Lindsey v. Lindsey , 833 Utah Adv. Rep. 16 ( 2017 )

2017 UT App 38THE UTAH COURT OF APPEALS
RICK J. LINDSEY,
Appellee,
v.
KAREN M. LINDSEY,
Appellant.
Opinion
No. 20150769-CA
Filed March 2, 2017
Fourth District Court, Heber Department
The Honorable Fred D. Howard
No. 134500010
Douglas B. Thayer and Mark R. Nelson, Attorneys
for Appellant
Dean C. Andreasen, Diana L. Telfer, Troy L. Booher,
and Julie J. Nelson, Attorneys for Appellee
JUDGE JILL M. POHLMAN authored this Opinion, in which JUDGES
STEPHEN L. ROTH and DAVID N. MORTENSEN concurred.
POHLMAN, Judge:
¶1 Rick J. Lindsey and Karen M. Lindsey were married for
almost twenty years, and during that time the value of Mr.
Lindsey’s premarital business interests substantially appreciated.
The issue on appeal is whether the trial court properly granted
summary judgment awarding those business interests solely to
Mr. Lindsey, as his separate property, during the Lindseys’
divorce proceeding. We affirm.
Lindsey v. Lindsey
BACKGROUND
¶2 Mr. and Ms. Lindsey were married in November 1996. 1
They had one child together, and they each had minor children
from prior marriages. The parties initiated divorce proceedings
in early 2013, and they obtained a decree of divorce in 2015.
¶3 Both before and during the marriage, Mr. Lindsey held
considerable business interests in the insurance industry. When
the parties married in 1996, Mr. Lindsey owned Evolution
Insurance Group and its subsidiaries (collectively, Evolution)
and was part owner of Prime Holdings Insurance Services Inc.
and its subsidiaries (collectively, Prime Holdings). In November
1997, about a year after the parties married, Mr. Lindsey’s
interests in Evolution were merged into Prime Holdings. Mr.
Lindsey then became CEO of Prime Holdings and obtained a
substantial ownership interest in that entity.
¶4 At that time, Mr. Lindsey’s business interests were valued
at approximately $3.6 million. 2 During the parties’ marriage,
those interests appreciated in value. By December 2012, Mr.
Lindsey’s equity in Prime Holdings was worth approximately $6
to $7 million. And in June 2014, Mr. Lindsey’s equity in Prime
Holdings was valued at approximately $10.9 million.
¶5 Due to Mr. Lindsey’s employment with Prime Holdings
as well as his ownership of Prime Holdings stock, the Lindseys
1. We view the facts—which are largely undisputed—and all
reasonable inferences drawn therefrom in the light most
favorable to Ms. Lindsey, against whom partial summary
judgment was granted. See Orvis v. Johnson, 2008 UT 2, ¶ 6, 177
P.3d 600.
2. The parties and the trial court used this estimated value of Mr.
Lindsey’s business interests to approximate the value of his
premarital holdings.
20150769-CA 2 2017 UT App 38Lindsey v. Lindsey
enjoyed a high standard of living during their marriage. Mr.
Lindsey was highly compensated via his annual salary, bonus,
car allowance, and vacation payout. Due to his equity in the
company, Mr. Lindsey also received large cash dividends from
Prime Holdings between 2011 and the end of 2012, which totaled
over $2 million. Because Mr. Lindsey elected to receive certain
dividends in stock rather than cash, Mr. Lindsey also received
fifty-seven shares of Prime Holdings stock between 2004 and
2012.
¶6 Ms. Lindsey was not employed outside the home at the
time of the parties’ marriage or during the marriage. Ms.
Lindsey was responsible for meeting many of the parties’
household and family needs, while Mr. Lindsey handled most of
the parties’ finances and most of the tasks related to financing
and building their marital home.
¶7 Ms. Lindsey also supported Mr. Lindsey’s efforts to
strengthen relationships with his clientele. When clients or
business associates came to visit, sometimes with their families,
Ms. Lindsey took on the additional responsibilities associated
with those visits—preparing guest rooms and welcome baskets,
cooking, cleaning, assisting in laundry, and entertaining. On one
occasion, she even loaned her car to their visiting guests. But Ms.
Lindsey did not otherwise provide services for Prime Holdings
or act as its employee.
¶8 As noted above, in early 2013 the parties initiated divorce
proceedings. They resolved by stipulation many issues related to
their separation, but they were unable to agree on the amount of
alimony to be paid to Ms. Lindsey, the division of their marital
property, and whether or how Mr. Lindsey’s business interests
would be divided.
¶9 Mr. Lindsey moved for partial summary judgment
asserting that, as a matter of law, his premarital interests in
Evolution and Prime Holdings, together with any appreciation
or enhancement of their value, were his separate property. He
20150769-CA 3 2017 UT App 38Lindsey v. Lindsey
asserted that he was presumptively entitled to retain that
property following divorce and no equitable principles called for
a different result.
¶10 To preempt any argument to the contrary, Mr. Lindsey
averred that his premarital business interests had not been
commingled with the marital estate or augmented, maintained,
or protected by any effort of Ms. Lindsey. Mr. Lindsey also
asserted that no extraordinary circumstances warranted
awarding a portion of his business interests to Ms. Lindsey,
arguing that the parties had benefitted from Mr. Lindsey’s work
efforts while married; Ms. Lindsey’s contributions to the
marriage would “be reflected in an award of alimony”; and the
rate of return on his business interests was below average for a
closely held company and attributable to his premarital holdings
rather than Mr. Lindsey’s work effort while married, particularly
given the significant salary and dividends received by Mr.
