Beckham v. Beckham , 2022 UT App 65 ( 2022 )

2022 UT App 65THE UTAH COURT OF APPEALS
VICKI BECKHAM,
Appellee,
v.
RANDALL BECKHAM,
Appellant.
Opinion
No. 20200935-CA
Filed May 19, 2022
Third District Court, Salt Lake Department
The Honorable Barry G. Lawrence
No. 194901020
Ben W. Lieberman, Attorney for Appellant
Ryan A. Rudd and Nicholas S. Nielsen, Attorneys
for Appellee
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES GREGORY K. ORME and JILL M. POHLMAN concurred.
MORTENSEN, Judge:
¶1 When Vicki and Randall Beckham came before the district
court for a bench trial on a divorce petition, Vicki1 asked the court
to order that she be a named beneficiary under one of the then-
existing term life insurance policies on Randall. The court denied
this request, a determination with which neither party takes issue.
Despite both parties acknowledging that the policy had no value,
however, and while expressly noting that the policy was not
presented in evidence, the district court ordered Randall to
reimburse Vicki the premiums she had paid for this “asset” for
1. Our practice is to refer to parties by their first names when they
share a last name.
Beckham v. Beckham
several years to the tune of $40,000. Randall appeals, claiming the
district court erred in this award. We agree and reverse.
BACKGROUND2
¶2 During the divorce proceeding, Vicki and Randall
disputed how two term life insurance policies on Randall’s life
should be treated. Vicki asserted that the court should award her
a beneficiary interest in one of the policies. In ruling on the matter,
the district court noted that the parties had failed to provide the
court “with the policies at issue” and that it was “unclear whether
these term life insurance policies were renewable by year, or after
a number of years, or ended upon Randall’s death, or were
terminated in the event of a divorce.” The court also stated that
“Vicki’s counsel argued that they did not receive the policy in
discovery,” and citing rule 37 of the Utah Rules of Civil
Procedure, the court opined that “if that [was] the case, that issue
could have and should have been resolved through the
appropriate pretrial procedure.” See Utah R. Civ. P. 37(a)(1)(E)
(“A party . . . may request that the judge enter an order . . .
compelling discovery from a party who fails to make full and
complete discovery.”).
¶3 Although the court determined that it “may award a life
insurance beneficiary interest to a spouse upon divorce, under
general principles of law concerning the apportionment of marital
assets,” it declined to do so, reasoning that Vicki did not have a
financial need for the insurance benefits, that the parties never
reached an understanding regarding the apportionment of the life
insurance policies, and that there was “no reason to perpetuate a
2. “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.” Chesley v. Chesley, 2017 UT
App 127, ¶ 2 n.2, 402 P.3d 65 (cleaned up).
20200935-CA 2 2022 UT App 65Beckham v. Beckham
relationship between” the parties by granting Vicki a beneficiary
interest in a policy on Randall’s life. Accordingly, the court
concluded that the policies would “remain with Randall” and that
he would “continue to control the beneficiary designation going
forward.”
¶4 However, the court found that the parties had treated the
“two policies as marital assets during the marriage,” that each
party had “spent a significant amount on annual premiums,” that
the “policies were clearly part of the parties’ future planning and
provided a benefit to them,” and that the “evidence was clear that
each party used their own funds to pay for the respective
policies.”
¶5 Accordingly, the court determined that Vicki should be
reimbursed for her contribution to the premiums of one of the
policies:
[I]n the interest of fairness and equity, Vicki should
be awarded $40,000 from Randall to reimburse her
for the annual premiums she paid for the policy
over the past eight years. The testimony at trial was
very clear that each party used their own funds to
pay for the respective policies. Thus, Vicki
contributed to an asset that will remain with
Randall; it is thus fair and equitable for him to
reimburse her for the amounts she paid—amounts
that have maintained the policy and allowed
Randall to perpetuate that [p]olicy on behalf of his
newly named beneficiaries.
Randall appeals, asserting that the district court should not have
ordered reimbursement of premiums paid during the marriage.
20200935-CA 3 2022 UT App 65Beckham v. Beckham
ISSUE AND STANDARDS OF REVIEW
¶6 Randall argues that the district court erred “in invoking its
equitable powers to order [him] to reimburse [Vicki] for term life
insurance policy premiums paid during the marriage.” “A district
court has considerable discretion considering property division in
a divorce proceeding, thus its actions enjoy a presumption of
validity. We will disturb the district court’s division only if there
is a misunderstanding or misapplication of the law indicating an
abuse of discretion.” Johnson v. Johnson, 2014 UT 21, ¶ 23, 330 P.3d
704 (cleaned up). And “[w]hen a district court fashions an
equitable remedy, we review it to determine whether the district
court abused its discretion.” Collard v. Nagle Constr., Inc., 2006 UT
72, ¶ 13, 149 P.3d 348; accord Kartchner v. Kartchner, 2014 UT App
195, ¶ 14, 334 P.3d 1.
