Keyes v. Keyes , 351 P.3d 90 ( 2015 )

2015 UT App 114_________________________________________________________
THE UTAH COURT OF APPEALS
REBECCA KEYES,
Petitioner and Appellee,
v.
WARREN GENE KEYES,
Respondent and Appellant.
Opinion
No. 20130524-CA
Filed April 30, 2015
Second District Court, Ogden Department
The Honorable Michael D. DiReda
No. 084901373
Charles R. Ahlstrom, Attorney for Appellant
Randall W. Richards, Attorney for Appellee
JUDGE STEPHEN L. ROTH authored this Opinion, in which JUDGE J.
FREDERIC VOROS JR. concurred. JUDGE GREGORY K. ORME
concurred, with opinion.
ROTH, Judge:
¶1 Warren Gene Keyes (Husband) appeals from the divorce
decree dissolving his marriage to Rebecca Keyes (Wife).
Husband contends that the trial court erred in ruling that the
parties’ premarital agreement was unenforceable. He also
contends that the court abused its discretion in awarding Wife
some of his separate property without providing detailed factual
findings to support that decision. Finally, Husband challenges
the alimony award to Wife. We reverse and remand.
Keyes v. Keyes
BACKGROUND
Premarital Agreement
¶2 The parties acquired relatively few assets during their
seventeen-year marriage, but each brought some assets to the
marriage, most significantly Husband’s interest in his family’s
landscaping business. Before they married, Husband and Wife
executed a premarital agreement (the Agreement). The
Agreement provides, in pertinent part, that each party
shall have, keep and retain sole ownership, control
and enjoyment of during [his or her] life, and by
last will and testament or other testamentary
disposition, shall have the exclusive right to
dispose of any and all . . . real and personal
property that [he or she] now owns or is possessed
of.
Each party expressly ‚waive*d+ all . . . right, title and interest to
which [he or she] is or may be entitled in and to any of [the] real
and personal property listed in‛ two attached exhibits, one for
each spouse. Husband’s exhibit listed ‚*a+ny proceeds from the
[landscaping] business . . . and/or any other related business,
investments, stocks, bonds and/or real property what so ever,
including any increase in value of said business.‛ The
Agreement further provides that ‚this agreement is entered into
whether or not the parties hereto have full knowledge of the
extent and probable value of the real and personal property
referred to in the *attached exhibits+.‛
¶3 The trial court ultimately concluded that the Agreement
was unenforceable. Relying on a provision of Utah’s Uniform
Premarital Agreement Act that governs enforcement of
premarital agreements (the Premarital Agreement Statute), the
court concluded that Wife had ‚met her burden in establishing
that fraud had been committed‛ because Husband had failed to
disclose his financial information to Wife before she had
executed the Agreement, Wife had not waived disclosure of that
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information, and Wife could not have independently acquired
knowledge regarding Husband’s financial information prior to
executing the Agreement. See Utah Code Ann. § 30-8-6(1)(b)
(LexisNexis 2013).1
Inventory
¶4 Because the trial court determined that the Agreement
was unenforceable, it then went on to address the distribution of
property. On appeal, Husband’s only challenge to that
distribution order relates to the award to Wife of one-half the
value of his interest in his business’s inventory.
¶5 About the time the couple married, Wife helped Husband
acquire some storage racks for the landscaping business’s
warehouse. These storage racks allowed Husband’s business to
acquire substantially more inventory. Wife also testified that she
encouraged Husband to diversify his inventory to attract more
customers, which he did with some success. The trial court
found that because this inventory was acquired ‚during the
course of the marriage,‛ it was marital property. Thus, the court
awarded Wife one-half of the value of Husband’s interest in the
inventory, or $115,266.
Alimony
¶6 Husband and Wife were both employed throughout the
marriage. Husband worked exclusively for his family’s
landscaping business, in which he held a 50% ownership
interest. Husband testified that he earned $1,400 a month in
salary. But after hearing from the business’s accountant about
additional ‚distributions and guaranteed payments‛ to the
1. We cite the current codification of the Premarital Agreement
Statute because the statute has not been amended since its
enactment in 1994 and thus was in effect in its current form
when the parties executed the Agreement in 1995.
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owners, the trial court became concerned that Husband’s
reported income was ‚inaccurate‛ and ‚not support[ed] by his
own testimony, by the testimony of his accountant, and by [the]
exhibits.‛ Accordingly, the court ordered ‚that a forensic
accountant be brought into this case for the purpose of digesting
[the] tax documents and helping [the court] to better ascertain
the income of [Husband].‛ After hearing the forensic
accountant’s testimony, the court calculated Husband’s monthly
income to be $2,627.
¶7 Throughout the marriage, Wife worked full time in retail
as a merchandiser and interior designer. She earned as much as
$1,750 per month, which, based on a forty-hour work week, is
about $10 per hour. Shortly before Wife filed for divorce,
however, she was terminated from her employment. Between
the time she filed for divorce and trial, Wife worked for two
different employers, earning as much as $11.75 per hour. In both
jobs, there was limited work available due to a slow economy.
Wife also testified that she could only work three to four hours
at a time due a decline in her health. In the months leading up to
trial, Wife’s gross monthly income was about $722. The trial
court, however, found that Wife was currently unemployed but
was capable of working full time at minimum wage to earn
$1,257 per month.