Lindsey during the marriage. Thus, according to Mr. Lindsey,
there was “no marital value” in his business interests.
¶11 In response, Ms. Lindsey did not challenge the initial
characterization of Mr. Lindsey’s business interests as his
separate property. Rather, she asserted that separate property
may become subject to equitable distribution when it has been
consumed or has lost its identity through commingling; when
“the other spouse has contributed to the enhancement,
maintenance, or protection of that property”; or when “the
distribution of separate property achieves a fair, just, and
equitable result.” Ms. Lindsey claimed that all three principles
applied and that factual disputes precluded resolution of those
issues on summary judgment.
¶12 With regard to commingling, Ms. Lindsey asserted that, at
one point in the marriage, she had been “aware that [Mr.
Lindsey] needed money for his business.” Therefore, when she
received $54,000 from the sale of real property she had owned
with her prior husband, she “turned the money over” to Mr.
20150769-CA 4 2017 UT App 38Lindsey v. Lindsey
Lindsey, who “took [it] and told [her] he put it into his
business.” Ms. Lindsey also alleged that, among other things,
Mr. Lindsey’s acquisition of fifty-seven shares of Prime Holdings
stock during the parties’ marriage created a fact issue as to
commingling because “[a]ll dividends ha[d] been historically
used in the marriage as marital income.”
¶13 As to her enhancement of Mr. Lindsey’s business
interests, Ms. Lindsey cited her “efforts to grow [the] business”
by entertaining and hosting business-related guests; discussing
Mr. Lindsey’s business in conversations with him; supporting
Mr. Lindsey in his profession; and enabling Mr. Lindsey to
attend to his business by caring for the parties’ child and other
children from prior marriages, maintaining the parties’
residence, and attending to other household duties.
¶14 Finally, Ms. Lindsey asserted that the court could “award
an interest in [separate property] when equity requires.” Ms.
Lindsey argued, without elaboration, that the trial court was
required to consider several factors before fashioning an
equitable property division, and “it [would be] more appropriate
. . . to hear the equitable issues more fully at trial where the
[c]ourt can observe the parties’ demeanor” and “hear all the
evidence.” Ms. Lindsey asserted that if the court awarded Mr.
Lindsey’s business interests to him, prior to trial, the court might
not be able to achieve an equitable outcome, but she did not
specify how that might occur or point to disputed facts that
would bar summary judgment on that ground.
¶15 On reply, Mr. Lindsey addressed each allegedly disputed
fact in turn. With regard to commingling, Mr. Lindsey submitted
a forensic accountant’s declaration that the fifty-seven shares of
Prime Holdings received during the marriage were not marital
income but “a return on Mr. Lindsey’s premarital stock
holdings.” Regarding the $54,000 allegedly provided to him for
investment in Prime Holdings, Mr. Lindsey pointed to Ms.
Lindsey’s deposition, in which she stated that she did not
20150769-CA 5 2017 UT App 38Lindsey v. Lindsey
remember “exactly the conversation [they] had the day [she]
handed [Mr. Lindsey] the check,” and that Mr. Lindsey “[c]ould
have done anything” with it—like depositing it into “[s]ome
joint account of his” or “possibl[y]” depositing it into her marital
account. Mr. Lindsey claimed the $54,000 went toward “marital
expenses,” and he submitted a declaration from Prime Holdings’
CFO, who reported that none of the Lindseys’ “personal funds
. . . were invested in Prime Holdings” during the relevant year.
¶16 As to the alleged enhancement of his business, Mr.
Lindsey noted that neither Ms. Lindsey’s household duties nor
her clientele-related activities were in dispute. According to Mr.
Lindsey, even assuming Ms. Lindsey’s claims in that regard
were correct, she had never been involved “in the creation,
organization, development, or growth of [his] business nor was
she ever employed by the business,” and her efforts did not
warrant an equitable distribution of his property.
¶17 During the summary judgment hearing, the parties
agreed that if Mr. Lindsey retained his business interests as part
of the property division, alimony would be awarded to Ms.
Lindsey in the divorce decree. Mr. Lindsey’s counsel conceded
that “alimony undoubtedly will be ordered in this case,” and
Ms. Lindsey’s counsel concurred, noting that “this [case] has an
alimony portion to it.” Ms. Lindsey’s counsel did not assert that
the court might be unable to award sufficient alimony following
trial or suggest that a decision regarding Mr. Lindsey’s business
interests needed to be postponed on that basis.
¶18 At the close of the hearing, the trial court granted the
motion for partial summary judgment. The court later issued a
written decision, which set forth the court’s conclusions that
specific facts were undisputed and outlined the court’s rationale
for rejecting Ms. Lindsey’s arguments.
¶19 With regard to commingling, the court concluded that
“there is no evidence to support [Ms.] Lindsey’s allegation that
the [$54,000] from the sale of her premarital residence [was]
20150769-CA 6 2017 UT App 38Lindsey v. Lindsey
invested in or loaned to Prime Holdings.” In addition, “[b]ased
on the evidence presented,” the fifty-seven shares of stock
received by Mr. Lindsey during the marriage constituted a
return on his premarital business interests and “d[id] not,
therefore, constitute personal income earned by Mr. Lindsey
during the marriage. Accordingly, the [s]hares do not constitute
a commingling of marital income with Mr. Lindsey’s premarital
business interests in Prime Holdings.”
