Allison Q. KUNZLER, Petitioner, Appellee, and Cross-appellant, v. Alan KUNZLER, Respondent, Appellant, and Cross-appellee.
No. 20061146-CA
Court of Appeals of Utah
July 10, 2008
2008 UT App 263 | 497
David S. Dolowitz, Dena C. Sarandos, Bradley M. Strassberg, and Thomas J. Burns, Salt Lake City, for Appellant and Cross-appellee. Kim M. Luhn, Salt Lake City; and Jennifer D. Reyes, Brigham City, for Appellee and Cross-appellant.
OPINION
DAVIS, Judge:
¶1 The trial court awarded Allison Q. Kunzler (Wife), among other things, one half of Alan Kunzler‘s (Husband) undivided interests in five parcels of real property (the Properties). The Properties had been given to Husband and his siblings by his mother, Bernice L. Kunzler nka Bernice Rous (Rous), during the marriage of Husband and Wife. The trial court supported its award of the Properties by ruling that Husband‘s interests in these parcels were not really a gift from Rous but, rather, represented earnings due to Husband‘s work on Kunzler Ranch, LLC (the Ranch). This ruling was based solely upon Rous‘s deposition testimony. Husband appeals this award of the Properties to Wife, arguing that the trial court erred in ruling that the Properties are marital property.
¶2 The trial court also ruled that because Rous transferred her and her late husband‘s real estate into the Ranch for estate planning purposes, Husband‘s interest in the Ranch and the bulls that lived on the Ranch‘s land were his separate property. Wife cross-appeals, arguing that trial court erred by ruling Husband‘s interest in the Ranch to be non-marital property as well as by excluding the bulls that lived on the Ranch from the marital estate. We affirm in part, and reverse and remand in part.1
BACKGROUND
¶3 On April 4, 1981, the parties married. Throughout the marriage, Husband worked on the family ranch and Wife was a homemaker. In 1987, Rous began purchasing properties and titling them in her children‘s names. The Ranch was established after Husband‘s father‘s death to reduce Rous‘s estate tax burden. Virtually all of the acreage placed under the control of the Ranch was originally owned by Husband‘s parents. Husband has a 20.37% ownership interest in the Ranch.
¶4 Wife filed a petition for divorce on April 24, 2003, after twenty-two years of marriage. The trial court issued a bifurcated decree of divorce on October 27, 2004, which divorced the couple, awarded Wife sole physical and legal custody of the minor children, ordered Husband to continue to pay $549 a month in temporary child support, and reserved the remaining issues for trial. Trial was held on August 17 and 18, 2005.
¶5 In her opening statement on the first day of trial, Wife‘s counsel requested
that with regard to any real property that [Husband] owns, individually or jointly, that [Wife] be awarded half interest in said property. With regard to the [Ranch] ownership interest, [Wife is] requesting an award of half of the 20.37 percent interest that he now holds. And then with regard to other personal property we would ask that [Wife] be awarded an equitable interest in that as well.
¶6 Later that day, Wife‘s counsel asked Husband, “Isn‘t it true that . . . your mother purchased this land . . . for the purpose of benefitting you and your brothers because you were working the [R]anch?” While Husband never directly answered the question, he responded by saying, “[Rous] is who owned the [R]anch. It went through her account. It was her. She paid the wage[s]. . . . Me and my brothers and some hired men did the work, but it was not [R]anch money [that paid for the Properties].” Wife‘s counsel never pressed Husband on why Rous gave him interests in the Properties.