¶8 The trial court also considered the parties’ monthly
expenses relative to their incomes. It determined that Wife had
reasonable monthly expenses of $4,7992 and that after deducting
taxes from her gross monthly income of $1,257, she had a
shortfall of $3,856. The court accepted Husband’s representation
that he had $1,923 in expenses each month. The court
2. Wife incurred some of these expenses for medical bills because
Husband had allowed her health insurance to lapse, despite a
previous court order that he provide insurance, and because
Wife had been unable to acquire new insurance due to her
preexisting condition.
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determined that after deducting taxes and Husband’s expenses
from his gross income of $2,627, Husband had ‚a monthly
surplus of $47.‛ Therefore, although the surplus was ‚barely
identifiable,‛ Husband had some means to ‚assist *Wife+.‛
Because the parties had more expenses than income, the court
found it ‚appropriate that the parties share in the financial
misery.‛ Accordingly, it ordered Husband to pay Wife $1,928
per month in alimony for a time period equal to the marriage,
subject to the usual contingencies of remarriage, cohabitation, or
death. The court explained that its alimony award equalized the
parties’ standards of living by leaving each party ‚with a
monthly shortfall of approximately $1928.‛3
¶9 Husband now appeals the trial court’s decision on the
enforceability of the Agreement as to the inventory and, in the
event that the trial court’s decision that the Agreement is
unenforceable is upheld, the decision to award inventory itself.
Husband also challenges the alimony award.
ISSUES AND STANDARDS OF REVIEW
¶10 Husband appeals from the trial court’s decision not to
enforce the Agreement. Husband challenges the court’s
interpretation of the Premarital Agreement Statute. We review
the trial court’s interpretation of a statute as a matter of law for
correctness. Daniels v. Gamma W. Brachytherapy, LLC, 2009 UT 66,
¶ 46, 221 P.3d 256.
¶11 Husband contests the trial court’s award to Wife of one-
half of the value of Husband’s share of the business inventory.
Specifically, Husband contends that the trial court clearly erred
in finding that the business inventory was marital property.
3. Wife’s monthly deficit after receiving alimony was exactly
$1,928, while Husband was left with a monthly deficit of $1,881
after paying alimony.
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‚Trial courts have considerable discretion in determining . . .
property distribution in divorce cases, and will be upheld on
appeal unless a clear and prejudicial abuse of discretion is
demonstrated.‛ Stonehocker v. Stonehocker, 2008 UT App 11, ¶ 8,
176 P.3d 476 (omission in original) (citation and internal
quotation marks omitted). The decision, however, must be
supported by adequate findings that ‚reveal how the court
reached its conclusions.‛ Rappleye v. Rappleye, 855 P.2d 260, 263
(Utah Ct. App. 1993). We review the legal adequacy of the trial
court’s findings for correctness. Wall v. Wall, 2007 UT App 61,
¶ 17, 157 P.3d 341.
¶12 Husband also challenges the trial court’s alimony award.
‚We review a trial court’s award of alimony for abuse of
discretion. We will not disturb the trial court’s alimony award so
long as the trial court exercises its discretion within the
standards set by the appellate courts.‛ Bakanowski v. Bakanowski,
2003 UT App 357, ¶ 7, 80 P.3d 153 (citations and internal
quotation marks omitted). To the extent that Husband has also
challenged the sufficiency of the evidence to support the court’s
factual findings, we will not disturb the court’s findings ‚unless
they are clearly erroneous.‛ Kimball v. Kimball, 2009 UT App 233,
¶ 14, 217 P.3d 733 (citation and internal quotation marks
omitted).
ANALYSIS
I. The Agreement
¶13 Husband contends that the trial court erred when it
determined that the Agreement was unenforceable. ‚Parties to a
premarital agreement may contract with respect to . . . the rights
and obligations of each of the parties in any of the property of
either or both of them whenever and wherever acquired or
located . . . [and] the disposition of property upon separation[ or]
marital dissolution.‛ Utah Code Ann. § 30-8-4(1)(a), (c)
(LexisNexis 2013). Generally, a premarital agreement is
enforceable in the same manner as any other contract. Levin v.
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Carlton, 2009 UT App 170, ¶ 15, 213 P.3d 884. However, the
Premarital Agreement Statute prohibits enforcement if
the agreement was fraudulent when executed and,
before execution of that agreement, [the] party
[against whom enforcement is sought]:
(i) was not provided a reasonable disclosure
of the property or financial obligations of the other
party insofar as was possible;
(ii) did not voluntarily and expressly waive,
in writing, any right to disclosure of the property
or financial obligations of the other party beyond
the disclosure provided; and
(iii) did not have, or reasonably could not
have had, an adequate knowledge of the property
or financial obligations of the other party.
Utah Code Ann. § 30-8-6(1)(b) (emphasis added).
