Gerwe v. Gerwe , 424 P.3d 1113 ( 2018 )

2018 UT App 75THE UTAH COURT OF APPEALS
SHANNON OLIVIA GERWE,
Appellee,
v.
BRIAN SCOTT GERWE,
Appellant.
Opinion
No. 20160117-CA
Filed April 26, 2018
Second District Court, Farmington Department
The Honorable Thomas L. Kay
No. 144700123
Andrew G. Deiss, Brent A. Orozco, and Diana F.
Bradley, Attorneys for Appellant
Russell Yauney, Attorney for Appellee
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES
KATE A. TOOMEY and DAVID N. MORTENSEN concurred.
HAGEN, Judge:
¶1 Brian Scott Gerwe (Husband) challenges the district
court’s order setting aside a postnuptial agreement (the
Postnuptial Agreement) Husband entered into with Shannon
Olivia Gerwe (Wife) as well as various findings of fact and
conclusions of law associated with the court’s divorce decree.
We affirm.
BACKGROUND
¶2 In January 2014, Wife petitioned for divorce from
Husband. On June 25, 2014, the parties entered into the
Postnuptial Agreement, which divided the parties’ assets and set
forth their financial obligations. In August 2014, Wife moved the
Gerwe v. Gerwe
court to set aside the Postnuptial Agreement on grounds that
Husband fraudulently induced her to sign it.
¶3 Following an evidentiary hearing, the court granted
Wife’s motion. It found that Husband had induced Wife to sign
the Postnuptial Agreement in hopes of reconciliation when
Husband “had no intent to reconcile with” Wife. This was
evidenced by (1) the “shortness of time between the signing of
the document and the request to move forward with the
divorce,” (2) the “text messages from [Husband] sent to [Wife]
almost immediately after the document was signed,” and (3) the
fact that the “six factors [Husband] cited to about why he did not
want to get back together, were not valid, and were only used as
an attempt to justify his actions.”
¶4 After a bench trial, the district court entered findings of
fact and conclusions of law in support of the divorce decree.
Relevant to this appeal, the court found that: (1) Wife was
entitled to half the marital funds in a brokerage account but was
not responsible for a loan Husband claimed had been used to
fund the account; (2) the total value of personal property
remaining in Husband’s possession was $48,000, and half of that
value should be awarded to Wife; and (3) based on Husband’s
current gross income is $9,373 per month, he was required to
pay Wife child support in the amount of $671 per month and
alimony in the amount of $1,000 per month.
¶5 Husband now appeals the court’s order to set aside the
Postnuptial Agreement as well as various findings of fact and
conclusions of law associated with the divorce decree.
ISSUES AND STANDARDS OF REVIEW
¶6 Husband raises four issues on appeal. First, Husband
argues that the district court failed to utilize the “clear and
convincing” evidentiary standard when it set aside the
Postnuptial Agreement and failed to make sufficient findings on
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the essential elements of fraudulent inducement. Husband
acknowledges that he did not raise this issue below and would
normally be barred from asserting it on appeal. He asks this
court to reach the merits of his argument under the plain error
exception to the preservation rule. 1 “The party seeking the
benefit of the plain error exception must demonstrate that (i) an
error exists; (ii) the error should have been obvious to the trial
court; and (iii) the error is harmful, i.e., absent the error, there is
a reasonable likelihood of a more favorable outcome” for the
appellant. Meadow Valley Contractors, Inc. v. State Dep’t of
Transpo., 2011 UT 35, ¶ 17, 266 P.3d 671 (quotation simplified).
To the extent Husband challenges the sufficiency of the evidence
supporting a finding of fraudulent inducement, “we will not set
aside a [district] court’s factual findings ‘unless clearly
erroneous,’ giving ‘due regard to the [district] court’s
opportunity to judge the credibility of the witnesses.’” Shuman v.
Shuman, 2017 UT App 192, ¶ 3, 406 P.3d 258 (quoting Utah R.
Civ. P. 52(a)(4)).
¶7 Second, Husband contends that the district court erred
when it awarded each party half the marital funds in the
brokerage account but allocated to him the entirety of a loan he
claimed was used to fund the account. “In a divorce action, there
is no fixed formula upon which to determine a division of debts.