¶7 On the second day of trial, Wife‘s counsel addressed Rous‘s dispersal of her land, pointing to a statement Rous made in a deposition. Before Wife‘s counsel could utter the statement, Husband‘s counsel objected, stating that he had been “informed that [the depositions] would not be transcribed,” that “they‘ve never been presented to [Rous]
¶8 On cross-examination, Wife‘s counsel sought to ask Rous questions based on her previous statements in deposition. Husband‘s counsel then reiterated his previous objections. The trial court ruled, “I‘m not going to accept the deposition at this point as evidence, but I will allow [Wife‘s counsel] to show it to [Rous] and have her read it and then [Wife‘s counsel] can ask her about it.” Wife‘s counsel then asked Rous to read aloud both the question and her answer from the deposition, at which point Husband‘s counsel again objected. The trial court ruled that Wife‘s counsel could ask Rous to read the deposition and ask Rous if it refreshed her memory. Wife‘s counsel then read Rous‘s deposition testimony where she stated that her children who work on the Ranch would receive more real property than those children who do not. Rous testified that this reading of the deposition transcript refreshed her memory, but Wife‘s counsel moved on to another line of questioning without any further questions about the subject. After both parties rested, the trial court took the matter under advisement, promising to issue a written decision shortly.
¶9 The trial court issued a Memorandum Decision on August 24, 2005, addressing the issues of child support, alimony, personal and real property, and attorney fees, as well as directing Wife to prepare findings. Respecting the Properties, the trial court relied on Rous‘s deposition statements to rule that the Properties represented earnings for Husband‘s work on the Ranch and were therefore marital properties. Thereafter, the parties disputed various income calculations, technical errors, as well as the fact that the Properties had been deemed earnings by the trial court.
¶10 The trial court issued a second Memorandum Decision on March 15, 2006, recalculating Husband‘s income for the purposes of child support and alimony. Again, the trial court directed Wife to prepare findings. Wife‘s trial counsel submitted Supplemental Findings of Fact and Conclusions of Law on March 24, 2006. This document again referenced Rous‘s deposition testimony as the basis for the finding that the Properties represented earnings and not gifts. The trial court signed this document, along with a Supplemental Decree of Divorce, on April 6, 2006.
¶11 On November 22, 2006, the trial court issued its Amended Supplemental Findings of Fact and Conclusions of Law, as well as an Amended Supplemental Decree of Divorce. The trial court made findings on child support, alimony, health insurance, child care, tax exemptions, attorney fees, and personal and real property. Specifically, the trial court awarded Wife half of the cattle and horses owned by the parties but determined that the bulls belonged to the Ranch and not to Husband. Next, the trial court again determined that the undivided interests in the Properties were given to Husband by Rous not as a gift or inheritance but as earnings for his work on the Ranch, and accordingly awarded Wife a one half interest in Husband‘s undivided interests. To support this determination, the trial court relied upon Rous‘s deposition testimony. The trial court ruled that the land and livestock held by the Ranch was not marital property and that Husband‘s ownership interest in the Ranch was part of Rous‘s estate plan to keep the property in the family and reduce taxes.
¶12 Husband appeals the trial court‘s awarding of half of his interests in the Properties to Wife. Wife cross-appeals, challenging the trial court‘s determination that Husband‘s interests in the Ranch and the bulls are not marital property.
ISSUES AND STANDARDS OF REVIEW
¶13 Husband challenges the award of half of his share of the Properties to Wife. Wife challenges the conclusion that the Ranch and the bulls were not marital property. “In a divorce proceeding, there is no fixed formula from which to determine the division of prop-
¶14 A trial court‘s findings, however, must be supported by facts that would be admissible at trial. See Centro de la Familia de Utah v. Carter, 2004 UT 43, ¶ 16, 94 P.3d 261. “[O]n appeal from a judgment of the trial court, our role is not to substitute our own findings for those of the trial court, but to examine the record for evidence supporting the judgment.” Shioji v. Shioji, 712 P.2d 197, 201 (Utah 1985).2
ANALYSIS
¶15 In a divorce proceeding, a property distribution “must be based upon adequate factual findings and must be in accordance with the standards set by this state‘s appellate courts.” Dunn v. Dunn, 802 P.2d 1314, 1317 (Utah Ct.App.1990). “Generally, in a divorce proceeding each party is presumed to be entitled to all of his or her separate property and fifty percent of the marital property.” Bradford v. Bradford, 1999 UT App 373, ¶ 26, 993 P.2d 887 (alteration, citation, and internal quotation marks omitted). We analyze the trial court‘s findings on the division of both personal and real property based on these principles.