¶14 The statute’s prohibition on enforcement of premarital
agreements under these circumstances seems to be an outgrowth
of our case law’s long recognition that ‚‘*p+remarital agreements
concerning the disposition of property owned by the parties at
the time of their marriage are valid so long as there is no fraud,
coercion, or material nondisclosure.’‛ Reese v. Reese, 1999 UT 75,
¶ 24, 948 P.2d 987 (quoting Beesley v. Harris (In re Estate of
Beesley), 883 P.2d 1343, 1347 (Utah 1994), which observed that
this principle had previously been noted in dicta). Indeed, when
considering the validity of premarital agreements, our courts
have always required that prospective spouses be ‚held to the
highest degree of good faith, honesty, and candor in connection
with the negotiation and execution of [a premarital]
agreement*+.‛ In re Estate of Beesley, 883 P.2d at 1346. This
heightened duty between spouses arises because
*u+nlike a party negotiating at arm’s length, who
generally will view any proposal with a degree of
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skepticism, a party to a premarital agreement is
much less likely to critically examine
representations made by the other party. The
mutual trust between the parties raises an
expectation that each party will act in the other’s
best interest.
Id. ‚Thus, the general principle derived from our case law is that
spouses or prospective spouses may make binding contracts
with each other and arrange their affairs as they see fit, insofar as
the negotiations are conducted in good faith, as described in In re
[Estate of] Beesley . . . .‛ Reese, 1999 UT 75, ¶ 25.
¶15 In this case, the parties entered into a premarital
agreement that provided that Wife ‚waives all of her right, title
and interest to which she is or may be entitled in‛ Husband’s
‚business . . . and/or any other related business, investments,
stocks, bonds and/or real property what so ever, including any
increase in value of said business.‛ The trial court determined
that this Agreement was not enforceable because Wife ‚met her
burden in establishing . . . fraud‛ when she demonstrated that
‚no reasonable disclosure *of the business’s value or debts+
occurred,‛ Wife ‚never voluntarily or expressly issued a waiver
to the financial disclosure,‛ and Wife ‚had no knowledge as to
the worth of the business.‛
¶16 On appeal, Husband argues that the trial court’s
conclusion that the Agreement was unenforceable ‚was wrong,
unsupported as a matter of law‛ for two reasons. First, he
contends that the court ‚did not address the primary and
mandatory factor that the Agreement . . . be fraudulent.‛ Rather,
the court simply determined that the three subsidiary conditions
had occurred and that fulfillment of those conditions itself
established that the Agreement was fraudulently executed.
Second, he contends that the court erred in determining that
each of the three subsidiary conditions for invalidating the
Agreement had been satisfied because Wife waived her right to
additional disclosure. As we will discuss below, Husband’s first
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contention is well taken, but his second contention was not
preserved.
A. The Trial Court Failed To Make an Independent
Determination of Fraud.
¶17 The trial court erred when it read the Premarital
Agreement Statute to mean that its threshold requirement—that
the Agreement be fraudulently executed—was satisfied once
each of the three subsidiary conditions had been demonstrated.
In other words, the court read the statute to mean that the
absence of a reasonable disclosure of assets and liabilities by the
spouse benefitted by a premarital agreement, combined with
inadequate knowledge or opportunity to know and the lack of a
voluntary and express waiver of asset and liability-related
information on the part of the other spouse, would render the
agreement fraudulent.
¶18 When interpreting statutes, appellate courts ‚seek to give
effect to the intent of the legislature‛ by ‚interpret*ing+ the
statute according to its plain language.‛ Wilcox v. CSX Corp.,
2003 UT 21, ¶ 8, 70 P.3d 85 (citation and internal quotation marks
omitted). In doing so, we examine the language of the statute as
a whole. LPI Servs. v. McGee, 2009 UT 41, ¶ 11, 215 P.3d 135.
¶19 The Premarital Agreement Statute separates the
‚fraudulent when executed‛ requirement and the three
subsidiary conditions with the word ‚and.‛ The use of the
conjunctive ‚and‛ indicates that all four requirements—(1)
fraudulent execution, (2) nondisclosure of financial obligations,
(3) no express waiver of disclosure, and (4) no independent
knowledge of the financial obligations—must occur to render a
premarital agreement unenforceable. See, e.g., Gregerson v.
Equitable Life & Cas. Ins. Co., 256 P.2d 566, 567 (Utah 1953)
(stating, in the context of analyzing an insurance policy’s
conditions for reinstatement, that ‚[t]he use of the conjunctive
‘and’ indicates that the reinstatement depends upon the
fulfillment of two requirements‛). Yet the trial court did not
make a separate finding of fraud but rather seemed to assume
20130524-CA 9 2015 UT App 114Keyes v. Keyes
that fraud had necessarily occurred simply because Wife had
shown that the three subsidiary conditions were met.
¶20 Husband contends that although the trial court could find
that he did not fully disclose his property and financial
obligations to Wife, it could not have determined that his actions
amounted to fraud had it conducted a proper fraud analysis
rather than relying solely on consideration of the three
subsidiary factors. ‚Fraud‛ is a ‚false representation of an
existing material fact, made knowingly or recklessly for the
purpose of inducing reliance thereon upon which the plaintiff
reasonably relies to his detriment.‛ Atkinson v. IHC Hosps., Inc.,
798 P.2d 733, 737 (Utah 1990) (citation and internal quotation
marks omitted). The simple failure of one party to disclose
property or financial obligations, of which the other party would
not otherwise be aware, without the other party’s voluntary and
express waiver does not necessarily amount to a ‚false
representation‛ of material information ‚made knowingly or
recklessly for the purpose of inducing reliance.‛ See id. (citation
and internal quotation marks omitted). Nor does it necessarily
mean that the other party ‚reasonably relie*d+‛ upon the
nondisclosure ‚to his detriment.‛ See id. (citation and internal
quotation marks omitted).
