DeAvila v. DeAvila ( 2017 )

2017 UT App 146THE UTAH COURT OF APPEALS
CRISTY DEAVILA,
Appellant,
v.
PERICLES DEAVILA,
Appellee.
Opinion
No. 20160024-CA
Filed August 10, 2017
Second District Court, Farmington Department
The Honorable Michael G. Allphin
No. 144700136
Ben W. Lieberman, Attorney for Appellant
Stacy J. McNeill, Eric B. Vogeler, and Jenna Hatch,
Attorneys for Appellee
JUDGE JILL M. POHLMAN authored this Opinion, in which JUDGES
GREGORY K. ORME and J. FREDERIC VOROS JR. concurred.1
POHLMAN, Judge:
¶1 Cristy DeAvila, now known as Cristy Brown, appeals the
trial court’s division of marital assets under a decree of divorce.
We affirm.
BACKGROUND
¶2 Brown and Pericles DeAvila married in 2004, separated in
2013, and divorced in 2015. At a one-day bench trial, the parties
1. Judge J. Frederic Voros Jr. participated in this case as a
member of the Utah Court of Appeals. He retired from the court
before this decision issued.
DeAvila v. DeAvila
disputed, among other things, the division of two assets relevant
to this appeal, namely, the insurance proceeds stemming from
the destruction of a vehicle (the Lexus) and the stock from
DeAvila’s company (the Sector 10 stock).
¶3 At trial, Brown took the position that the Lexus was her
separate property and that she should retain all of the insurance
proceeds. Brown had listed the Lexus in her name on her
financial declaration, and she testified that DeAvila bought the
Lexus and gave it to her as a gift for her birthday. According to
Brown, DeAvila had a vehicle “through [his] business,” and
Brown had paid the insurance on that vehicle. When the
business vehicle was totaled, DeAvila used proceeds from the
insurance to buy the Lexus. Brown further testified that the
Lexus was “destroyed” during the parties’ separation and that
she believed DeAvila was responsible for the damage because
she “saw him driving by [her] house” within fifteen minutes of
hearing “loud bashes” in her garage. After this incident, which
totaled the Lexus, Brown received an insurance check for
$17,371. Because, in her view, DeAvila “intentionally destroyed”
the Lexus, Brown alternatively asserted that even if the Lexus
was deemed to be marital property, DeAvila was “not entitled to
the benefit of the insurance proceeds under the collateral source
rule.”
¶4 DeAvila asserted that the parties were “jointly listed as
owners” of the Lexus. He testified that he purchased the Lexus,
believed he was an owner, and titled it in his name. DeAvila
provided supporting evidence, including the 2009 bill of sale and
the sales contract for the Lexus, which named DeAvila as the
buyer. He also provided an exhibit with the application for
original title, identifying himself as the primary owner and
Brown as the secondary owner, but the record does not contain a
copy of the original certificate of title.
¶5 DeAvila further asserted that shortly after the Lexus was
damaged, Brown re-titled the Lexus “exclusively in her name.”
In support, he provided a corrected certificate of title, dated after
20160024-CA 2 2017 UT App 146DeAvila v. DeAvila
the Lexus was damaged, which listed only Brown as an owner.
In his trial brief, he stated that he was “being prosecuted for
charges associated with damage done” to the Lexus, and at trial
he invoked the Fifth Amendment to the United States
Constitution, refusing to answer questions about whether he
damaged the car. Nonetheless, DeAvila claimed that Brown
should pay him one-half of the insurance proceeds as his marital
share.
¶6 With regard to the Sector 10 stock, Brown asserted that
Sector 10 was a publicly traded company whose stock was
traded “‘over the counter’” and testified that the stock’s market
price as of the day of trial was five cents per share.2 She testified
that she held Sector 10 stock in her name, amounting to at least
400,000 shares. Brown urged the trial court to award DeAvila
“his separate assets, including all shares in the Sector 10
[entities],” stating that “[w]hatever shares . . . are out there . . . he
should be awarded those shares.” She further urged the court to
value the Sector 10 stock at the market price of five cents per
share.