I. The Properties
¶16 Husband argues that the trial court erred in ruling that the Properties are marital property. Specifically, Husband contends that the trial court improperly relied on deposition testimony that was never properly part of the trial record. Generally, “either party may introduce all or any competent and relevant parts of a deposition which are not fragmentary or misleading, and the opposing party may put in evidence any other relevant part or parts,” Brooks v. Scoville, 81 Utah 163, 17 P.2d 218, 224 (1932), for the purposes of impeaching an adverse witness, cf.
¶17 In Thompson v. Ford Motor Co., 14 Utah 2d 334, 384 P.2d 109 (1963), it was “apparent that [the depositions cited by the parties] were never marked and introduced into evidence nor read by the trial judge.” Id. at 109. Therefore, “the testimony contained in the deposition was not presented to” the trial court. Id. Appellate courts have long held that “we cannot consider matters not in the record before the trial court,” including depositions that were never properly entered into evidence. Reliable Furniture Co. v. Fidelity & Guar. Ins. Underwriters, Inc., 14 Utah 2d 169, 380 P.2d 135, 135 (1963). It is equally axiomatic that a trial court cannot use statements made in a deposition that were never properly admitted into evidence at trial as support for a factual finding.
¶18 Here, the trial court made its ruling and based its award to Wife of one half of Husband‘s undivided interests in the Properties solely on the basis of deposition testimony that was never admitted into evidence at trial.3 Reading from a deposition to refresh
¶19 Wife contends that even if the deposition testimony could not have been used to support the court‘s findings, the Amended Supplemental Findings of Fact and Conclusions of Law includes language giving the district court alternate grounds for the distribution of the Properties: That the Properties were marital property because they were either “acquired or enhanced through the joint efforts of both [Husband] and [Wife], or . . . have been commingled.” To support the district court‘s statement, Wife points both to an affidavit wherein she listed her labors assisting Husband and to the benefits that the Ranch provided Husband. While Wife‘s counsel referenced this affidavit in passing during the second day of trial, the affidavit was never admitted as evidence. Moreover, at trial Wife testified only as to how her domestic labors enabled Husband to ranch for longer periods of time without having to, for example, return home to launder his clothes. This testimony does not support either the commingling or the enhancement of real property. Thus, the evidence in the trial record, of which the affidavit was never a part, is insufficient to support a factual finding of either commingling or enhancement of the Properties.5
¶20 Finally, the trial court‘s ruling was not based upon whether the property award was to achieve a fair, just, and equitable result. In fact, Wife never presented, either at trial or on appeal, an equity-based argument to suggest that awarding an interest in the Properties would be appropriate. Thus, we reverse the trial court‘s award to Wife of a one half interest in Husband‘s undivided interests in the Properties.
¶21 The dissenting opinion claims that Wife‘s counsel‘s opening statement “clearly stated Wife‘s position that she was seeking an equitable interest in Husband‘s individually-owned property.” Infra ¶ 33. However, Wife‘s counsel merely requested “that [Wife] be awarded half interest in [the Properties]“—a request consistent with Wife‘s trial strategy and the trial court‘s ruling. The portion that the dissenting opinion quotes that references Wife‘s purported request for equitable distribution was only “with regard to other personal property” and not real property. (Emphasis added.)
438 Main St. v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (first, second, fourth, and fifth alterations in original) (citation and internal quotation marks omitted); see also Turtle Mgmt. v. Haggis Mgmt., 645 P.2d 667, 672 (Utah 1982) (“This Court will not consider on appeal issues which were not submitted to the trial court and concerning which the trial court did not have the opportunity to make any findings of fact or law.“). It is clear that Wife made no allusion to an equitable theory respecting the Properties, let alone presented the issue to the trial court in such a way that the court could correct the alleged error. Thus, the dissenting opinion is ruling sua sponte that an equitable theory is appropriate.
¶22 “With respect to the court of appeals’ power to make equitable decisions in domestic relations matters, the court of appeals is not entitled to substitute its judgment for that of the trial court except in the extraordinary circumstance of a manifest injustice.” Reese v. Reese, 1999 UT 75, ¶ 10, 984 P.2d 987 (internal quotation marks omitted). “[I]n most circumstances the term manifest injustice is synonymous with the plain error standard. . . .” State v. Casey, 2003 UT 55, ¶ 40, 82 P.3d 1106 (internal quotation marks omitted). Neither party alleges plain error on the part of the trial court.
