Opinion
20200557-CA
12-30-2021
Gary Lee Fischer, Appellant, v. Melissa Kay Fischer, Appellee.
Steve S. Christensen and Clinton R. Brimhall, Attorneys for Appellant K. Andrew Fitzgerald, Attorney for Appellee
Seventh District Court, Moab Department The Honorable Don Torgerson No. 184700047
Steve S. Christensen and Clinton R. Brimhall, Attorneys for Appellant
K. 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
¶1 Gary 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. 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.
Because the parties share the same surname, we refer to them by their first names, with no disrespect intended by the apparent informality.
"On appeal from a bench trial, we view the evidence in a light most favorable to the trial court's findings, and therefore recite the facts consistent with that standard, and we present conflicting evidence to the extent necessary to clarify the issues raised on appeal." Nakkina v. Mahanthi, 2021 UT App 111, n.2, 496 P.3d 1173 (quotation simplified).
¶2 Following 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.
¶3 At 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.
¶4 After 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." The court then explained that
In Sorensen v. Sorensen, 839 P.2d 774 (Utah 1992), our Supreme Court held that "[i]t would not be equitable to require" a husband who was a sole practitioner "to pay his wife part of the value ascribed to the goodwill, because the goodwill of a sole practitioner is nothing more than his or her reputation for competency[.]" Id. at 775.
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.
¶5 Regarding 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."
¶6 With 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.
¶7 The 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."
¶8 In 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. 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."
As previously explained, the district court categorized the American Express account as Melissa's separate property, a disposition we affirm. See infra ¶¶ 17-18. Accordingly, it should not be considered in evaluating the propriety of the court's distribution of marital 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."
¶11 The 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."
¶12 Gary 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).
Melissa asserts that the first and second issues Gary raises are unpreserved. But because we rule in Melissa's favor on both issues, we need not grapple with their preservation. See State v. Kitches, 2021 UT App 24, ¶ 28, 484 P.3d 415 ("If the merits of a claim can easily be resolved in favor of the party asserting that the claim was not preserved, we readily may opt to do so without addressing preservation.") (quotation simplified).
¶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. "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).
Melissa contends that this issue is also unpreserved. We disagree. This was the central issue at trial. Immediately after the court painstakingly laid out all the values of the marital assets it was allocating to the parties in its oral ruling at trial, Gary informed the court that, at "first glance, it looks like the math is not correct" and asked the court whether it was "saying that there is a $300,000 house asset and there's $300,000 of personal property that offset that?" The court responded, somewhat confusingly, "I'm saying there is a $300,000 house asset. Between the money that [Gary] owes for the business, let's see. That may be the-in the last count, that may be where . . . my math-so I'm saying there's a $292,285 equity in the house." It is clear that there was confusion about the division of the marital estate, and Gary asserted that the court's math underlying its characterization of the allocation as a "wash" was "not correct." While Gary could have been more precise in his objection, it is obvious from the district court's later written rulings that it understood there was disagreement on whether the division of the marital estate was "equal," and the issue was presented to the court in such a way that it had an opportunity to rule on it, and it did rule on it. See Wohnoutka v. Kelley, 2014 UT App 154, ¶ 4, 330 P.3d 762. In its decree, the court specifically detailed the division of the marital estate, acknowledged the unequal amount, and provided its justification for not dividing the estate exactly 50/50. Thus, we have no qualms in concluding that the issue regarding the equitable division of the marital estate was preserved.
ANALYSIS
I. 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).
A district court's separate property determination is generally reviewed for correctness. See Brown v. Brown, 2020 UT App 146, ¶ 13, 476 P.3d 554. But a court is granted "broad discretion" to value the estate, or a portion of the estate, at the date of separation, thereby making the property the parties accumulate from that point onward their separate property. Shepherd v. Shepherd, 876 P.2d 429, 432-33 (Utah Ct. App. 1994).
¶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. 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.
Gary asserts that the district court's decision to value the joint bank accounts as of the time of separation allowed it "to sidestep the issue of what should be done with the American Express savings account, since Melissa claimed it was created after" they separated. But this argument is unavailing because Gary does not adequately confront the court's ruling or demonstrate any reversible flaw. See Duchesne Land, LC v. Division of Consumer Prot., 2011 UT App 153, ¶ 8, 257 P.3d 441 ("Because Appellants have not addressed the actual basis for the district court's ruling, they have failed to persuade us that the district court's ruling constituted error[.]"). Gary acknowledges that "[t]he district court did provide findings" but nevertheless asserts that "the sudden appearance of $50,000 could have a profound effect on those findings and equities of the case." He never actually addresses the findings underpinning the equitable nature of the court's ruling, namely the notable disparity between his post-separation spending and Melissa's post-separation saving, along with the length of the separation. Thus, we reject Gary's challenge to the court's decision valuing the cash accounts as of the date of separation.
¶18 The district court therefore did not err when it determined that the American Express account was Melissa's separate property. It follows, then, that the court likewise did not 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.
Even if the court erred in determining that the American Express account was Melissa's separate property, it is far from clear that the court would have abused its discretion in distributing the account in its entirety to Melissa in any event. See Burt v. Burt, 799 P.2d 1166, 1172 (Utah Ct. App. 1990) ("Each party is presumed to be entitled to . . . fifty percent of the marital property. 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[.]"); Hall v. Hall, 858 P.2d 1018, 1022 (Utah Ct. App. 1993) ("[O]nce 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."). In light of the court's specific findings that Melissa was saving during the months after separation while Gary was spending and accumulating substantial debt, the district court would likely have acted within its discretion if it had concluded that it would be categorically unfair to apply the general rule and saddle Melissa with half the debt Gary incurred after they separated, while requiring Melissa to split with Gary the account she prudently accumulated on her own.
II. 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]ax returns 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[.]").
¶21 Therefore, 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.
When making its oral ruling at trial, the district court indicated that it was not intending to divide the estate unequally when it stated that Gary's share of the equity would be "used to offset the other property awards in this case" and that "if my math is correct, that should leave a wash on all of the property." Clearly the court's math was not correct, and regardless of the court's intent, it did end up dividing the estate in a manner that was nowhere near equal, and its subsequent efforts to rationalize that unequal distribution were inadequate.
¶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.
¶26 First, 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.
Melissa asks for attorney fees on appeal, asserting that Gary's appeal is meritless and brought without good faith. But because Gary prevailed in part, her premise is incorrect, and we deny her attorney fee request. See Tobler v. Tobler, 2014 UT App 239, ¶¶ 45-47, 337 P.3d 296.
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.