¶7 DeAvila, for his part, alleged in his trial brief that he had
transferred to Brown “at least 11 million shares of Sector 10
stock,” which were worth ten cents per share in 2008, totaling
$1.1 million. He further alleged that Brown had dissipated that
asset, and he sought a judgment for his half of the value of that
stock. At trial, he testified that the current Sector 10 stock price
was “[f]ive to seven cents” per share. But DeAvila also testified
that the company had no value and was “going to basically file
[for] bankruptcy” due to the fact that attorneys who were
handling litigation on its behalf on a contingency fee basis had
2. Over-the-counter trading is carried out directly between two
parties and does not involve the supervision of an exchange.
Over-the-counter (finance), Wikipedia, https://en.wikipedia.org/
wiki/Over-the-counter_(finance) [https://perma.cc/YS9Q-BET5].
20160024-CA 3 2017 UT App 146DeAvila v. DeAvila
recently “dropped” the case. In closing argument, he encouraged
the court to value the shares at five cents per share.
¶8 During his testimony, DeAvila referred to the company’s
Form 10-K that Sector 10 had filed with the Securities and
Exchange Commission approximately one month before trial.
The 10-K stated that Sector 10’s common stock had “an average
market value of $.05 per share” and indicated that the stock
traded on the Pink Sheets.3 The 10-K also disclosed pending
litigation matters and resulting uncertainties, and showed that
for the prior year, the company was operating at a loss and had
an overall lack of revenue, income, and assets.
¶9 The trial court entered a decree of divorce in December
2015. Among other things, the court found that the parties
owned a boat and four vehicles at the time of separation. It
further found that one of those vehicles, the Lexus, “was
destroyed” and subsequently declared a total loss by the
insurance company. The court found that Brown had received
$17,371 in insurance proceeds for the Lexus and that those
proceeds were a marital asset. The court then awarded three of
the vehicles to Brown and a boat and one of the vehicles to
DeAvila. Because the value of the property awarded to Brown
was worth more than that awarded to DeAvila, the court
determined that DeAvila was “entitled to a judgment of $8,325
for the difference in value.”
3. The Pink Sheets, now known as the OTC Markets
Group, was a financial market for over-the-counter
securities. OTC Markets Group, Wikipedia, https://en.wikipedia.
org/wiki/OTC_Markets_Group [https://perma.cc/MPT4-JFSQ].
The 10-K indicated that the Sector 10 stock closed at seven cents
per share on March 31, 2015. The 10-K said that Sector 10
believed its stock was a “penny stock” that was “highly
volatile,” and indicated the volume of trading was “limited.”
The 10-K also stated, “There is a public market for our stock, but
it is thin and subject to manipulation.”
20160024-CA 4 2017 UT App 146DeAvila v. DeAvila
¶10 As for the Sector 10 stock, the trial court determined that
“the issue of who owns what shares in the company is moot,”
relying on DeAvila’s testimony that “the company’s only asset is
a lawsuit where attorneys were on a contingent fee basis and
have withdrawn, and as a result, the lawsuit is expected to be
dismissed.” The court thus awarded any and all shares, interest,
or value in Sector 10 to DeAvila. Brown appeals.
ISSUES AND STANDARDS OF REVIEW
¶11 Brown advances two main contentions on appeal. First,
Brown contends that the trial court erred when it treated the
insurance proceeds from the Lexus as a marital asset and
awarded half of the proceeds to DeAvila. She argues, in the
alternative, that the collateral source rule barred DeAvila from
receiving a portion of the insurance proceeds. Second, Brown
contends that the trial court erred when it failed to value the
Sector 10 stock at the market price of five cents per share.
¶12 District courts generally have “considerable discretion
concerning property distribution [and valuation] in a divorce
proceeding and their determinations enjoy a presumption of
validity.” See Dahl v. Dahl, 2015 UT 79, ¶ 119 (citation and
internal quotation marks omitted); see also Lindsey v. Lindsey,
2017 UT App 38, ¶ 26, 392 P.3d 968. As a result, this court “will
uphold the decision of the district court on appeal unless a clear
and prejudicial abuse of discretion is demonstrated.” Dahl, 2015
UT 79, ¶ 119 (citation and internal quotation marks omitted).