¶20 With respect to her contribution to the business, the court
concluded, among other things, that “Ms. Lindsey has had no
involvement in the operation of Mr. Lindsey’s business interests.
Additionally, Ms. Lindsey’s assistance in entertaining business
clients was infrequent and had no material impact in
augmenting or enhancing the value of Mr. Lindsey’s business
interests.” Thus, the court determined that Ms. Lindsey’s efforts
were insufficient to support “the conclusion that [she]
augmented or enhanced the value of Mr. Lindsey’s business
interests.”
¶21 Last, with regard to the exception for extraordinary
circumstances, the court concluded that “a party must be
allowed a reasonable return on . . . premarital capital” before
“concluding the increase in value was created during the
marriage and is deemed to be marital property.” Given the low
rate of return on Mr. Lindsey’s business interests, the court
attributed all appreciation thereof to Mr. Lindsey’s premarital
holdings “rather than his [marital] work effort,” particularly
given the significant salary and dividends Mr. Lindsey received,
which “drew down the value of Prime Holdings.” The court
noted that the dividends alone totaled over $2 million. The court
also determined, “[b]ased on the uncontroverted evidence,” that
Mr. Lindsey was compensated “commensurate with his work
effort” and did not “leav[e] money in Prime Holdings to grow
the business.” There was thus “no marital value in Prime
Holdings,” and the trial court therefore awarded Mr. Lindsey’s
business interests solely to him, as his separate property.
20150769-CA 7 2017 UT App 38Lindsey v. Lindsey
¶22 Trial was then held on the remaining issues—alimony
and division of the marital estate. Following the trial, the court
awarded substantial monthly alimony to Ms. Lindsey and
divided the marital estate in a manner that heavily favored her,
largely in line with Mr. Lindsey’s proposed distribution. While
Ms. Lindsey received substantially more assets than debt, Mr.
Lindsey received substantially more debt than assets. Indeed,
Mr. Lindsey was required to assume nearly all marital debt, a
substantial figure attributable primarily to the parties’ marital
home.
ISSUES AND STANDARD OF REVIEW
¶23 Ms. Lindsey challenges the trial court’s grant of partial
summary judgment, which awarded Mr. Lindsey’s business
interests solely to him, as his separate property. Ms. Lindsey
claims that the ruling was premature and substantively
incorrect. She asserts that, had the court waited until trial and
properly addressed the issue, she would have been awarded
some portion of the business’s appreciated value based on her
contributions or as necessary to achieve a fair, just, and equitable
property division.
¶24 Summary judgment is appropriate “if the moving party
shows that there is no genuine dispute as to any material fact
and the moving party is entitled to judgment as a matter of law.”
Utah R. Civ. P. 56(a). 3 Ordinarily “[a]n appellate court reviews a
trial court’s legal conclusions and ultimate grant or denial of
3. Utah Rule of Civil Procedure 56 was amended in 2015, after
the motion for summary judgment was argued and decided. But
because the 2015 amendments did not alter “substantive Utah
law” with regard to rule 56, we cite the current version of the
rule. Utah R. Civ. P. 56 advisory committee notes; accord Porter v.
EB Golf LLC, 2016 UT App 82, ¶ 7 n.3, 372 P.3d 709.
20150769-CA 8 2017 UT App 38Lindsey v. Lindsey
summary judgment for correctness,” see Orvis v. Johnson, 2008
UT 2, ¶ 6, 177 P.3d 600 (citation and internal quotation marks
omitted), and the parties do not suggest this court should
deviate from that general rule for purposes of this appeal.
¶25 However, we view the appropriate standard of review in
this case as an unsettled question. Clearly, we apply a
correctness standard when reviewing a court’s determination
that there were no genuine issues of material fact. But it is less
clear whether a court’s legal conclusions and grant or denial of
summary judgment regarding characterization and distribution
of property are also reviewed for correctness or are afforded the
same deference as would have applied had those determinations
been made at the conclusion of a trial.
¶26 We note that, as a general principle, trial courts “have
considerable discretion concerning property distribution in a
divorce proceeding and their determinations enjoy a presumption
of validity.” Dahl v. Dahl, 2015 UT 79, ¶ 119 (citation and internal
quotation marks omitted). “Determining and assigning values to
marital property” is a matter committed to the trial court, over
which it is permitted “broad latitude, and its judgment is not to
be lightly disturbed, so long as it exercises its discretion in
accordance with the standards set by this court.” Rappleye v.
Rappleye, 855 P.2d 260, 263 (Utah Ct. App. 1993) (citations and
internal quotation marks omitted). As a result, we generally
“defer to a trial court’s categorization and equitable distribution
of separate property,” Keyes v. Keyes, 2015 UT App 114, ¶ 29, 351
P.3d 90, and uphold its determinations in that regard “unless a
clear and prejudicial abuse of discretion is demonstrated,” see
Dahl, 2015 UT 79, ¶ 119 (citation and internal quotation marks
omitted).
¶27 No Utah appellate decision has addressed whether this
deference is limited to determinations made after a trial on all of
the substantive issues, or whether it also applies on summary
judgment to rulings based on undisputed facts. Moreover, as we
20150769-CA 9 2017 UT App 38Lindsey v. Lindsey
note below, Utah appellate courts have taken different
approaches to the standard of review at this juncture, where
deferential and correctness standards appear to intersect. And
those decisions do not offer clear principles for determining
whether deference is afforded on summary judgment in a
specific context.