ANALYSIS
¶7 In a divorce proceeding, a district court is empowered to
enter “equitable orders relating to the children, property, debts or
obligations, and parties.” See Utah Code Ann. § 30-3-5(1)
(LexisNexis Supp. 2021). Here, the district court characterized the
life insurance policy as a marital asset. Citing Utah Code section
30-3-5, the court noted its authority to divide marital assets and
indicated that the parties had “treated” the policy as a “marital
asset[] during their marriage” and that “Vicki contributed to an
asset that will remain with Randall.”
¶8 The court explicitly acknowledged that it did not have
access to the life insurance policies because the parties did not
provide them to the court.3 Given this lacuna, the court
3. Insofar as Vicki attempts to cast the absence of the insurance
policy as a failure of Randall to disclose it, we note that Vicki had
(continued…)
20200935-CA 4 2022 UT App 65Beckham v. Beckham
acknowledged that it was “unclear whether these term life
insurance policies were renewable by year, or after a number of
years, or ended upon Randall’s death, or were terminated in the
event of a divorce.” But the court also noted that Vicki “could
have and should have” resolved the lack of production “through
the appropriate pretrial procedure,” presumably a statement of
discovery issues seeking to compel discovery. See Utah R. Civ. P.
37(a)(1)(E).
¶9 Given the court’s acknowledgment that it was unaware of
the nature of the policy, it follows that it was equally unaware
whether the policy was still in effect or if it had cash value. Indeed,
Vicki took the position at trial that the insurance policy had no
value: “[T]hese . . . term life insurance policies . . . don’t have
value. It’s contingent upon an act.” And she explicitly stated that
the policy had no “cash value” and was limited to “[j]ust the death
benefit.” Randall also took the position that the policy had “no
value.” Neither the district court’s findings of fact and conclusions
of law nor the parties’ briefs on appeal point to any record basis
on which to base a conclusion that the insurance policy retained
the burden of producing evidence of the provisions of the policy
in question. After Randall offered testimony of the policy’s cash
value—testimony we note that Vicki appeared to agree with at
trial when she characterized the policy as having no “value” apart
from its value contingent on Randall’s death, see infra ¶ 9—Vicki
had the burden of offering evidence of an alternative valuation.
See Argyle v. Argyle, 688 P.2d 468, 470–71 (Utah 1984) (stating that
if a party asserts that an asset should be valued by a different
measure, then “the burden of offering further evidence on
alternative methods of valuation” falls on that party); accord
Beesley v. Beesley, 2003 UT App 202U, para. 2.
20200935-CA 5 2022 UT App 65Beckham v. Beckham
any value. Instead, all the value related to the policy—as far as the
record indicates—was consumed during the marriage.4
¶10 Accordingly, Vicki was not entitled to reimbursement for
the premiums for the simple reason that either she or the marital
estate received the value—in the form of mitigating the risk in the
event of Randall’s death—of the premiums she paid. Short of
collecting on a claim, mitigation of risk is generally the very
nature of the benefit one receives from insurance. Vicki may
indeed be entitled to reimbursement if the premiums had
enhanced the value of Randall’s estate to her exclusion. But on the
record before us, the payment of the insurance premiums did not
enrich Randall such that he continued to enjoy—to the exclusion
of Vicki—the benefit of the premiums after the divorce. Or put
another way, there is no record evidence that Randall “is retaining
some sort of good purchased with the money” spent on the life
insurance premiums. See In re Marriage of Fluent, No. 16-1321, 2017
4. In a term life insurance policy,
[e]ach premium payment gives rise to an
enforceable contractual right of coverage for an
additional period of time. As premiums are paid
over the life of the policy, distinct property interests
in coverage for various periods of time arise. Of
those distinct property interests, only one is worth
anything in hindsight: coverage for the term during
which the insured dies.
In re Marriage of Burwell, 164 Cal. Rptr. 3d 702, 713 (Cal. Ct. App.
2013). “Prior terms of coverage only lack value in hindsight (i.e.,
when it is certain the contingency has failed). Prospectively, all
coverage terms have at least expected value.” Id. at 713 n.12. Thus,
here the policy had no value in the sense that the premium
coverage periods had expired without the contingency occurring,
and these are the very terms for which Vicki received
reimbursement.