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 trial court.” Goggin v. Goggin, 2013 UT 16,
¶ 26, 299 P.3d 1079 (citation and internal quotation marks
omitted). Additionally, “[i]n reviewing a property distribution,
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.” Dahl, 2015 UT 79,
¶ 121. In evaluating whether the trial court correctly declined to
20160024-CA 5 2017 UT App 146DeAvila v. DeAvila
apply the collateral source rule, we review that decision for
correctness. Mahana v. Onyx Acceptance Corp., 2004 UT 59, ¶ 35,
96 P.3d 893.
ANALYSIS
I. Insurance Proceeds
¶13 Brown contends that because the Lexus was her separate
property, the insurance proceeds stemming from its destruction
should not have been divided between her and DeAvila. In the
alternative, Brown contends that even if the Lexus was marital
property, “[DeAvila] was not entitled to a share of the
[insurance] proceeds under the collateral source rule.” We
address each argument in turn.
A. Determination of Marital Property
¶14 Brown argues that the Lexus was her “sole and separate
property,” asserting that her “testimony that the Lexus was a
birthday gift, coupled with the existence of the title solely in her
name, should have been deemed conclusive by the trial court
that the Lexus was indeed a gift and her separate property.”
Brown therefore contends that DeAvila is not entitled to a
marital share of the insurance proceeds resulting from the car’s
destruction. We conclude that the trial court acted within its
discretion when it deemed the insurance proceeds to be marital
property subject to equitable distribution.
¶15 Utah law presumes that “marital property will be divided
equally while separate property will not be divided at all.”
Lindsey v. Lindsey, 2017 UT App 38, ¶ 32, 392 P.3d 968 (citing
Dahl v. Dahl, 2015 UT 79, ¶ 121). Utah law further “presumes that
property acquired during the marriage is marital property
subject to equitable distribution.” Dahl, 2015 UT 79, ¶ 26. Indeed,
“[m]arital property is ordinarily all property acquired during the
marriage . . . , ‘whenever obtained and from whatever source
derived.’” Dunn v. Dunn, 802 P.2d 1314, 1317–18 (Utah Ct. App.
20160024-CA 6 2017 UT App 146DeAvila v. DeAvila
1990) (quoting Gardner v. Gardner, 748 P.2d 1076, 1079 (Utah
1988)); see also Bradford v. Bradford, 1999 UT App 373, ¶ 26, 993
P.2d 887 (noting that the trial court has “broad equitable power
to distribute marital property, regardless of who holds title”).
Separate property, in contrast, is typically a spouse’s premarital
property or property received by gift or inheritance during the
marriage. Dahl, 2015 UT 79, ¶ 143; Kimball v. Kimball, 2009 UT
App 233, ¶ 24, 217 P.3d 733.
¶16 In this case, the trial court found that the parties jointly
owned four vehicles, including the Lexus, at the time of
separation. Accordingly, the court treated the insurance
proceeds that Brown received after the Lexus’s destruction as a
marital asset.
¶17 Brown has not shown error in the trial court’s
classification of the insurance proceeds as marital property
subject to division. In support of her position, Brown cites her
own testimony that DeAvila gave her the Lexus as a gift and a
corrected certificate of title, which post-dated the damage to the
Lexus and named Brown as the only owner. But the trial court
also had before it evidence that weighed against Brown’s
position. For example, DeAvila testified that he bought the
Lexus and believed he retained an ownership interest. The trial
court also had evidence in the form of the 2009 bill of sale and
the sales contract for the Lexus, both of which name DeAvila as
the buyer. Additionally, the application for original title listed
both DeAvila and Brown as owners of the vehicle. Because this
evidence could reasonably show that DeAvila acquired the
Lexus during the marriage and intended it to be a marital asset,
this evidence is sufficient to support the trial court’s decision.
Given the trial court’s considerable discretion in this area of law
and in light of the record evidence, we conclude that the trial
court acted within the bounds of its discretion when it applied
the general presumption—that marital property is all property
acquired during the marriage from whatever source derived—to
the insurance proceeds of the Lexus. See Dahl, 2015 UT 79, ¶ 26;
Dunn, 802 P.2d at 1317–18; see also Barrani v. Barrani, 2014 UT
20160024-CA 7 2017 UT App 146DeAvila v. DeAvila
App 204, ¶ 24, 334 P.3d 994 (“[A]n appellate court’s role is not to
reweigh the evidence presented at trial but only to determine
whether the court’s decision is supported by the evidence,
leaving questions of credibility and weight to the trial court.”).
Accordingly, Brown has not shown that the trial court exceeded
its discretion in equitably dividing the insurance proceeds.