¶28 In some instances, a singular standard of correctness has
been applied on review of summary judgment, although
deference may have been afforded had the court resolved the
issue following a trial. See, e.g., Southam v. South Despain Ditch
Co., 2014 UT 35, ¶¶ 9, 24, 337 P.3d 236 (applying a correctness
standard on the issue of waiver); Bahr v. Imus, 2011 UT 19,
¶¶ 12–18, 250 P.3d 56 (applying a correctness standard on the
issue of equitable estoppel). In other cases, a measure of
deference has been folded into the standard of review on
summary judgment, to account for the discretion afforded trial
courts on the ultimate issue. See, e.g., Jones v. Farmers Ins. Exch.,
2012 UT 52, ¶¶ 6, 13, 286 P.3d 301 (including a deferential
standard on the issue of whether the validity of the insurance
claim was fairly debatable); IHC Health Services, Inc. v. D & K
Mgmt., Inc., 2003 UT 5, ¶ 6, 73 P.3d 320 (including a deferential
standard on the issue of waiver); Withers v. Jepsen, 2011 UT App
8, ¶¶ 2, 5–6, 246 P.3d 1215 (examining whether the district court
exceeded its discretion by declining to make equitable
adjustments in partition and sale matters).
¶29 The latter approach may be appropriate when summary
judgment turns on a trial court’s determinations regarding the
equitable distribution of separate property. Undoubtedly, a
strong basis for affording deference is trial courts’ superior
advantage in observing witnesses and resolving factual disputes;
and that advantage does not exist on summary judgment, which,
“by definition, cannot resolve genuine disputes of fact.” See Bahr,
2011 UT 19, ¶ 15. But the discretion afforded trial courts to
characterize and distribute separate and marital property does
not rest solely on their superior advantage in fact-finding. That
20150769-CA 10 2017 UT App 38Lindsey v. Lindsey
discretion also stems from the broad range of permissible
avenues in reaching an equitable property division, a matter
over which the trial court has substantial latitude, for “[t]here is
no fixed formula upon which to determine a division of assets in
a divorce action.” See Rappleye, 855 P.2d at 263. A trial court’s
judgment on these matters need only fall within the spectrum of
appropriate resolutions, and we see no reason to circumscribe
that range more tightly at summary judgment than we would
post-trial.
¶30 However, we need not decide which standard—deference
or correctness—more appropriately fits the trial court’s legal
conclusions and summary judgment ruling in this case because
even applying a correctness standard, giving no deference to the
trial court’s decision, we would still affirm the trial court’s grant
of summary judgment awarding Mr. Lindsey’s business interests
to him, as his separate property.
ANALYSIS
¶31 When distributing “marital property in a divorce
proceeding, the overriding consideration is that the ultimate
division be equitable—that property be fairly divided between
the parties.” Granger v. Granger, 2016 UT App 117, ¶ 15, 374 P.3d
1043 (brackets, citation, and internal quotation marks omitted).
To that end, a trial court must first “identify the property in
dispute and determine whether it is marital or separate.” Dahl v.
Dahl, 2015 UT 79, ¶ 121 (brackets, citation, and internal quotation
marks omitted). Marital property ordinarily includes “all
property acquired during marriage,” “whenever obtained and
from whatever source derived.” Dunn v. Dunn, 802 P.2d 1314,
1317–18 (Utah Ct. App. 1990) (citation and internal quotation
marks omitted). Separate property ordinarily includes premarital
property, gifts, and inheritances, including any appreciation that
may accrue during the marriage. See Dahl, 2015 UT 79, ¶ 143;
Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988).
20150769-CA 11 2017 UT App 38Lindsey v. Lindsey
¶32 The presumption is that marital property will be divided
equally while separate property will not be divided at all. See
Dahl, 2015 UT 79, ¶ 121; Dunn, 802 P.2d at 1323. Married persons
have a right to separately own and enjoy property, and that right
does not dissipate upon divorce. See Mortensen, 760 P.2d at 308.
Thus, equity generally requires that “each party retain the
separate property he or she brought into the marriage, including
any appreciation” thereof. Dunn, 802 P.2d at 1320, 1323; accord
Dahl, 2015 UT 79, ¶ 143; Mortensen, 760 P.2d at 308.
¶33 But separate property “is not totally beyond a court’s
reach.” Elman v. Elman, 2002 UT App 83, ¶ 19, 45 P.3d 176(brackets, citation, and internal quotation marks omitted). Before
carving property out of the marital estate, a trial court must
consider whether circumstances warrant an equitable override of
the separate-property retention rule. See Henshaw v. Henshaw,
2012 UT App 56, ¶ 15, 271 P.3d 837. Three circumstances have
been identified under Utah law as supporting an award of
separate property at the time of divorce. These exceptions are
when separate property has been commingled; when the other
spouse has augmented, maintained, or protected the separate
property; and in extraordinary situations when equity so
demands. See Mortensen, 760 P.2d at 308; Dunn, 802 P.2d at 1320.
The latter two exceptions are at issue here. 4
4. The first exception—commingling—is not at issue on appeal
but was addressed during the proceedings below. Ms. Lindsey
asserted that factual disputes as to commingling precluded
summary judgment in favor of Mr. Lindsey, citing $54,000 she
allegedly turned over to Mr. Lindsey for investment in his
business and fifty-seven shares of Prime Holdings stock Mr.