¶21 Husband argued to the trial court that he did not
‚knowingly‛ misrepresent or conceal any information because
he trusted that the attorney who prepared the Agreement ‚was
handling the matter appropriately and legally‛ and that Wife
was generally aware of his assets and debts. Husband also
elicited testimony from Wife that at the time she entered the
Agreement, she knew that Husband had not fully disclosed
financial information to her about the family business and that
even if he had, it would not have affected her decision in any
way because ‚*she+ loved him and *she+ thought he was a really
good guy.‛ Thus, Husband claims that he demonstrated that
even if he did knowingly withhold material information, Wife
did not rely on his failure to disclose. Wife, on the other hand,
testified that Husband had informed her that the business was
bankrupt. She reported that she was therefore ‚surprised when
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*Husband+ asked for a prenuptial agreement‛ but that Husband
told her not to worry.
¶22 In determining that there was necessarily fraud in the
Agreement’s execution because the three subsidiary conditions
had been satisfied, the trial court left the parties’ arguments
unaddressed in this regard. And the satisfaction of the three
subsidiary conditions does not require a fraud determination,
though they certainly may be relevant to the issue. For that
reason, we remand for the trial court to determine whether,
under the totality of the circumstances, the Agreement was
‚fraudulent when executed.‛ See Utah Code Ann. § 30-8-6(1)(b)
(LexisNexis 2013).
B. Husband Failed To Preserve His Waiver Argument.
¶23 Husband contends that even if the Agreement was
fraudulent when executed, it is nevertheless enforceable under
the statute because Wife executed a waiver of her right to receive
any additional disclosures. The Premarital Agreement Statute
precludes enforcement of a fraudulent premarital agreement
only when three conditions have been demonstrated—the party
against whom enforcement is sought (i) ‚was not provided a
reasonable disclosure of the property or financial obligations,‛
(ii) ‚did not voluntarily and expressly waive, in writing, any
right to disclosure,‛ and (iii) ‚did not have, or reasonably could
not have had, an adequate knowledge of the property or
financial obligations.‛4 Id.
¶24 Husband argues that Wife’s written waiver can be found
in paragraph 10 of the Agreement, which states, ‚*T+his
agreement is entered into whether or not the parties hereto have
full knowledge of the extent and probable value of the real and
personal property referred to in the‛ attached exhibits. However,
Husband did not raise this waiver claim in the trial court, and it
4. Husband does not challenge the trial court’s findings that
conditions (i) and (iii) have been demonstrated.
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is therefore unpreserved for our review. See 438 Main St. v. Easy
Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (‚*I+n order to preserve
an issue for appeal[,] the issue must be presented to the trial
court in such a way that the trial court has an opportunity to rule
on that issue.‛ (alterations in original) (citation and internal
quotation marks omitted)).
¶25 In his motion for summary judgment on Wife’s claims for
division of property, Husband did not assert that the Agreement
was enforceable because Wife had waived any right to financial
disclosure. Rather, his motion focused on the Agreement’s
enforceability despite his failure to disclose. Nor did Husband
raise the issue at the trial court’s hearing on the enforceability of
the Agreement. In an attempt to ‚focus *Husband’s examination
of Wife+ on the aspects of the statute‛ that were at issue, the
judge stated, ‚I don’t think there’s been any indication that
there’s been a waiver unless I missed it under sub double ‘i’ [of
the Premarital Agreement Statute].‛ Husband said nothing in
response before returning to his examination of Wife, tacitly
endorsing the court’s understanding. Later, the judge posed a
similar question to Wife and indicated that based on his
discussion with Husband, he understood the statute’s ‚triple ‘i’
*to be+ really the only one that’s at issue‛ because Wife had
‚never waived any disclosure.‛ Wife confirmed the court’s
understanding, and Husband remained silent, again indicating
his tacit approval. Because Husband never put the issue of
waiver squarely before the court, even when invited to do so, he
has failed to preserve the issue for appeal, and we will not
consider it.
¶26 Accordingly, we remand solely for a determination of
whether, under the circumstances surrounding Husband’s
failure to disclose, the Agreement was fraudulent when
executed. If the court determines that the Agreement was not
fraudulent, then it should enforce the Agreement to the extent it
relates to the business inventory, the only issue that Husband
claims is governed by the Agreement. If the court decides that
the Agreement was fraudulent when executed or that the
Agreement does not apply to the inventory, then it must make
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adequate findings, as discussed in part II, to support its decision
regarding the inventory’s distribution.
II. Inventory
¶27 Husband contends that the trial court ‚inappropriately
awarded Wife a portion of the inventory held by Husband’s
business.‛ We conclude that the court’s findings regarding
division of the inventory are legally inadequate.
¶28 In addressing the distribution of property between
divorcing spouses, the trial court must first determine whether
the assets in dispute are marital or separate property. Dahl v.
Dahl, 2015 UT 23, ¶ 121, 345 P.3d 566. ‚Marital 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. 1990) (citation and
internal quotation marks omitted). ‚In Utah, marital property is
ordinarily divided equally between the divorcing spouses . . . .‛
Stonehocker v. Stonehocker, 2008 UT App 11, ¶ 13, 176 P.3d 476.