However, such allocation must be based upon adequate factual
findings which ruling we will not disturb absent an abuse of
1. As this court has previously observed, “[o]ur supreme court
recently noted the ‘ongoing debate about the propriety of civil
plain error review,’ but did not take the opportunity to resolve
that debate for purposes of Utah law.” Frugal Flamingo Quick
Stop v. Farm Bureau Mutual Ins. Co., 2018 UT App 41, ¶ 10 n.3
(quoting Utah Stream Access Coal. v. Orange St. Dev., 2017 UT 82,
¶ 14 n.2). We decline to resolve this issue here because the
appellee has not challenged the applicability of plain error
review.
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discretion.” Rehn v. Rehn, 1999 UT App 41, ¶ 19, 974 P.2d 306(quotation simplified).
¶8 Third, Husband contends that the district court abused its
discretion in distributing the value of the parties’ personal
property. “[D]istrict courts have considerable discretion
concerning property distribution in a divorce . . . [and] we will
uphold the decision of the district court . . . unless a clear and
prejudicial abuse of discretion is demonstrated.” Dahl v. Dahl,
2015 UT 79, ¶ 119 (quotation simplified).
¶9 Finally, Husband contends that the district court abused
its discretion by failing to calculate alimony and child support
based on his projected salary. A district court’s award of alimony
is reviewed for abuse of discretion. Bakanowski v. Bakanowski,
2003 UT App 357, ¶ 7, 80 P.3d 153.
ANALYSIS
I. Fraudulent Inducement
¶10 Husband argues that the district court committed plain
error when it set aside the Postnuptial Agreement because it
failed to use the “clear and convincing” evidentiary standard.
Husband also asserts that the court failed to make sufficient
findings on the essential elements of fraudulent inducement and
that the evidence was insufficient to support such findings.
¶11 To prevail on a claim of fraudulent inducement, the party
alleging fraud “must present clear and convincing evidence” of
the following:
(1) that a representation was made (2) concerning a
presently existing material fact (3) which was false
and (4) which the representor either (a) knew to be
false or (b) made recklessly, knowing that there
was insufficient knowledge upon which to base
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such a representation, (5) for the purpose of
inducing the other party to act upon it and (6) that
the other party, acting reasonably and in ignorance
of its falsity, (7) did in fact rely upon it (8) and was
thereby induced to act (9) to that party’s injury and
damage.
Daines v. Vincent, 2008 UT 51, ¶ 38, 190 P.3d 1269 (quotation
simplified). “[F]or a matter to be clear and convincing to a
particular mind it must at least have reached the point where
there remains no serious or substantial doubt as to the
correctness of the conclusion.” Greener v. Greener, 212 P.2d 194,
205 (Utah 1949).
¶12 On appeal, Husband has not established that the district
court committed plain error in ruling that Wife had proven
fraudulent inducement. “The burden of showing error is on the
party who seeks to upset the judgment.” State v. Jones, 657 P.2d
1263, 1267 (Utah 1982). Accordingly, “[i]n the absence of record
evidence to the contrary, we assume regularity in the
proceedings below, and affirm the judgment.” Id.¶13 Although the district court did not expressly state that
Wife presented clear and convincing evidence of fraudulent
inducement, it never suggested that a lower standard of proof
applied. A reviewing court “will not presume from a silent
record that the court applied an incorrect legal standard” but
“must presume the regularity and validity of the [district]
court’s proceedings, and that it applied the correct legal
standard, in the absence of evidence to the contrary.” State v.
Cash, 951 N.E.2d 486, 492 (Ohio Ct. App. 2011); see also Granville
Med. Center v. Tipton, 586 S.E.2d 791, 795 (N.C. Ct. App. 2003)
(rejecting claim that district court applied the wrong legal
standard below because “[w]here the record is silent on a
particular point, we presume that the trial court acted
correctly”); Committee for Responsible Planning v. City of Indian
Wells, 257 Cal. Rptr. 635, 638 (Cal. Ct. App. 1989) (“In the absence
of any contrary indication in the record, we therefore assume
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that the trial court followed the correct legal standard in ruling
on the motion.”). Because nothing in the record suggests that the
court applied something less than the clear and convincing
standard, 2 Husband cannot establish error.