Lindsey received during the marriage. On appeal, Ms. Lindsey
does not challenge the trial court’s dismissal of her commingling
claim. Instead, she asserts for the first time that factual disputes
as to the $54,000 and the fifty-seven shares also precluded
summary judgment as to the remaining exceptions. Because
(continued…)
20150769-CA 12 2017 UT App 38Lindsey v. Lindsey
I. The Contribution Exception
¶34 Ms. Lindsey asserts that the trial court incorrectly
determined, “on summary judgment based on undisputed facts,
that Ms. Lindsey’s contributions to Mr. Lindsey’s business . . .
were infrequent and immaterial” and were “insufficient to
augment or enhance the value of Mr. Lindsey’s business
interests as a matter of law.” According to Ms. Lindsey, the trial
court “misapplied the undisputed facts to governing case law”
and erroneously “remov[ed] the parties’ largest asset from the
marital pie, leaving such an equitable discrepancy[] that even if
Ms. Lindsey were awarded the entire marital estate, [her award]
would not come close to equaling the size of the now missing
piece of the pie.”
¶35 Under the contribution exception, a spouse’s separate
property may be subject to equitable distribution when “the
other spouse has by his or her efforts or expense contributed to
the enhancement, maintenance, or protection of that property,
thereby acquiring an equitable interest in it.” Mortensen, 760 P.2d
at 308. This exception may be satisfied when one spouse brings
assets into the marriage and the other spouse’s prudent
investment of those assets substantially increases their value, see
Dubois v. Dubois, 504 P.2d 1380, 1381 (Utah 1973), or when
marital funds are expended or marital debt is incurred for the
benefit of one spouse’s separate property, see Schaumberg v.
Schaumberg, 875 P.2d 598, 602–03 (Utah Ct. App. 1994). In
addition, this court has contemplated that the exception might
apply when one spouse works for a business owned by the other
(…continued)
those arguments were not “presented to the district court in such
a manner that the court had a meaningful opportunity to rule on
[them],” we decline to address them on appeal. See Dahl v. Dahl,
2015 UT 79, ¶ 207 (citation and internal quotation marks
omitted).
20150769-CA 13 2017 UT App 38Lindsey v. Lindsey
spouse but is not “paid a wage or salary,” see Rappleye v.
Rappleye, 855 P.2d 260, 262–63 (Utah Ct. App. 1993), or when a
spouse elects to forgo salary or related compensation that would
have benefited the marriage so that those funds may be
reinvested in his or her separate business, see Keyes v. Keyes, 2015
UT App 114, ¶ 30, 351 P.3d 90. Under such circumstances, one
spouse’s effort or investment may render the other spouse’s
underlying asset, its appreciated value, or some portion thereof
subject to equitable distribution. See, e.g., Schaumberg, 875 P.2d at
602–03.
¶36 While spouses often contribute to one another’s financial
success in a variety of ways, Utah law draws a line between
contributions that qualify as “enhancement, maintenance or
protection” of a spouse’s separate property and those that do
not. See Jensen v. Jensen, 2009 UT App 1, ¶¶ 11, 16, 203 P.3d 1020(citation and internal quotation marks omitted). Under Utah law,
perhaps the most common type of spousal assistance—taking on
some measure of household or family responsibilities to allow
the other spouse to spend time enhancing the value of his or her
separate property—has been rejected as a standalone basis for
awarding separate property under the contribution theory. See
id. ¶ 16.
¶37 As this court concluded in Jensen, one spouse’s efforts to
“maintain[] the household,” provide childcare, and run a part-
time business that “contributed to [the] family finances” were
insufficient to justify awarding even “part” of the appreciated
value of the other spouse’s interest in the corporation of which
he was president. Id. ¶¶ 4, 10–11, 15–16 (internal quotation
marks omitted). Although the wife’s efforts may have enabled
her husband to devote his attention to his employment, she had
not sufficiently contributed to the increase in value of the
corporation’s equity: “Wife did not assist in running the business
nor contribute in any way to its increase in equity. Moreover, it
[was] unclear whether the increase in equity was due to
anything other than inflation.” Id. ¶ 16. Likewise, in Kunzler v.
20150769-CA 14 2017 UT App 38Lindsey v. Lindsey
Kunzler, the contribution exception was not triggered by one
spouse’s assumption of household responsibilities, which
allowed the other spouse “to focus his time and energy on
preserving and increasing the value” of his separate property.
2008 UT App 263, ¶¶ 19 & n.5, 32, 37, 190 P.3d 497.
¶38 The division of labor among married parties may take any
number of forms, and the give-and-take often inherent in marital
relationships is generally not a sufficient basis for judicially
rewriting title to property. The presumption that parties retain
their separate property at divorce would be rendered largely
irrelevant if rebutted by any spousal effort that freed the other
spouse to work on his or her separate property. Thus, for
purposes of this exception, direct involvement with or financial
expenditures toward a spouse’s separate property appear to be
key.
¶39 In this case, Ms. Lindsey was undisputedly responsible
for meeting many of the parties’ household and family needs
throughout the marriage. She left some responsibilities to Mr.
Lindsey, but she was “focus[ed] on caring for the parties’ child
and managing the maintenance and upkeep of the household,”
and her efforts enabled Mr. Lindsey to focus more freely on his
work. However, as set forth above, such efforts cannot
themselves support an award of Mr. Lindsey’s business interests
for purposes of this exception.