After identifying property as marital, the court must ‚consider
whether there are exceptional circumstances that overcome the
general presumption that marital property be divided equally,‛
‚assign values to each item of marital property so that *a+
distribution strategy . . . can be implemented,‛ and ‚distribute
the marital assets consistent with the distribution strategy.‛ Dahl,
2015 UT 23, ¶ 121 (alteration and omission in original) (citation
and internal quotation marks omitted). On the other hand,
‚separate property, which may include premarital assets,
inheritances, or similar assets, will be awarded to the acquiring
spouse.‛ Stonehocker, 2008 UT App 11, ¶ 13 (citation and internal
quotation marks omitted). In most cases, ‚equity requires that
each party retain the separate property that he or she brought
into the marriage, including any appreciation of the separate
property.‛ Dunn, 802 P.2d at 1320. Separate property may lose
its separate character, however, ‚through commingling‛ or if
‚the other spouse has by his or her efforts or expense
contributed to the enhancement, maintenance, or protection of
that property.‛ Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah
20130524-CA 13 2015 UT App 114Keyes v. Keyes
1988). In making this assessment, the court ‚look*s+ to a party’s
actions as a manifestation of a spouse’s intent to contribute
separate property to the marital estate.‛ Dahl, 2015 UT 23, ¶ 143.
¶29 In general, we defer to a trial court’s categorization and
equitable distribution of separate property due to the
considerable discretion it has in this area. Stonehocker, 2008 UT
App 11, ¶ 8 (noting that a trial court’s property distribution ‚will
be upheld on appeal unless a clear and prejudicial abuse of
discretion is demonstrated‛ (citation and internal quotation
marks omitted)); Rappleye v. Rappleye, 855 P.2d 260, 263 (Utah Ct.
App. 1993) (explaining that the trial court has primary
responsibility for determining and assigning values to property).
‚However, there must be adequate factual findings to reveal
how the court reached its conclusions,‛ Rappleye, 855 P.2d at 263,and to ‚establish*+ that the court’s judgment or decree follows
logically from, and is supported by, the evidence,‛ Dahl, 2015 UT
23, ¶ 121 (citation and internal quotation marks omitted). The
touchstone of adequate findings is that they are ‚sufficiently
detailed and include enough subsidiary facts to disclose the
steps by which the ultimate conclusion on each factual issue was
reached.‛ Hall v. Hall, 858 P.2d 1018, 1021 (Utah Ct. App. 1993)
(citation and internal quotation marks omitted). Adequate
findings of fact ‚enable ‘meaningful appellate review’‛ because
an appellate court can understand the trial court’s reasoning and
assess its compliance with governing law. Neff v. Neff, 2011 UT 6,
¶ 61, 247 P.3d 380 (quoting Willey v. Willey, 951 P.2d 226, 230
(Utah 1997)).
¶30 Here the trial court did not provide a sufficient basis for
us to determine whether its decision regarding the nature and
distribution of the inventory complied with governing law.
Rather, the court simply found that ‚*t+he business did . . .
acquire a large amount of inventory during the course of the
marriage, which [inventory] has been valued at $461,064.‛ It
then concluded that Wife ‚is entitled to her marital percentage of
that inventory, which is one-half *of Husband’s interest+.‛ In
making this order, the court did not explain how Wife had
obtained an interest in the business inventory, which Husband
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had testified was purchased solely with proceeds from the
landscaping business that the court had characterized as
Husband’s separate property. There is certainly some evidence
in the record that might support an award of an interest in the
inventory to Wife, including Wife’s testimony about her
contributions to the business’s acquisition of the inventory and
her belief that Husband was reinvesting money into the business
that should properly have benefited the marriage, for example,
by keeping his salary or distributions artificially low. But in the
face of the court’s finding that the landscaping business was
separate property and the evidence that the inventory was
purchased using business resources, we conclude that the court’s
findings lack sufficient detail and ‚enough subsidiary facts to
disclose the steps by which the ultimate conclusion . . . was
reached.‛ See Hall, 858 P.2d at 1021 (citation and internal
quotation marks omitted).
¶31 Thus, we conditionally remand for the trial court to
further consider its decision to award Wife one-half of
Husband’s interest in the inventory. Our remand is conditional
because the trial court’s conclusion regarding fraud in the
Agreement could render this particular claim moot. And if the
court does reach the inventory issue on remand, the court may
simply enter more detailed findings that adequately support its
original decision regarding the marital nature of the inventory or
it may find it appropriate to reconsider that decision. Nothing in
this decision should be interpreted as expressing a view toward
a particular result.
III. Alimony
¶32 Husband also claims that the trial court abused its
discretion in making the alimony award. Husband argues that
the court’s findings regarding Wife’s financial condition and
needs are not supported by the evidence. He also challenges the
court’s approach to equalizing the parties’ income because it
fails to take into account the disparities between his and Wife’s
20130524-CA 15 2015 UT App 114Keyes v. Keyes
needs, leaving him with an inequitably disproportionate burden
of the resulting hardship.5
¶33 To ‚support*+ its *alimony+ decision with adequate
findings and conclusions,‛ the trial court is obligated to consider
the factors set forth in Utah Code section 30-3-5(8)(a). Mark v.