¶14 Husband also claims the district court committed plain
error because it did not make express factual findings on each of
the nine elements of fraudulent inducement. On plain error
review, we cannot assume that the court committed any legal
error simply because it did not expressly recite each element of
fraudulent inducement in announcing its ruling. Nothing in the
record would lead us to conclude that the court set aside the
Postnuptial Agreement without first finding that Wife
established each element of fraudulent inducement by clear and
convincing evidence.
¶15 Relatedly, Husband claims that the evidence was
insufficient to support such findings. The court’s ruling
identified three evidentiary grounds for setting aside the
Postnuptial Agreement based on fraud: (1) “[t]he shortness of
time between the signing of the document and the request to
move forward with the divorce”; (2) the text messages between
Husband and Wife, which were sent immediately after the
Postnuptial Agreement was signed; and (3) Husband’s
testimony “about why he did not want to get back together [with
Wife], [was] not valid, and [was] only used as an attempt to
justify his actions.”
2. As evidence that the district court did not apply the clear and
convincing evidence standard, Husband points to the judge’s
statement that, if the Postnuptial Agreement was not set aside,
the parties would “be doing a petition to modify anyway, and I
think we ought to just get it done.” The court’s observation that
its ruling might ultimately streamline the resolution of this case
does not suggest that it applied the wrong evidentiary standard
in making that ruling.
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¶16 “On appeal, we consider the facts in a light most
favorable to the district court’s ruling, including its findings.”
See Mota v. Mota, 2016 UT App 201, ¶ 2 n.2, 382 P.3d 1080.
Viewed in that light, these findings support each element of
fraudulent inducement. Specifically, these facts are sufficient to
establish that (1) Husband made a representation (2) concerning
the material fact that he intended to reconcile (3) which was false
and (4) which Husband knew to be false (5) for the purpose of
inducing Wife to sign the Postnuptial Agreement and (6) that
Wife acted reasonably and in ignorance of its falsity (7) when she
did in fact rely upon it (8) and was thereby induced to enter into
the Postnuptial Agreement (9) to her injury and damage. See
Danies, 2008 UT 51, ¶ 38. Based on the evidence presented, the
district court reasonably could have concluded by clear and
convincing evidence that Husband induced Wife to agree to the
Postnuptial Agreement through fraud. Because Husband has not
established plain error, we affirm the district court’s ruling
setting aside the Postnuptial Agreement.
II. Marital Debt
¶17 Husband contends that the district court erred when it
allocated to each party half the value of the marital funds in the
brokerage account but allocated to him the entire debt from a
loan that Husband claims was used to fund that account. It is
within the discretion of the district court to allocate and divide
debts between the parties as long as such findings are based on
adequate facts. See Rehn v. Rehn, 1999 UT App 41, ¶ 19, 974 P.2d
306. “Showing an abuse of discretion is a heavy burden, and we
can properly find abuse only if no reasonable person would take
the view adopted by the [district] court.” DeAvila v. DeAvila,
2017 UT App 146, ¶ 12, 402 P.3d 184 (quotation simplified).
¶18 At trial, Husband testified that the value of the brokerage
account at the time of separation was approximately $506,200,
but the record does not appear to contain any account
statements or other documentary evidence supporting this
assessment. Husband and his mother each testified that
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Husband’s mother largely funded the account with the intent
that Husband would manage the money she invested for her
benefit. Because Husband also deposited marital funds into the
account, he created a spreadsheet to separately track the deposits
and capital gains and losses belonging to his mother. According
to Husband’s spreadsheet that was admitted at trial, marital
funds accounted for only twenty-two percent of the brokerage
account, or $128,600 after taxes. He further testified that, with
Wife’s consent, he used $40,000 to purchase some personal
property, leaving a balance of $88,600.