¶23 My colleagues argue that because the trial court erroneously determined that the Properties were marital property, “Wife did not further pursue the correct legal approach of equitable distribution.” Infra ¶ 33. This argument ignores the fact that the trial court made its ruling that the Properties were Husband‘s earnings for working for the Ranch (and hence the Properties were marital property) several days after the completion of two days of trial. Secondly, the approach of Wife and of the trial court was essentially correct—Wife simply failed to property introduce the deposition testimony into evidence. Finally, the opinion fails to cite any authority for the implicit proposition that since Wife was successful at trial on one legal theory, she did not waive the equitable distribution theory by failing to raise it.6
¶24 Having given Wife a new trial on a new theory, for some reason, my colleagues conclude that this court may affirm the trial court‘s awarding of a one half interest in Husband‘s undivided interests in the Properties on any ground, making a passing reference to Dipoma v. McPhie, 2001 UT 61, ¶ 18, 29 P.3d 1225, to support this proposition. See infra ¶ 33. However, in order for an appellate court to affirm on an alternate ground, “not only must the alternative ground be apparent on the record, it must also be sustainable by the factual findings of the trial court.” State v. Topanotes, 2003 UT 30, ¶ 9, 76 P.3d 1159. The dissenting opinion has failed to establish either of these required elements.
¶26 Neither party appealed the trial court‘s alimony award. However, had my colleagues not elected to give Wife a new trial on a new theory, I would have remanded the matter for reconsideration of the alimony award (to include Husband‘s collateral sources of support and the time and income production value of Husband‘s separate assets) since the real property award affected the level and duration of alimony the trial court awarded Wife.
II. The Ranch and the Bulls
¶27 On cross-appeal, Wife contends that the trial court erred by ruling that “the bulls are [the sole] property of [the] Ranch” and that “the assets of [the] Ranch . . . , including the land, equipment, livestock, and accounts receivable, as well as [Husband‘s] partner‘s capital account are his sole and separate property.” Specifically, Wife argues that the first problem with the trial court‘s ruling is that the same reasoning that the court used to award a one half interest in Husband‘s interests in the Properties to Wife would equally justify awarding the Ranch to Wife as well.
¶28 The second problem, according to Wife, is that most of the bulls were registered to the Ranch and a few to Husband. She views this to be problematic even though Husband testified that he did so to save
¶29 Wife cites to no law to support her position or any evidence on the record that demonstrates that the trial court‘s rulings with regard to the bulls or Husband‘s interest in the Ranch are against the clear weight of the evidence that was before the trial court. In fact, at trial Husband testified that he purchased the bulls as an officer of the Ranch with the Ranch‘s money. The few bulls that were listed in Husband‘s name, he explained, were listed as such in order to save approximately $100 in membership fees to the Angus Association. “But,” Husband added, “I‘ve never owned a bull personally or purchased one with my own money.” Similarly, Rous and her accountant testified that the Ranch was formed after Husband‘s father‘s death in order to reduce Rous‘s estate tax burden. More importantly, both testified that the acreage controlled by the Ranch was previously owned by Husband‘s parents—a fact that Wife does not dispute. Thus, we affirm the trial court‘s property division with respect to the Ranch and the bulls.
CONCLUSION
¶30 In its findings, the trial court improperly relied on deposition testimony that was never entered into evidence. Therefore, we reverse the trial court‘s award to Wife of a one half interest in Husband‘s undivided interests in the Properties. We affirm the trial court‘s award of personal property regarding the Ranch and the bulls because Wife has failed to meet her burden to overturn the court‘s findings to those matters.
¶31 However, I disagree with my colleagues that Wife should receive a new trial regarding the division of the Properties under a new theory. Upon reversal of the trial court‘s award to Wife of one half of Husband‘s undivided interests in the Properties, I would remand for the purpose of revisiting the alimony award since the property distribution affected the level of alimony the trial court awarded Wife. I believe this is the proper approach.