Mark, 2009 UT App 374, ¶¶ 6, 9, 223 P.3d 476 (citation and
internal quotation marks omitted). These factors include ‚(i) the
financial condition and needs of the recipient spouse; (ii) the
recipient’s earning capacity or ability to produce income; (iii) the
ability of the payor spouse to provide support; [and] (iv) the
length of the marriage.‛ Id. ¶ 9 (alteration in original) (citing
Utah Code Ann. § 30-3-5(8)(a) (LexisNexis Supp. 2005)). The trial
court ‚must make sufficiently detailed findings of fact on each
[statutory] factor to enable a reviewing court to ensure that the
trial court’s discretionary determination was rationally based
upon these . . . factors.‛ Id. (omission in original) (citation and
internal quotation marks omitted).
¶34 A party claiming that the court’s findings are not
supported by sufficient evidence must demonstrate that the
findings are clearly erroneous. Kimball v. Kimball, 2009 UT App
233, ¶ 14, 217 P.3d 733. ‚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.‛ Id. (citation and internal
quotation marks omitted). We conclude that the trial court’s
findings regarding Wife’s ability to earn income ‚conflict with
the clear weight of the evidence.‛ See id. (citation and internal
quotation marks omitted).
5. Husband briefed this issue primarily as a challenge to the
adequacy of the trial court’s findings, and Wife claimed that
Husband had failed to preserve that argument. We consider the
issue to actually be a legal challenge to the application of the
equalization-of-income standard.
20130524-CA 16 2015 UT App 114Keyes v. Keyes
¶35 The trial court found that Wife ‚is currently unemployed,
but capable of working a full-time job earning minimum wage‛
as a basis for its decision to ‚impute gross monthly income to
*Wife+ of $1257.‛ The first phrase of the finding, that Wife ‚is
currently unemployed,‛ is contradicted by the evidence, as Wife
testified at trial that she was working, albeit on a reduced
schedule. It is also difficult to discern the basis on which the trial
court arrived at an earning capacity for Wife of minimum wage,
as it appears to be undisputed that Wife had earned more than
minimum wage in her previous full-time jobs and was earning
$11.75 an hour from part-time employment at the time of trial.
But the court did not explain why it was imputing only
minimum wage to her. See Utah Code Ann. § 78B-12-203(7)(b)
(LexisNexis 2012) (‚If income is imputed to a parent, the income
shall be based upon employment potential and probable
earnings as derived from employment opportunities, work
history, occupation qualifications, and prevailing earnings for
persons of similar backgrounds . . . .‛); cf. id. § 78B-12-203(7)(c)
(‚If a parent has no recent work history or a parent’s occupation
is unknown, income shall be imputed at least at the federal
minimum wage for a 40-hour work week.‛).6
¶36 The court also found that Wife was capable of working
full time. But Wife testified that during the divorce proceedings,
her health had seriously deteriorated and she was then
physically unable to work more than three to four hours at a
time and therefore could not work full time. Husband did not
contest Wife’s claim other than to suggest that she had been
dealing with health issues for a number of years and that she
had been able to find employment in the past where the
employer could make suitable accommodations. Thus, the
6. ‚Although the section of the Utah Code that addresses
imputation is located in the Utah Child Support Act‛ and thus
references a ‚parent‛ to whom income may be imputed, this
section is ‚also relevant to imputation in the alimony context.‛
Busche v. Busche, 2012 UT App 16, ¶ 15 n.7, 272 P.3d 748 (citation
and internal quotation marks omitted).
20130524-CA 17 2015 UT App 114Keyes v. Keyes
finding that Wife is capable of working full time also does not
appear to be supported by the record evidence. See Kimball, 2009
UT App 233, ¶ 14.
¶37 It is possible, of course, that the trial court simply
disbelieved Wife’s testimony about her inability to work full
time or thought that Wife could find full-time employment that
would make necessary accommodations. It is also possible that
the court might have imputed income to Wife as it did—full-
time work at minimum wage—in an attempt to take into account
the complex interrelationship of Wife’s history of full-time work
at higher pay and the reality of her present inability to work
more than part time (but at higher than minimum wage). But
again such an approach is not apparent on the face of the court’s
decision and is not a result that is readily deduced from the
record. See id. ¶ 13. Given the sparse analysis on the issue, we
can only speculate that the court had reasons for its decision that
it did not express when the uncontradicted evidence seems to
belie the court’s express finding that Wife is capable of working
full time at minimum wage. See Bakanowski v. Bakanowski, 2003
UT App 357, ¶ 13, 80 P.3d 153 (‚The findings of fact must show
that the court’s judgment or decree follows logically from, and is
supported by, the evidence.‛ (citation and internal quotation
marks omitted)).
¶38 Moreover, the court’s decision to equalize the parties’
income in the face of their inability to meet their combined
needs, while appropriately aimed at sharing the hardship of
inadequate resources, does not seem to take into account the
apparent effect of this approach on Husband’s relative ability to
meet basic needs. The decision thus raises an unaddressed
concern about the equities of the resolution. See Oliekan v.
Oliekan, 2006 UT App 405, ¶ 16, 147 P.3d 464 (stating, in the
context of reviewing a property distribution, that we will disturb
the trial court’s decision when ‚there is a misunderstanding or
misapplication of the law such that a manifest injustice or
inequity results, indicating an abuse of discretion‛).