B. Collateral Source Rule
¶18 Brown alternatively argues that even if the Lexus was
marital property, “[DeAvila] was not entitled to a share of the
[insurance] proceeds under the collateral source rule.” In
support, she argues that the trial court should have determined
“how the Lexus was destroyed” because “the only evidence
presented at trial was that . . . [DeAvila] destroyed the Lexus.”
She further argues that “[t]he legal result of [DeAvila]
destroying the Lexus . . . is that he is not entitled to any of the
insurance proceeds under the collateral source rule.” Thus,
Brown asserts that the “trial court’s order requiring her to divide
[the insurance] payment with the wrongdoer who caused the
damage is contrary to the collateral source rule in the same way
as it would be in a tort case.” DeAvila responds that the
collateral source rule is a “tort principle requiring a finding of
wrongdoing by a tortfeasor” and “has no application in the
equitable division of marital property.” Assuming, without
deciding, that DeAvila was responsible for the damage to the
Lexus, we conclude that Brown has not shown that the collateral
source rule is applicable to the circumstances of this case.
¶19 Brown cites one Utah case in support of her argument.
That case involved the tort of conversion, and the Utah Supreme
Court affirmed the application of the collateral source rule to
exclude from consideration bond proceeds paid to a victim
whose truck had been converted. Mahana v. Onyx Acceptance
Corp., 2004 UT 59, ¶¶ 1, 47, 96 P.3d 893. The court explained,
“The collateral source rule provides that a wrongdoer is not
entitled to have damages, for which he is liable, reduced by
proof that the plaintiff has received or will receive compensation
20160024-CA 8 2017 UT App 146DeAvila v. DeAvila
or indemnity for the loss from an independent collateral source.”
Id. ¶ 37 (citation and internal quotation marks omitted); see also
Collateral-source rule, Black’s Law Dictionary 299 (9th ed. 2009)
(“The doctrine that if an injured party receives compensation for
the injuries from a source independent of the tortfeasor, the
payment should not be deducted from the damages the
tortfeasor must pay.”). Subsequent Utah case law has identified
two policy rationales for the rule. See Wilson v. IHC Hosps., Inc.,
2012 UT 43, ¶ 31, 289 P.3d 369. “First, public policy favors giving
the plaintiff a double recovery rather than allowing a wrongdoer
to enjoy reduced liability simply because the plaintiff received
compensation from an independent source.” Id. (citation and
internal quotation marks omitted); accord Mahana, 2004 UT 59,
¶ 37. “Second, the rule encourages the maintenance of insurance
by assuring that a plaintiff’s payments from a collateral source
will not be reduced by a subsequent judgment.” Wilson, 2012 UT
43, ¶ 31 (citation and internal quotation marks omitted).
¶20 Brown has not persuaded us that the collateral source
doctrine applies here. She has not cited any precedent, either
from Utah or elsewhere, that would support importing the
collateral source rule from tort law into the context of family
law. Nor has Brown made a compelling argument that the policy
rationales behind the collateral source rule would support its
application to this case. Moreover, Brown has not explained how
the collateral source rule operates where, as here, the alleged
tortfeasor has an ownership interest in the damaged property.
See Dahl v. Dahl, 2015 UT 79, ¶ 141 (“[A]ppellate courts are not a
depository in which [a party] may dump the burden of
argument and research.” (second alteration in original) (citation
and internal quotation marks omitted)). We therefore conclude
that Brown has not demonstrated error in the trial court’s refusal
to apply the collateral source rule in this case.
II. Stock Valuation
¶21 Next, Brown contends that the trial court erred in
implicitly finding that the Sector 10 stock was valueless,
20160024-CA 9 2017 UT App 146DeAvila v. DeAvila
asserting that the court “was not entitled to determine that
shares of a publicly-traded corporation were valueless, contrary
to the market price, based solely on [DeAvila’s] testimony.”
Brown argues that the trial court could not “disregard the stock
price . . . in favor of its own analysis” and that, “[a]t a minimum,
expert testimony should be required if the trial court is to
deviate from an open market stock price.” 4 We conclude that
Brown has not shown that the trial court clearly erred in finding
that the Sector 10 stock was essentially worthless.