20200935-CA 6 2022 UT App 65Beckham v. Beckham
WL 2461601, at *3 (Iowa Ct. App. June 7, 2017).5 Rather, the only
conclusion that the sparse evidence could sustain is that the
“benefit” of the insurance premiums was received by Vicki
during the corresponding terms of life insurance coverage. And
this benefit consisted of protection from the risk associated with
Randall’s potential death during each of the paid terms of the
policy—a benefit that was consumed in each term. But after each
paid term lapsed, Randall did not retain some benefit from the
premiums—or at least there is no record evidence of a retained
benefit. Thus, the premiums were not reimbursable to Vicki
because she—or the marital estate—had already received the
value of those premiums in the coverage the insurance policy
provided on Randall’s life during the marriage.
¶11 Expressed differently, the premiums were a paid-for
resource that had been consumed—like many household
expenditures—during the marriage. And like the money paid for
any other proper living expense incurred during a marriage, the
money paid for the insurance premiums was not reimbursable
upon divorce because the value of the expense associated with
that item—in this case, assurance against risk provided by
insurance premiums—was used up during the marriage. See
Heckler v. Heckler, No. FA040084101S, 2005 WL 529940, at *1–2
(Conn. Super. Ct. Jan. 27, 2005) (denying, in a divorce proceeding,
a husband’s request that his former wife reimburse him for
5. It is unclear how the district court found that Randall benefited
from the payment of premiums by allowing him to “perpetuate”
the policy for “his newly named beneficiaries.” At best, this
benefit identified by the court seems speculative because the court
had explicitly stated that it did not have access to the policies and
that it was “unclear whether these term life insurance policies
were renewable by year, or after a number of years, or ended
upon Randall’s death, or were terminated in the event of a
divorce.”
20200935-CA 7 2022 UT App 65Beckham v. Beckham
“certain living expenses he paid on the wife’s behalf during the
marriage”); see also Czepiel v. Allen, No. FA 9886060, 1999 WL
99097, at *1 (Conn. Super. Ct. Feb. 16, 1999) (“The court does not
allow reimbursement for telephone bill expenses or other
household expenses [that] were joint undertakings of their family
. . . .”). The insurance premiums Vicki paid—even if they did
proceed from her own earnings—were akin to the living expenses
that are “part and parcel” of the daily marital undertaking. See
Czepiel, 1999 WL 99097, at *2. As such, they were not reimbursable
to her upon divorce as she had already received the value she
bargained for in voluntarily assuming the expense of the
premiums.
¶12 Thus, the expenditures for the insurance premiums fell
into the category of normal living expenses voluntarily paid from
marital assets, and they were not subject to reimbursement
because they had been entirely exhausted and consumed in
paying for a marital expense, namely, buying life insurance for
Randall—from which Vicki would have benefited had Randall
died during the term of the policy. See Mortensen v. Mortensen, 760
P.2d 304, 308 (Utah 1988) (“[I]n Utah, trial courts making
‘equitable’ property division pursuant to section 30-3-5 should . . .
generally award property acquired by one spouse by gift and
inheritance during the marriage (or property acquired in
exchange thereof) to that spouse, together with any appreciation
or enhancement of its value, unless . . . the property has been
consumed . . . .” (emphasis added)); see also In re Marriage of Rolfe,
699 P.2d 79, 84 (Mont. 1985) (noting that the district court “erred
in returning the value of” certain prenuptial property that had
“long since been consumed” during the course of a fifteen-year
marriage); In re Marriage of Fluent, 2017 WL 2461601, at *3
(determining that it was “inequitable” to require a wife to
reimburse her former husband $74,000 of his own funds that he
had voluntarily used during the marriage “to maintain the
parties’ basic standard of living” and “for the benefit of both
20200935-CA 8 2022 UT App 65Beckham v. Beckham
himself and his family, without providing any accounting for
these expenditures or identifying any asset (beyond the marital
home) into which the monies were allegedly spent” (cleaned up)).
¶13 Accordingly, the district court exceeded its discretion in
ordering reimbursement where there was no evidence that
Randall continued to benefit after the divorce from the previous
payments of the premiums.
CONCLUSION
¶14 Because Vicki had already received the benefit of the
insurance premiums she paid, we conclude that the district court
exceeded its discretion in ordering Randall to reimburse Vicki
$40,000 for the premiums.
¶15 Reversed and remanded.6
6. The court ordered Randall to pay Vicki a cash payment of
$68,750 plus any gains realized from non-retirement accounts and
IRAs. This amount consisted of equalizing payments of $23,658.50
for non-retirement assets, $2,913 for IRAs, $1,000 for gains on a
non-retirement account, $1,250 for a half-interest in a burial plot,
and $40,000 for the life insurance premium reimbursement. We
note the sum of these values is $68,821.50, which is $71.50 more
than the court’s addition yielded. On remand, the court should
resolve this discrepancy.
20200935-CA 9 2022 UT App 65