Ross v. Negron-Ross
33,418
N.M. Ct. App.Apr 25, 2017Background
- Gary Ross (Husband) purchased the Spring Creek residence in 2004 for $799,000 (down payment $160,000) and owned it as his sole and separate property; at trial it was appraised at $700,000 with mortgages totaling $559,131.
- The parties married in 2010, separated in 2012, and the district court entered a final decree in October 2013 dividing property.
- The district court found community funds were used to pay mortgage principal on the Spring Creek residence but concluded the property had negative value after deducting mortgages and Husband’s down payment and therefore declined to impose a community lien.
- The district court also found Wife breached a fiduciary duty and embezzled $48,341 from Husband’s dental practice (Husband was later reimbursed by insurance).
- The court ordered each party to pay their own attorney fees. Wife appealed, challenging (1) the absence of a community lien on the Spring Creek residence, (2) the embezzlement/fiduciary-duty finding, and (3) the attorney-fee allocation.
Issues
| Issue | Plaintiff's Argument (Wife) | Defendant's Argument (Husband) | Held |
|---|---|---|---|
| Whether a community lien arises on a spouse’s separate residence when community funds paid mortgage principal but the property depreciated during the marriage | No community lien exists because the separate property declined in value and district court correctly found no lien | Community contributions to principal created equitable interest; a lien should be recognized even if market value declined | Court held a community lien can exist despite depreciation and adopted Valento formula to calculate it; remanded to compute/apportion lien |
| Whether Wife breached fiduciary duty and embezzled funds from Husband’s practice | Finding was erroneous / not supported | District court had evidence (exhibits, expert testimony); Husband prevailed at trial | Finding was supported by substantial evidence; affirmed |
| Whether Husband should pay Wife’s attorney fees | District court abused discretion by not awarding fees to Wife | District court properly balanced factors and declined fees | Affirmed: each party to pay own fees |
| Remedial question: How to calculate community share when separate property depreciates | (implicit) existing NM formulas assume appreciation and are inapplicable | Apply Valento's formula to apportion community contribution when depreciation occurred but positive equity remains | Court adopted Valento formula (C - [C/B x D]) and remanded to calculate and apportion lien |
Key Cases Cited
- Valento v. Valento, 240 P.3d 1239 (Ariz. Ct. App. 2010) (adopted formula for community lien when community funds paid principal but separate property depreciated)
- Jurado v. Jurado, 892 P.2d 969 (N.M. Ct. App. 1995) (community entitled to lien for contributions that enhanced separate property)
- Trego v. Scott, 961 P.2d 168 (N.M. Ct. App. 1998) (apportionment required when separate property is enhanced by community funds)
- Zemke v. Zemke, 860 P.2d 756 (N.M. Ct. App. 1993) (property status determined at acquisition)
- Portillo v. Shappie, 636 P.2d 878 (N.M. 1981) (definitions of separate and community property)
- Styka v. Styka, 972 P.2d 16 (N.M. Ct. App. 1999) (standard of review for legal questions)
- Gomez v. Gomez, 895 P.2d 277 (N.M. Ct. App. 1995) (legal error addressed first on appeal)
- Dorbin v. Dorbin, 731 P.2d 959 (N.M. Ct. App. 1986) (apportionment to achieve substantial justice)