¶40 The undisputed evidence before the trial court was that
Ms. Lindsey was not involved in the creation, organization, or
ongoing affairs of Mr. Lindsey’s business. While Ms. Lindsey
helped Mr. Lindsey strengthen relationships with his clientele,
and on several occasions hosted and entertained his clients, she
did not identify any concrete benefit that accrued to Mr.
Lindsey’s business interests due to her efforts nor did she point
to any other involvement with or services she allegedly provided
to Prime Holdings, and it is undisputed that she never acted as
its employee. Moreover, Ms. Lindsey did not contend that Mr.
20150769-CA 15 2017 UT App 38Lindsey v. Lindsey
Lindsey elected to forgo salary or other compensation that
would have benefited the marriage so that those funds could be
reinvested in his business, cf. Keyes v. Keyes, 2015 UT App 114,
¶ 30, 351 P.3d 90; supra ¶ 33 n.4, and it was undisputed that Mr.
Lindsey received significant compensation as well as dividends
during the marriage, which were treated as marital income and
thus benefited both parties.
¶41 The trial court thus correctly ruled, as a matter of law,
that Ms. Lindsey’s household and family responsibilities,
coupled with her intermittent assistance in entertaining and
hosting business clients, did not enhance, maintain, or protect
Mr. Lindsey’s business interests for purposes of the contribution
exception. As noted above, we generally “defer to a trial court’s
categorization and equitable distribution of separate property,”
Keyes, 2015 UT App 114, ¶ 29, and the court’s determinations in
that regard are presumptively valid, see Dahl v. Dahl, 2015 UT 79,
¶ 119. On this record, however, the trial court properly
concluded that it had no discretion to award a portion of Mr.
Lindsey’s business interests. Even “view[ing] the facts and all
reasonable inferences drawn therefrom in the light most
favorable to” Ms. Lindsey, see Jones & Trevor Mktg., Inc. v. Lowry,
2012 UT 39, ¶ 9, 284 P.3d 630 (citation and internal quotation
marks omitted), she did not enhance, maintain, or protect the
value of Mr. Lindsey’s business interests for purposes of the
contribution exception.
¶42 Ms. Lindsey argues otherwise, citing Dunn v. Dunn, 802
P.2d 1314 (Utah Ct. App. 1990), and Elman v. Elman, 2002 UT
App 83, 45 P.3d 176, but those cases do not support her claim.
Dunn involved a corporation that was presumptively marital
property because it was “established during the marriage.” See
Dunn, 802 P.2d at 1317–18. The general rule requiring equal
division of marital property therefore applied, particularly given
both spouses’ contributions to the corporation and one spouse’s
unpaid “bookkeeping and secretarial services” and “sole
responsibility of running the household and managing the
20150769-CA 16 2017 UT App 38Lindsey v. Lindsey
household accounts.” See id. at 1318. Because the corporation
was properly considered marital property, subject to a fifty-fifty
split, the trial court had erred in concluding otherwise. See id.; see
also Lee v. Lee, 744 P.2d 1378, 1380–81 (Utah Ct. App. 1987)
(reversing and remanding for award of an “equitable share of
the corporation,” which was “established after the parties’
marriage” and the value of which “was actualized during the
marriage”).
¶43 This court’s decision in Elman is similarly inapplicable to
the contribution exception. In Elman, the trial court determined
that neither the commingling nor the contribution exception had
been satisfied. 2002 UT App 83, ¶ 20. Nevertheless, the trial court
awarded the wife a portion of the husband’s separate property,
and the issue on appeal was whether that award could be
supported under the third exception—achievement of a fair and
equitable result under extraordinary circumstances. Id. ¶¶ 19–20,
30. As in Dunn, the discussion and ruling in Elman was not tied
to the contribution exception, see id., and thus offers no support
for Ms. Lindsey’s position here. 5
5. Dunn v. Dunn, 802 P.2d 1314 (Utah Ct. App. 1990), and Elman
v. Elman, 2002 UT App 83, 45 P.3d 176, have occasionally been
referenced in the context of the contribution exception. See, e.g.,
Jensen v. Jensen, 2009 UT App 1, ¶ 14, 203 P.3d 1020 (“Mortensen,
Dunn, and Elman appear to require more active participation and
contribution by the nonowner spouse . . . .”). But the rules
discussed in Dunn and Elman are specific to the issues before the
court in each instance. See Child v. Child, 2008 UT App 338, ¶ 10
n.5, 194 P.3d 205 (“[T]he award in Dunn was based on a business
established during the marriage. When the Dunn court evaluated
a premarital asset, on the other hand, it acknowledged the rule
[that parties generally retain the separate property they brought
into the marriage, including any appreciation of that property].”
(citation omitted)), rev’d on other grounds, 2009 UT 17, ¶¶ 2–3, 206
P.3d 633 (per curiam).
20150769-CA 17 2017 UT App 38Lindsey v. Lindsey
¶44 Ms. Lindsey also argues that the trial court’s ruling
erroneously excluded “the parties’ largest asset” from the
marital estate, such that Ms. Lindsey could not receive an
equitable apportionment regardless of how the estate was
divided. But separate property is usually excluded when
determining whether a property division is equitable. See
Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988). “The
remaining property should be divided equitably between the
parties,” and “[a]ny significant disparity in the division of [that]
property should be based on an equitable rationale other than on
the sole fact that one spouse is awarded his or her” separate
property. Id. The trial court thus correctly concluded that Ms.
Lindsey’s efforts did not support an award of Mr. Lindsey’s
business interests under the contribution exception.