BILLINGS, Judge (concurring in part II and dissenting in part I):
¶32 We agree with Judge Davis‘s opinion in Part I that the trial court erred in characterizing the Properties as joint property; however, our rationale is different. We conclude that the trial judge incorrectly characterized the Property as joint property and would do so even if the disputed evidence were properly admitted. However, instead of reversing the trial court‘s award, we remand for the trial court to consider division of the Properties under the rationale set forth in this opinion. Judge Davis‘s opinion refuses to give the trial court a chance to reconsider its division of the Properties because it claims the argument for an equitable distribution of the Properties was not made before the trial court. We conclude it was the trial court‘s mistaken characterization of the Properties as marital property that led the parties not to pursue the correct legal approach.
¶33 In her opening statement at trial, Wife‘s counsel clearly stated Wife‘s position that she was seeking an equitable interest in Husband‘s individually-owned property. Specifically, she stated that
regard[ing] . . . any real property that [Husband] owns, individually or jointly, [Wife requests] that she be awarded half interest in said property. With regards to the LLC ownership interest, she‘s requesting an award of half of the 20.37 percent interest that he now holds. And then with regard to other personal property we would ask that she be awarded an equitable interest in that as well.
However, Wife did not further pursue the correct legal approach of equitable distribution because the trial court incorrectly characterized the Properties as marital property. Before making any award of property, a trial court is “first required to properly categorize the parties’ property as marital or separate.” Elman v. Elman, 2002 UT App 83, ¶ 18, 45 P.3d 176 (emphasis added). It is only after this initial characterization that the trial court can continue in making its property distributions. See Hodge v. Hodge, 2007 UT App 394, ¶ 5, 174 P.3d 1137. “Trial courts must follow this ‘systematic approach’ when
¶34 In determining that Husband‘s interest in the Properties was not his separate property that Rous gifted to him during the marriage but rather was marital property, the trial court found that Husband‘s interest in the Properties was the result of his earnings from working on the Ranch. The trial court opined that “the only pension or retirement which most farmers and ranchers have is the value of the land which they have acquired.” The court therefore found that “it makes sense that those who have stayed and worked the ranch receive a greater share. The greater share is not truly a gift, rather it is something that has been earned.”
¶35 We disagree with the trial court‘s assessment that the Properties were marital rather than Husband‘s separate, gifted property. However, we conclude that this case is exactly the type of case where Utah‘s appellate courts have allowed the invasion of a spouse‘s separate property because it is the only way to achieve equity in the situation.
¶36 “Generally, in a divorce proceeding each party is presumed to be entitled to all of his or her separate property and fifty percent of the marital property.” Bradford v. Bradford, 1999 UT App 373, ¶ 26, 993 P.2d 887 (internal quotation marks omitted). “However, separate property is not ‘totally beyond [a] court‘s reach in an equitable property division.‘” Elman, 2002 UT App 83, ¶ 19, 45 P.3d 176 (alteration in original) (quoting Burt v. Burt, 799 P.2d 1166, 1169 (Utah Ct.App.1990)). Under Utah law, a trial court “may award the separate property of one spouse to the other spouse in extraordinary situations where equity so demands.” Id. (internal quotation marks omitted).
¶37 In this case, Husband‘s limited income received from working on the Ranch may not allow him to provide a sufficient alimony payment to Wife to compensate her for twenty-three years of marriage where she managed the household and raised seven children. Wife‘s contribution to the household allowed Husband to focus his time and energy on preserving and increasing the value of both the Properties and the Ranch. See, e.g., id. ¶¶ 20, 24 n. 5 (noting that the wife was entitled to a portion of the husband‘s separate property interests because her work in maintaining and growing the marital property allowed the husband to concentrate full-time on his separate property). Thus, we conclude that an equitable distribution of the Properties would be well within the trial court‘s discretion on remand. See id. ¶ 17 (“A trial court has considerable discretion concerning property [division] in a divorce proceeding.” (alteration in original) (internal quotation marks omitted)).
¶38 I CONCUR: PAMELA T. GREENWOOD, Presiding Judge.