20130524-CA 18 2015 UT App 114Keyes v. Keyes
¶39 Equalization of income, which ‚is perhaps better
described as ‘equalization of poverty,’‛ is a trial court’s remedy
for ‚those situations in which one party does not earn enough to
cover his or her demonstrated needs and the other party does
not have the ability to pay enough to cover those needs.‛ Sellers
v. Sellers, 2010 UT App 393, ¶ 3, 246 P.3d 173. When this situation
arises, the trial court must determine how to equitably allocate
the burden of insufficient income that occurs when the resources
that were sufficient to cover the expenses of a couple must now
be stretched to accommodate the needs of two individuals living
separately. Such a situation arose in this case where the parties
had a combined $6,722 in monthly expenses that the trial court
found reasonable and only $2,913 in net monthly income. The
court attempted to equalize the parties’ poverty by setting
alimony at a rate whereby they would each be ‚left with a
monthly shortfall of approximately $1928‛ between their
incomes and their expenses. This is not an unreasonable
approach at a theoretical level. See generally Hansen v. Hansen,
2014 UT App 96, ¶ 4, 325 P.3d 864 (noting that the trial court
equalized the parties’ standards of living by awarding alimony
in a way that resulted in ‚each party having an equal monthly
shortfall‛); Kidd v. Kidd, 2014 UT App 26, ¶ 3, 321 P.3d 200(noting that by ‚adding the parties’ monthly income‛ and
‚dividing that income in half,‛ then awarding the wife the
difference between one-half the parties’ total income and her
individual income, the trial court ‚intended to ensure that the
shortfall in their ability to maintain the marital standard of living
was equitably shared‛).
¶40 As a practical matter, however, the trial court’s approach
appears to leave Husband without the ability to meet any of his
most basic needs. The court accepted that Husband had
reasonable monthly needs of $1,923, including approximately
$1,400 in housing and food expenses, and had monthly net
income of $1,970, $47 more than his needs. Because Husband
had a surplus, albeit a meager one, the court concluded that he
was able to pay alimony. But by awarding Wife $1,928 per
month, leaving Husband with just $42 to put toward his basic
needs, the court appears to have put Husband in a position
20130524-CA 19 2015 UT App 114Keyes v. Keyes
where he has insufficient means to sustain life on the most basic
level. Wife, on the other hand, is to receive $2,871 from net
imputed income and alimony. This figure falls far short of her
accepted monthly needs of $4,799, but it is more than adequate
to cover her basic expenses for food and shelter, which total
roughly $1,400. It seems that ‚shared misery‛ income
equalization is often based—at least in part—on a judge’s
determination that one party or both must (and can) tighten their
belts in the face of clearly insufficient resources. But even
assuming that the court could have determined that Husband’s
declared monthly expenses for housing and food were inflated,
an allocation that on its face leaves one party with essentially no
income for basic necessities cannot be deemed equitable without
further explanation by the trial court.7 Cf. Jensen v. Jensen, 2008
UT App 392, ¶ 13, 197 P.3d 117 (explaining that a goal of
awarding alimony is to ‚equaliz*e+ the parties’ standards of
living,‛ which requires the court to take into account, ‚‘all
relevant facts and equitable principles’‛ (quoting Utah Code
Ann. § 30-3-5(8)(c) (LexisNexis Supp. 2008))); Bakanowski, 2003
UT App 357, ¶ 10 (explaining that a trial court abuses its
discretion when it fails to take into account the parties’ needs
and abilities to support themselves in making an alimony
award). It seems clear that the court believed that Husband had
understated his income when it decided that Husband’s income
exceeded his reported salary. But the amount the court
calculated above what Husband reported is just the sum that
now leaves him with only $42 after deducting the $1,928
monthly alimony award.
7. It is of course possible that divorcing parties will not have
enough combined income to cover their combined basic needs.
In such a case, the court may make an alimony award that will
require both parties to reduce their budgets. Such an award is
justifiable because it requires both spouses to share the daunting
challenge of working out how to meet basic needs with
inadequate resources. It is the apparent one-sidedness of the
burden in this case that is problematic.
20130524-CA 20 2015 UT App 114Keyes v. Keyes
¶41 We have located no case that endorses the equalization of
income and any resulting hardship in such a disparate manner.
See, e.g., Hansen, 2014 UT App 96, ¶¶ 3–4, 19 (affirming the trial
court’s equalization of the parties’ monthly shortfalls where the
husband had $1,345 to meet his monthly needs of $1,867 after
paying alimony and the wife had $3,543 to meet her needs of
$4,064); Kidd, 2014 UT App 26, ¶¶ 3, 27 (declining to disturb the
trial court’s equalization of income by ordering the husband to
pay $2,182.50 in monthly alimony, which would leave the
husband with $6,066.50 to meet his needs of $7,270 and the wife
$3,742.50 to meet her needs of $6,078); Child v. Child, 2008 UT
App 338, ¶ 7, 194 P.3d 205 (discerning no error in the trial court’s
alimony award of $2,575 to the wife, which would leave the
husband with $2,575 to meet his alleged needs of $3,945 and the
wife $5,214 to meet her alleged needs of $7,217), vacated in part on
other grounds, 2009 UT 17, 206 P.3d 633 (per curiam). Therefore,
we conclude that the trial court went too far in equalizing the
income in the manner that it did, and we vacate the alimony
award as facially inequitable.