¶19 Husband argued that Wife’s $44,300 share of the
brokerage account should be reduced by $22,820.05, half of a
$45,641 loan that Husband owed to Uniformed Services. At trial,
Husband testified that he used the Uniformed Services loan to
pay off a prior $50,000 loan that he had taken out in June or July
2013. According to Husband, the proceeds of the prior loan were
deposited into the brokerage account and his spreadsheet
reflects a $50,000 deposit at that time. But the parties have not
cited—and our own exhaustive review of the record has not
found—any documentary evidence establishing the existence or
balance of either loan or how the proceeds of those loans were
used. There are no loan documents, account statements, or
receipts showing either that the proceeds of the prior loan were
deposited into the brokerage account or that the Uniformed
Services loan was used to pay off the prior loan.
¶20 The district court noted that it “didn’t have a whole lot of
great evidence” regarding the value of the brokerage account.
Recognizing that it could not do more with the scarce evidence
before it, the court found that the value of the marital property
in the brokerage account was limited to $88,600, the amount
Husband had agreed belonged to the marital estate. The court
also rejected Husband’s claim that his $45,641 Uniformed
Services loan constituted marital debt and ruled that Wife was
not obligated to pay the $22,820.05 that Husband requested.
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¶21 On this record, Husband cannot establish that the district
court abused its discretion in finding that the Uniformed
Services loan was not marital debt. Other than his own
testimony and an entry in the spreadsheet that he created,
Husband offered no evidence to prove either the existence of the
loan or that the loan proceeds had been used to fund the
brokerage account. See, e.g., Ouk v. Ouk, 2015 UT App 104, ¶ 13,
348 P.3d 751 (affirming finding that “Husband did not meet his
burden at trial to provide any evidence or documentation
proving that all of the proceeds from the line of credit went into”
his business); Godfrey v. Godfrey, 854 P.2d 585, 587–88 (Utah Ct.
App. 1993) (vacating a finding of marital debt where husband
failed to produce “any documentation supporting the existence
of a lien,” such as “loan papers, mortgage or trust deeds,
cancelled checks, etc.”). In ruling that the Uniformed Services
loan was “his debt, not hers,” the court implicitly found that
Husband had failed to carry his burden to prove that the loan
was a marital debt. Given the lack of documentation regarding
the loan or the use of its proceeds, the district court acted within
its discretion by refusing to reduce Wife’s share of the brokerage
account by half of the loan’s balance. 3
3. In addressing the marital debt issue in his opening brief,
Husband inserted a single paragraph claiming that the district
court “took a similarly inequitable tack in apportioning the
IRAs.” Although it is not identified as a separate issue on appeal,
Husband argues that Wife’s share of the IRAs should have been
reduced because she dissipated marital assets by mismanaging
her own IRA account after the parties separated. To the extent
Husband intended to raise dissipation of marital assets as a
separate issue on appeal, Husband’s “overall analysis of the
issue is so lacking as to shift the burden of research and
argument to the reviewing court.” Sandusky v. Sandusky, 2018 UT
App 34, ¶ 17 (quotation simplified). In particular, Husband does
not analyze or offer any support for the proposition that
unprofitable investing decisions constitute dissipation of marital
(continued…)
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III. Personal Property
¶22 Husband contends that the district court abused its
discretion in valuing the parties’ personal property at $48,000
and awarding Wife one half of that amount. A district court has
considerable discretion to distribute property in a divorce
proceeding, and such distributions are presumed valid. Dahl v.
Dahl, 2015 UT 79, ¶ 119. We therefore will uphold the district
court’s decision on appeal “unless a clear and prejudicial abuse
of discretion is demonstrated.” Id. (quotation simplified). In
reviewing the district court’s decisions, “we will not set aside
findings of fact, whether based on oral or documentary
evidence, unless they are clearly erroneous, and we give due
regard to the district court’s superior position from which to
judge the credibility of witnesses.” Id. ¶ 121.
¶23 The district court reviewed significant evidence on the
value of the parties’ shared personal property. At trial, Wife
asked for specific personal property to be returned to her. She
also submitted a list of shared personal property that would
remain with Husband. Wife produced receipts for each of the
items on the list, argued that the total value of that shared
personal property was approximately $66,000, and asked for half
that amount. Husband never claimed that Wife had possession
of any of those items, but argued that Wife’s valuation was
(…continued)
assets, nor does he explain how the district court exceeded its
broad discretion by declining to deviate from the general rule
that a marital estate is valued at the time of the divorce decree.
