate Procedure, arguing that Heather’s appeal was “frivolous or for delay.” Rule 33 allows for the sanction of “just damages, which may include . . . reasonable attorney fees” to the prevailing party if an appeal “is not grounded in fact, not warranted by existing law, . . . not based on a good faith argument . . . or [if taken] for the purpose of delay.” Utah R. App. P. 33(a),(b). “The sanction for bringing a frivolous appeal is applied only in egregious cases, lest there be an improper chilling of the right to appeal erroneous lower court decisions.” Maughan v. Maughan, 770 P.2d 156, 162 (Utah Ct. App. 1989) (quotation simplified). Although Heather has not been successful on appeal, her arguments were “worthy of consideration and should not be subject to the chilling effect” of rule 33 sanctions. See id.
CONCLUSION
¶37 We conclude the district court did not exceed its discretion when it calculated Deluxe Vending’s value without including institutional goodwill and when it did not recalculate the value of Deluxe Vending based on testimony elicited at trial regarding a reduction of liabilities. We further conclude the court did not exceed its discretion by not imposing a deadline on or interest rate for Renson’s payment to Heather where there are no limitations on her ability to enforce the judgment. And because Heather failed to show an irregularity in the proceedings, we conclude the court did not exceed its discretion when it denied the post-judgment motion for a new trial. Accordingly, we affirm.
Utah Family Law, LC | divorceutah.com | 801-466-9277
————————————————————
[1] Because both parties share the same surname, we refer to them by their first names with no disrespect intended by the apparent informality.
[2] Heather is not the 1% interest owner of Deluxe Vending.
[3] Deluxe Vending’s micro-markets are “self-serve kiosks” that allow patrons to access food and beverage items from a cooler and then scan the item at the kiosk and pay with either a credit or debit card or with cash.
[4] Heather also contends the district court “abused or entirely failed to exercise its discretion when it declined to factor dissipation of marital assets into its division of the parties’ martial assets.” This argument is unpreserved. “[P]arties are required to raise and argue an issue in the trial court in such a way that the court has an opportunity to rule on it.” State v. Johnson, 2017 UT 76, ¶ 18, 416 P.3d 443 (quotation simplified). Failure to do so “precludes a party from arguing that issue in an appellate court, absent a valid exception,” such as plain error, ineffective assistance of counsel, or exceptional circumstances. Id. ¶¶ 18–19. Here, Heather never alleged at trial or in the post-judgment motion that the value of the marital assets should be adjusted to account for money Renson spent on non-marital assets. Nor did she identify Deluxe Vending’s bank account as the asset depleted or suggest that the money Renson spent on non-marital expenses was taken from the joint checking account. Instead, Heather asked the court to consider the alleged dissipation only with respect to attorney fees and alimony. Because Heather failed to raise this issue before the district court and she has failed to argue that an exception to preservation applies, see id., we decline to address it.
Each state’s divorce laws are different. Whether your jurisdiction treats inherited property as marital property is something you will need to determine by inquiring with an attorney who knows your jurisdiction’s laws.
In the jurisdiction where I practice law (Utah), gifts from persons other than your spouse and inheritances are considered separate property and will stay separate property unless they are “commingled” with marital property, meaning that if you were to receive an inheritance from Uncle Milt and then use that money to buy a family house or car in your and your spouse’s name the house or car would become marital property. *
*There is an exception to this rule that can sometimes come into play, which is known as “tracing” If one can “trace” the inherited money that went in to the purchase of the family house or car, you may be able to get what money you contributed to the purchase credited back to you as your separate property.
So if you know you are going to inherit money in the next five years, technically that shouldn’t be a divorce concern, right? After all, gifts from someone other than your spouse and inheritances are non-marital and separate property, right?
Utah Family Law, LC | divorceutah.com | 801-466-9277
QUESTION: The judge finalized the case. My father is to give my mother 2 years of alimony and half of his life insurance. The judge didn’t even consider the property as an asset in the case. That leaves me as the sole owner of the family property. I do not want anything to do with this as I don’t want my parents to think I am picking sides. I believe I should sell the property or split 50/50 and if my mom wants to keep the property she can get a loan so she pays the second half of it. My mother and brother still live in this property. What should I do? The property was put under my name by my mother a couple days before my father filed for divorce, without my consent.”
ANSWER: Your mother could be (and in my opinion should be) in a lot of trouble, both in the divorce action and potentially as a matter of criminal wrongdoing. Go see a good divorce lawyer in your jurisdiction, now. You could get in a lot of trouble yourself if you don’t handle this properly.
If I were you, I:
would NOT sell or try to sell the property. It’s likely not legally yours in the first place. It appears to me that in transferring it surreptitiously to you your mother made a fraudulent transfer;
would get a lawyer to help, if necessary or prudent, bring the facts to the attention of the divorce court and your father to ensure that you are not erroneously seen as somehow complicit with your mother;
would hope that perhaps my mother could resolve the matter out of court with my father and do right by him now.
Best wishes. Get help. You need it.
On a related note, for other circumstances different from yours, but that may come up in other divorce actions:
If you are the owner of the property that means you have legal claim to it and that it’s not your parents’ property now, even if it had been in the past before one or both of them apparently gave it to you.
You don’t “own” your parents’ marital property simply because, for example, it’s in your garage. That would be “possession,” but not ownership. If you have a bunch of your parents’ stuff (called “personal property”—things you can move around, things that aren’t land) because they dumped it on you and neither of them is asking for it back, you may want to simply write them each a letter (check with a good lawyer in your area to see if this is legal) saying, “Mom, Dad, I have all your ________ in my garage. I don’t want it. If you don’t come and get it in 45 days, I will either sell it or donate it to Goodwill,” that may solve your problem.
If by “the property” you mean a house or land (or a house and land), and if your father transferred title to you to prevent your mother from getting a portion of the property, then perhaps your mother doesn’t care if the house is in your name because she’s glad you have it, and that could explain why she didn’t fight over title to the property in the divorce.
If your mother did not know your father obtained a house during the marriage, then that would explain why she didn’t fight over title to the property in the divorce. If she later learns he hid assets from her, she could sue you and your father in an effort to establish and recover a marital share in the property.
Utah Family Law, LC | divorceutah.com | 801-466-9277