II. The Extraordinary Circumstances Exception
¶45 Ms. Lindsey also challenges the trial court’s decision not
to award a portion of Mr. Lindsey’s business interests to her
under the general exception for extraordinary circumstances.
According to Ms. Lindsey, the trial court limited “application of
the equity exception to . . . providing Mr. Lindsey a ‘reasonable
return’ on his premarital [business] interest[s], rather than
applying the . . . exception to the equities of the entire matter at
the conclusion” of trial. She asserts that the relatively low rate of
return earned by Mr. Lindsey on his business interests did not
preclude an award on equitable grounds, and the court was
required to wait until trial to determine whether Mr. Lindsey’s
business interests could be awarded solely to him. In Ms.
Lindsey’s view, the post-trial property division created a
“drastic imbalance of equities” requiring that the award of Mr.
Lindsey’s business interests be overturned.
¶46 Under Utah law, a spouse’s separate property may be
awarded to the other spouse “in extraordinary situations where
equity so demands.” Elman v. Elman, 2002 UT App 83, ¶ 19, 45
P.3d 176 (citation and internal quotation marks omitted). The bar
20150769-CA 18 2017 UT App 38Lindsey v. Lindsey
for establishing an extraordinary situation is high, traditionally
requiring that “invasion of a spouse’s separate property” is “the
only way to achieve equity.” Kunzler v. Kunzler, 2008 UT App
263, ¶ 35, 190 P.3d 497. A quintessential extraordinary situation
arises when a spouse owns separate property but lacks income
to provide alimony; in that circumstance, “an equitable
distribution of the [separate property] would be well within the
trial court’s discretion.” See id. ¶ 37; see also Burt v. Burt, 799 P.2d
1166, 1169 (Utah Ct. App. 1990) (“The court may award an
interest in the inherited property to the non-heir spouse in lieu of
alimony.”). An extraordinary situation has also arisen under
“very unique” circumstances in which, absent the exception, a
husband would have shared in profits his wife created as to their
marital property, but she would not have shared in profits he
created—and which she enabled him to create—with respect to
his separate property. Elman, 2002 UT App 83, ¶ 24 & n.5.
¶47 Depending on the facts of a specific case, a court might
take into account the rate of return earned on separate property
during the marriage when determining whether an
extraordinary situation exists or in calculating the amount of any
such award. See, e.g., id. ¶¶ 20, 26, 29–30 (affirming an award of
“a small share of the appreciation on [the husband’s] partnership
interests,” which was “only above a reasonable rate of
appreciation”). But an award of separate property may also be
independent of any rate of return earned on the property during
the marriage. See Henshaw v. Henshaw, 2012 UT App 56, ¶ 20 n.7,
271 P.3d 837 (rejecting the argument that, because the spouse’s
separate property declined in value during the marriage, the
other spouse could not receive an equitable interest under the
“extraordinary situations” exception (citation and internal
quotation marks omitted)). If a court were to award separate
property due to a spouse’s inability to pay alimony, for example,
that award could well be made irrespective of the rate of return
earned on the property during the marriage.
20150769-CA 19 2017 UT App 38Lindsey v. Lindsey
¶48 In this case, Ms. Lindsey asserts the trial court improperly
rejected her claim of extraordinary circumstances based solely
on the business interests’ low rate of return. As noted in the trial
court’s written decision, the court considered the “rate of return”
on Mr. Lindsey’s business interests, concluded that the rate was
“well below the typical . . . return . . . for a closely held
business,” and awarded Mr. Lindsey’s business interests solely
to him. But that was not the entirety of the trial court’s ruling.
The court also concluded that any appreciation on Mr. Lindsey’s
business interests was, given the low rate of return, attributable
to his premarital assets rather than his work effort during the
marriage; Mr. Lindsey was compensated commensurate with his
work effort during the marriage; Mr. Lindsey was not
undercompensated in an effort to grow the business; and the
amount of compensation and dividends Mr. Lindsey received
(which benefitted both parties) far exceeded the increase in the
value of his equity. Ms. Lindsey does not challenge any of these
conclusions or assert that the rate of return could not be
considered in determining whether extraordinary circumstances
existed.
¶49 Moreover, even assuming the trial court had erroneously
considered only the low rate of return, that would not alter the
outcome on appeal. “We may affirm a grant of summary
judgment upon any grounds apparent in the record.” McBroom
v. Child, 2016 UT 38, ¶ 18 (citation and internal quotation marks
omitted). The overriding consideration for a property division
generally, and the underlying purpose of the equitable
circumstances exception, is to ensure an equitable outcome. Cf.
Granger v. Granger, 2016 UT App 117, ¶ 15, 374 P.3d 1043. As set
forth below, the record reveals no inequity here.
¶50 Ms. Lindsey summarily argued in the trial court that
granting summary judgment for Mr. Lindsey could prevent an
equitable outcome, without specifying how that might occur or
pointing to any disputed facts bearing on that question. In
contrast, Mr. Lindsey presented evidence that no inequity would
20150769-CA 20 2017 UT App 38Lindsey v. Lindsey
follow from an award of summary judgment in his favor, as it
was undisputed that the parties had benefitted from Mr.
Lindsey’s work efforts while married and Ms. Lindsey would be
awarded alimony as part of the final divorce decree.