See Rayner v. Rayner, 2013 UT App 269, ¶¶ 19–21, 316 P.3d 455(explaining the general rule that marital estate is valued at the
time of decree or trial, the district court’s broad discretion in
deciding whether to deviate from this rule, and the factors
relevant to whether a party has dissipated marital assets).
Because this issue is inadequately briefed, we decline to address
it further.
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inflated because it was based on the purchase price of the items
and failed to reflect their depreciation in value. Based on the
evidence presented, the district court estimated the value of the
shared personal property at $48,000. Because the property
remained in Husband’s possession, the district court ruled that
Wife was entitled to half of its value, which amounted to
$24,000.
¶24 On appeal, Husband claims the district court abused its
discretion by awarding Wife half the value of the shared
personal property without taking into account the portion of that
property already in Wife’s possession. Husband argues that
“[t]he only way the [district] court’s ruling could have been
correct is if [Husband] kept all the personal property thereby
obligating him to pay [Wife] her half of the total value.” But that
is precisely what happened. Contrary to Husband’s claim, the
court did not determine “the value of all marital property,
including that retained by [Wife], to be $48,000.” Instead, $48,000
represented the value of only those items listed that Wife agreed
would remain in Husband’s possession.
¶25 Husband points to evidence that Wife kept a vehicle
worth $13,000, suggesting that her share of the personal property
should have been offset by that amount. But both parties had
purchased vehicles during the marriage and neither vehicle was
included in the list of shared personal property that Wife
submitted. Wife submitted evidence that the value of her vehicle
was between $10,782 and $13,140. Husband testified that he sold
his vehicle that had been purchased during the marriage for
$9,000, although Wife testified that the fair market value of his
vehicle was $21,000. Given the evidence that each party kept his
or her own vehicle and that the value of each vehicle was at least
arguably similar, it was reasonable for the court to exclude the
value of both vehicles in calculating the amount of shared
personal property.
¶26 Husband has not demonstrated that the district court
exceeded its discretion in valuing the shared personal property,
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excluding the parties’ vehicles, at $48,000. Accordingly, we
affirm the district court’s award of $24,000 as Wife’s share of the
value of the remaining personal property retained by Husband.
IV. Child Support and Alimony
¶27 Husband contends that the district court abused its
discretion by calculating alimony and child support based on his
monthly income at the time of trial rather than on the lower
salary expected to result from an imminent job change. At trial,
Husband testified that $9,373 was “an accurate reflection of [his
monthly] income.” However, he explained that he had planned
to separate from his military service and had accepted a job offer
with a commercial airline where his monthly salary would start
at $1,824. We conclude that the court did not abuse its discretion
in basing the child support and alimony awards on Husband’s
income at the time of trial rather than on his claimed anticipated
future income.
¶28 With respect to child support, the district court properly
based its award on Husband’s verified income. Utah law
establishes presumptive guidelines for the award of child
support based on the parents’ adjusted gross income. See Utah
Code Ann. §§ 78B-12-202, -301 (LexisNexis 2012). “Each parent
shall provide verification of current income,” including “year-to-
date pay stubs or employer statements and complete copies of
tax returns,” unless the court finds that such verification is not
reasonably available. Id. § 78B-12-203(5)(b) (LexisNexis 2012).
Because Husband had not yet changed jobs, he had no pay stubs
or other documentation to verify his reduced income. Nor did he
produce an offer letter from his new employer, confirming that
he had been hired and setting forth his anticipated salary.
Moreover, whether the anticipated salary change would come to
pass was speculative until he actually separated from the
military and began his new employment. Based on the lack of
verification and the uncertainty regarding Husband’s future
employment, the district court acted well within its discretion in
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basing the award of child support on Husband’s income at the
time of trial.
¶29 Husband also argues that the district court abused its
discretion when it failed to take his imminent job change into
account when awarding alimony. Unlike child support, which is
presumptively calculated based on income, the district court
must consider multiple factors in determining alimony. These
factors include “the ability of the payor spouse to provide
support” as well as “the financial condition and needs of the
recipient spouse” and “the recipient’s earning capacity or ability
to produce income.” Id. § 30-3-5(8)(a) (Supp. 2017) (laying out
the statutory factors for an alimony determination).