¶22 In reviewing this issue, we bear in mind that “the district
court’s factual findings as to the value of assets will not be
disturbed unless they are clearly erroneous.” Dahl, 2015 UT 79,
¶ 131. “A trial court’s factual determinations are clearly
erroneous only if they are in conflict with the clear weight of the
evidence, or if this court has a definite and firm conviction that a
mistake has been made.” Kimball v. Kimball, 2009 UT App 233,
¶ 14, 217 P.3d 733 (citation and internal quotation marks
omitted). Further, “[w]hen considering testimony regarding
valuation of property, the trial court is entitled to give conflicting
opinions whatever weight [it] deems appropriate,” and a trial
court’s valuation will be upheld if it is “within the range of
values established by all the [evidence].” See Morgan v. Morgan,
854 P.2d 559, 564, 566 (Utah Ct. App. 1993) (second and third
alterations in original) (citations and internal quotation marks
omitted); cf. Bingham Consolidation Co. v. Groesbeck, 2004 UT App
434, ¶ 32, 105 P.3d 365 (“[W]hen assessing a party’s proposed
valuation of shares, a trial court may rely on that party’s
trustworthiness in adopting or reject[ing] its valuation.”).
4. In so arguing, Brown does not argue that the trial court should
have awarded her a portion of the Sector 10 stock. Rather, she
asserts that by awarding at least 400,000 shares to DeAvila, the
trial court awarded DeAvila “a value of $20,000 at the five-cent-
per-share market price, not nothing,” entitling her to an
appropriate adjustment in the property awarded to her.
20160024-CA 10 2017 UT App 146DeAvila v. DeAvila
¶23 The trial court’s analysis did not expressly state the
precise value of the Sector 10 stock. But the court specifically
noted that DeAvila testified that “the company’s only asset is a
lawsuit where the attorneys were on a contingent fee basis and
have withdrawn, and as a result, the lawsuit is expected to be
dismissed.” Due to this fact, the court deemed moot “the issue of
who owns what shares in the company” and, in accordance with
Brown’s wishes, awarded DeAvila “any interest or value in
Sector 10.” The court’s analysis—with its reliance on DeAvila’s
testimony about the stalled lawsuit and its determination that
the issue of stock ownership was moot—indicates that the court
implicitly rejected the idea that the Sector 10 stock could be
traded at five cents or more per share.
¶24 Brown has not met her burden on appeal to show that the
trial court clearly erred in implicitly finding that the Sector 10
stock was worthless. Although DeAvila testified that Sector 10
was a publicly traded company and both parties testified that
the stock’s current market price was five cents per share, the
evidence in the record suggested the market for the stock was
“thin” and thus raised questions as to whether the stock could be
traded by either party for that amount. The trial court did not
clearly err in implicitly finding more credible and relevant
DeAvila’s testimony about the company’s current circumstances.
DeAvila testified that Sector 10 claimed “substantial damage” in
a lawsuit, but that because the company’s attorneys “dropped
the litigation,” Sector 10 was “now going to basically file [for]
bankruptcy.” DeAvila further indicated that the attorneys’
withdrawal from the lawsuit and the company’s resulting
inability to pursue its case for damages meant that Sector 10 had
no value. Brown disagrees with the trial court’s reliance on this
aspect of DeAvila’s testimony and with its ultimate finding that
the stock was worthless, but she has not shown that the trial
court’s valuation falls outside “the range of values established by
all the [evidence].” See Morgan, 854 P.2d at 566 (alteration in
original) (citation and internal quotation marks omitted); see also
id. at 563 (“[E]valuation of the weight and credibility of
testimony and evidence is a matter for the trier of fact.”).
20160024-CA 11 2017 UT App 146DeAvila v. DeAvila
¶25 Brown also cites the lack of expert evidence in this case
and asserts that expert testimony is required if a court deviates
from an open market price. But under Utah law, a
knowledgeable owner generally “may testify as to the market
value of property,” including in divorce cases, see Olson v. Olson,
2010 UT App 22, ¶ 27, 226 P.3d 751 (citation and internal
quotation marks omitted), and Brown has not persuaded us to
adopt an expert-testimony requirement when stock is at issue. In
short, Brown has not shown that the trial court clearly erred in
valuing the Sector 10 stock or otherwise exceeded its discretion
in awarding that stock to DeAvila.
CONCLUSION
¶26 Brown has not demonstrated that the trial court exceeded
its discretion in dividing property between DeAvila and Brown.
Accordingly, we affirm.
20160024-CA 12 2017 UT App 146