¶51 Specifically, Mr. Lindsey demonstrated that he was highly
compensated during the marriage, which enabled the parties to
enjoy a high standard of living, and there was no contention that
Mr. Lindsey was undercompensated or that he reduced his
salary so that those funds could be reinvested to enhance his
equity in the business. Cf. Keyes v. Keyes, 2015 UT App 114, ¶ 30,
351 P.3d 90. In addition, it was undisputed that Ms. Lindsey
enjoyed the benefit of payouts from Mr. Lindsey’s business
interests during the marriage; over $2 million in dividends were
paid to Mr. Lindsey due to his ownership of Prime Holdings
stock and, in Ms. Lindsey’s words, those dividends were “used
in the marriage as marital income.”
¶52 Ms. Lindsey thus shared substantially in the benefits of
Mr. Lindsey’s business interests during the marriage. Ms.
Lindsey’s limited argument in the trial court failed to set forth
any basis for concluding that equity also required awarding
some portion of Mr. Lindsey’s business interests to her. Ms.
Lindsey bore the burden of establishing an exception to the
general rule that each party retains the separate property he or
she brought into the marriage, including any appreciation of that
property, cf. Elman v. Elman, 2002 UT App 83, ¶¶ 18, 32, 45 P.3d
176, and she did not “set forth [any] specific facts showing that
there [was] a genuine issue for trial” on this matter, see Jones
& Trevor Mktg., Inc. v. Lowry, 2012 UT 39, ¶ 30, 284 P.3d 630(citation and internal quotation marks omitted).
¶53 On appeal, Ms. Lindsey fleetingly asserts that her
contributions to the marriage and to the business “cut in favor”
of an award of Mr. Lindsey’s business interests for purposes of
the equitable circumstances exception. Even assuming this single
sentence sufficiently briefed Ms. Lindsey’s argument, but see
20150769-CA 21 2017 UT App 38Lindsey v. Lindsey
West Jordan City v. Goodman, 2006 UT 27, ¶ 29, 135 P.3d 874(suggesting otherwise), we are unaware of any Utah appellate
decision characterizing a spouse’s assumption of substantial
household and childcare duties, coupled with the sort of limited
involvement and well-established premarital business present
here, as an extraordinary circumstance. See, e.g., Jensen v. Jensen,
2009 UT App 1, ¶¶ 16–17, 203 P.3d 1020 (concluding that the
spouse’s household, childcare, and part-time work efforts were
insufficient to support an award of separate property); Kunzler v.
Kunzler, 2008 UT App 263, ¶ 37, 190 P.3d 497 (concluding that
“an equitable distribution . . . would be well within the trial
court’s discretion” given the spouse’s household duties and the
other spouse’s potential inability to provide sufficient alimony);
Elman, 2002 UT App 83, ¶¶ 24 & n.5, 30 (affirming an award of
separate property given the spouse’s active management of the
household and the “very unique” situation in which the spouse’s
efforts substantially increased the value of marital property); cf.
Savage v. Savage, 658 P.2d 1201, 1202–04 (Utah 1983) (upholding a
division of property given the spouse’s household and childcare
duties and the fact that “[v]irtually the entire present value of the
corporations was developed during the marriage”). Under these
circumstances, Ms. Lindsey’s contributions did not create an
extraordinary situation.
¶54 Ms. Lindsey also asserts the trial court was required to,
but did not, consider several additional factors in determining
whether the exception applied, including “the parties’ health,
[their] standard of living and respective financial conditions,
their needs and earning capacities, the duration of the marriage,
what the parties gave up by the marriage, and the relationship
the property division has with the amount of alimony awarded.”
(Citing Naranjo v. Naranjo, 751 P.2d 1144, 1147–48 (Utah Ct. App.
1988).) Ms. Lindsey merely recites these factors without applying
them to the facts of her case. She does not indicate how the
alleged failure to consider these factors led to an inequitable
result, nor does she cite to any part of the record containing
evidence or argument on these issues. Ms. Lindsey similarly
20150769-CA 22 2017 UT App 38Lindsey v. Lindsey
claims that the trial court was required to delay its decision and
“hear[] all equitable issues more fully at trial,” but makes no
preserved argument, see supra ¶ 33 n.4, as to how that delay
would have led to a different result. Thus, these arguments are
inadequately briefed. See Goodman, 2006 UT 27, ¶ 29 (“A brief
must go beyond providing conclusory statements and fully
identify, analyze, and cite its legal arguments.” (citation and
internal quotation marks omitted)). “[A]n appellant who fails to
adequately brief an issue will almost certainly fail to carry its
burden of persuasion on appeal,” Bank of America v. Adamson,
2017 UT 2, ¶ 12 (citation and internal quotation marks omitted),
and that is the case here.
¶55 Finally, Ms. Lindsey again points to the overall disparity
between the value of the property awarded to her and the value
of the property awarded to Mr. Lindsey, if his separate property
is included. But as we have discussed previously, supra ¶ 44, Mr.
Lindsey’s separate property is not taken into account when
determining whether the property division was equitable.
Accordingly, the trial court correctly concluded that the case did
not present extraordinary circumstances supporting an equitable
adjustment in the ownership of Mr. Lindsey’s business interests.
CONCLUSION
¶56 The trial court correctly granted summary judgment
awarding Mr. Lindsey’s business interests to him as separate
property. No undisputed facts prevented the trial court from
making that determination at the summary judgment stage. Ms.
Lindsey’s efforts were insufficient to satisfy the contribution
exception, and there were no extraordinary circumstances
warranting an award of Mr. Lindsey’s business interests to Ms.
Lindsey. Accordingly, the judgment of the trial court is affirmed.
20150769-CA 23 2017 UT App 38