¶30 Here, the court considered the statutory factors and found
that Wife “has a need for alimony.” Although Wife has a college
degree and was making approximately $12 per hour at the time
of trial, she was not employed full-time. The court imputed her
earning capacity at minimum wage, or $1,257 per month because
“she has been out of the job market for a long time.” The court
found that, given her monthly costs, Wife “needs more money
than the child support and minimum wage provide.” Given
Husband’s admitted income of $9,373 per month, the court
explained that “there is no question that [Husband] makes more
money than [Wife].” Ultimately, the court awarded $1,000 per
month in alimony based on both Wife’s need and Husband’s
current ability to pay.
¶31 The district court did not abuse its discretion in
considering Husband’s current earnings to determine his ability
to provide support. In basing the alimony award on Husband’s
income at the time of trial, the court appears to have made an
implicit credibility determination regarding Husband’s claim
concerning his ability to provide support. At a post-trial hearing
regarding the findings of fact in the divorce decree, the court
noted that Husband came “into trial making a huge amount of
money as a Colonel in the Air Force, and then all of a sudden is
making no money because, you know, now it’s time to pay
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somebody.” “It is the province of the trier of fact to assess the
credibility of witnesses, and we will not second guess the trial
court where there is a reasonable basis to support its findings.”
Reed v. Reed, 806 P.2d 1182, 1184 (Utah 1991). It was within the
court’s discretion to discredit Husband’s claim that he was
unable—as opposed to merely unwilling—to provide the
support ordered by the court.
¶32 In addition, the district court acted within its discretion in
assessing Husband’s ability to provide support based on his
military pay where the anticipated decrease in salary was not
only speculative but also temporary. Indeed, “where the
husband has experienced a temporary decrease in income, his
historical earnings must be taken into account in determining the
amount of alimony to be paid.” Olson v. Olson, 704 P.2d 564, 566
(Utah 1985) (quotation simplified). Husband testified that his
initial salary in his new job would be significantly lower than his
current income. However, he acknowledged that his salary
would increase dramatically after the first year, from $24 per
hour to nearly $40 per hour. Husband also testified that the job
did not involve a 40-hour workweek, and that he was
guaranteed either 65 or 72 hours per week. Based on this
information, it appears that Husband’s monthly income would
at least approximate his military pay within one year. Because
the anticipated decrease was temporary, the district court
properly looked to historical earnings to determine Husband’s
ability to provide support. See id.¶33 Finally, Husband claims that the district court abused its
discretion because it was required to consider the imminent
decrease in his salary under the governing statute. Utah law
provides that “[w]hen a marriage of long duration dissolves on
the threshold of a major change in the income of one of the
spouses due to the collective efforts of both, that change shall be
considered . . . in determining the amount of alimony.” Utah
Code Ann. § 30-3-5(8)(g) (LexisNexis 2013). Husband does not
explain, however, how his anticipated change in income is the
result of the parties’ collective efforts. Rather, the change in
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income appears “unrelated to the efforts put forward by the
spouses during marriage.” Martinez v. Martinez, 818 P.2d 538,
542 (Utah 1991). Typically, this statutory provision deals with an
enhancement in a spouse’s earning capacity that stems from the
collective efforts of both spouses, such as where one spouse has
provided financial funding, care for the couple’s children, or
other support while the other spouse attends school or engages
in professional development. See, e.g., Ashby v. Ashby, 2010 UT 7,
¶ 26, 227 P.3d 246 (under the governing statute, “one spouse’s
support of their student spouse’s educational efforts is properly
considered as a factor in making the alimony determination”).
Husband has cited no authority suggesting that this provision
applies to a temporary change in income based on a voluntary
decision of the payor spouse to seek less lucrative employment.
Accordingly, we hold that the court did not exceed its discretion
in declining to adjust the alimony award based on Husband’s
anticipated change in income.
CONCLUSION
¶34 The district court did not commit plain error in setting
aside the Postnuptial Agreement based on fraudulent
inducement, nor did it exceed its discretion in allocating marital
property and awarding child support and alimony. Accordingly,
the district court’s judgment is affirmed.
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