¶42 One final note on this point: although the alimony award
appears to burden Husband with a much more serious hardship
than Wife, we recognize that the trial court had misgivings about
Husband’s report of his monthly earnings sufficient to warrant
the appointment of an independent forensic accountant to
address the issue. But while the court accepted an average of the
previous three years’ income to calculate Husband’s current
monthly income for alimony purposes, the court also concluded
that Husband is likely to earn more income in the future. In
addition, there is other evidence in the record, such as the fact
that Husband was able to obtain ‚weekly spiff money,‛ which
was a cash allowance in addition to his salary, and may have
had other potential sources of revenue aside from his income, to
suggest that he may have some other means of support. Thus,
we remand for the trial court to further consider the award of
alimony. In doing so, the court may need to reconsider other
aspects of its alimony decision, including Wife’s earning capacity
20130524-CA 21 2015 UT App 114Keyes v. Keyes
and the parties’ financial needs, and should not consider this
remand order to either require or restrict it from doing so.8
CONCLUSION
¶43 We reverse the trial court’s decision that the Agreement
was not enforceable and remand for the court to make a separate
conclusion regarding fraud, as required by the Premarital
Agreement Statute. The trial court must then consider how its
decision on the Agreement’s enforceability affects its inventory
decision. Should the court determine that the Agreement does
not govern the inventory distribution, it must either enter
detailed findings to support its decision to award half of the
8. Husband also challenges the trial court’s findings regarding
the length of the marriage and Wife’s need for alimony.
Regarding the length of marriage finding, Husband argues that
‚the court gave no indication as to why the length of the
marriage was important or how that factor was considered.‛ The
court, however, is statutorily required to take into account the
length of the marriage as part of its assessment of how long the
alimony award should continue. See Utah Code Ann. § 30-3-
5(8)(a)(iv), (j) (LexisNexis 2013). Husband also seems to be
arguing that the court should have calculated the length of the
marriage from the date of the parties’ marriage to the date of
their separation in 2008, rather than to the date of the divorce
trial in 2012. Husband has not shown that he made that
argument in the trial court in a way that would have required
the court to include a more detailed finding about how it
calculated the length of the marriage. See 438 Main St. v. Easy
Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801. Regarding Wife’s need,
Husband has failed to convince us—except to the extent that
Wife’s need is implicated in his challenge to the equalization
analysis—that the court abused its discretion in accepting Wife’s
monthly expenses, as set out in her financial declaration. That
said, the trial court is, of course, free to reassess these findings on
remand as part of its reconsideration of the alimony award.
20130524-CA 22 2015 UT App 114Keyes v. Keyes
business inventory to Wife or reconsider that decision as the it
sees appropriate. Regarding the alimony award, we remand for
the trial court to reconsider the alimony award, taking into
account the concerns raised by this decision. We emphasize,
however, that nothing in this decision is meant to express an
opinion as to the ultimate outcome of the issues addressed.
____________
ORME, Judge (concurring)
¶44 I was initially perplexed at all the attention given to the
premarital agreement (the Agreement) in this case, thinking it was
essentially a red herring. The Agreement is not one that, by its
terms, purports to do anything terribly drastic, at least as concerns
property distribution. On the contrary, it provides for nothing
more radical than what the law already prescribes: The parties
will each retain their own separate property. Even without a
premarital agreement, the property Husband owned at the time
of marriage is his separate property, consistent with the usual rule
that the property each spouse brought to the marriage remains
their separate property. See Rappleye v. Rappleye, 855 P.2d 260, 263
(Utah Ct. App. 1993) (‚As a general rule, premarital property is
considered separate property and will be retained by the party
who brought it into the marriage.‛).
¶45 But if the Agreement is enforceable, it may well be that it
precludes the application of the narrow exception to the general
rule, i.e., that in adjusting the rights of the parties the trial court is
empowered to distribute the separate property of divorcing
spouses in some way other than solely to the owner, if equity so
requires. Haumont v. Haumont, 793 P.2d 421, 424 n.1 (Utah Ct.
App. 1990) (‚*T+he trial court may, in the exercise of its broad
discretion, divide the property equitably, regardless of its source
or time of acquisition.‛). See Burt v. Burt, 799 P.2d 1166, 1169 (Utah
Ct. App. 1990) (explaining that separate property is not ‚totally
beyond the court's reach in an equitable property division‛).
Absent the Agreement, equity would permit the court to direct
some of Husband’s separate property to Wife if, for example, it
20130524-CA 23 2015 UT App 114Keyes v. Keyes
determined Wife played a significant role in the enhancement of
its value or to make her whole from Husband’s claimed
dissipation of the marital estate in favor of ‚growing‛ his
business. Cf. Schaumberg v. Schaumberg, 875 P.2d 598, 603 (Utah Ct.
App. 1994) (concluding that use of marital assets to increase the
value of nonmarital property changed the character of the
appreciated portion from a separate asset to a marital asset, of
which each spouse was entitled to half). Whether the Agreement,
if enforceable, circumscribes the trial court’s ability to make that
kind of adjustment is a question we need not answer, pending the
trial court’s determination on remand as to the validity of the
Agreement.
____________
20130524-CA 24 2015 UT App 114