Bradford v. Bradford

• Decision Date: 16 December 1999
• Docket Number: No. 981745-CA.,981745-CA.
• Citation: 1999 Utah Ct. App. 373,993 P.2d 887
• Parties: George R. BRADFORD, Plaintiff and Appellee, v. Andrea O. BRADFORD and James A. Demita, Defendants and Appellants.
• Court: Utah Court of Appeals

993 P.2d 887

1999 Utah Ct. App. 373

George R. BRADFORD, Plaintiff and Appellee, v. Andrea O. BRADFORD and James A. Demita, Defendants and Appellants.

No. 981745-CA.

Court of Appeals of Utah.

December 16, 1999.

Howard Chuntz, Orem, for Appellants.

Thomas R. Patton, Aldrich Nelson Weight & Esplin, Provo, for Appellee.

Before GREENWOOD, Associate P.J., and BENCH and BILLINGS, JJ.

OPINION

GREENWOOD, Associate Presiding Judge:

¶ 1 Mr. George K. Bradford filed for divorce from his wife, Mrs. Andrea O. Bradford, on June 10, 1997. In the same complaint, he alleged Mrs. Bradford had fraudulently conveyed a property interest in the couple's home to her son, Mr. James A. Demita, a named defendant. This appeal thus arises from two related cases tried together by agreement of the parties and the trial court. Mrs. Bradford appeals the trial court's order setting aside her conveyance of her interest in the home to Mr. Demita and the trial court's order awarding the home entirely to Mr. Bradford. We affirm the order setting aside the conveyance, but reverse the award of the home to Mr. Bradford and remand for further proceedings regarding property division between Mr. and Mrs. Bradford.

RELEVANT FACTS

¶ 2 The Bradfords were married in June 1985. Each had been married once before, and each had at least one child from the prior marriage. No children were born of their marriage to each other.

¶ 3 During their marriage, the couple lived in Mr. Bradford's home located in Spanish Fork, Utah. Mr. Bradford was raised in this home, which his grandfather and father both owned before him. Before marrying Mrs. Bradford, he received title to the home from his father as a gift. Several improvements were made to the home during the couple's marriage, including a repaired roof and septic system, the addition of a new furnace, and plumbing work connecting the home to the city's water supply. Mr. Bradford paid for these improvements with funds he received before the marriage as part of a settlement with Geneva Steel. Mrs. Bradford's only contribution to the improvements consisted of making phone calls and arranging for the work to be done. The undisputed present estimated value of the home is $180,000.

¶ 4 In 1989, approximately four years after they married, Mr. Bradford transferred the home by way of warranty deed to himself and his wife as "joint tenants with full rights of survivorship and not as tenants in common." Three years later, however, Mr. Bradford filed for divorce and asked that the home and real property be awarded to him. That action was dismissed in 1993 after the parties reunited.

¶ 5 The couple continued to have marital difficulties, and Mr. Bradford threatened divorce many times. Nevertheless, in 1996, the couple engaged in a joint business venture with Mrs. Bradford's son, Mr. Demita, to develop property, upon which the home was located. Mr. Demita was to receive twenty-five percent of the profits for his assistance in developing the property. At the time of this business arrangement, Mr. Demita was living with the Bradfords and had done so rent-free since December 1995.

¶ 6 In July 1996, shortly after the property venture began, Mr. Bradford arrived home to find several engineers in the house. He was upset with the slow progress of the project and had an argument with Mrs. Bradford. This time, the argument was severe, and the couple again discussed divorce.

¶ 7 On August 8, 1996, Mrs. Bradford transferred her interest in the home by way of quit claim deed to her son, Mr. Demita. She later claimed this transfer was for "estate planning purposes." Mr. Demita gave Mrs. Bradford $10 as consideration for the property transfer. Neither Mrs. Bradford nor Mr. Demita told Mr. Bradford about this transaction, and Mrs. Bradford continued to live in the home. Mr. Bradford discovered the existence of the quit claim deed several months later when his daughter went to the County Recorder's Office to verify Mr. Demita's representations that the home and property had been rezoned for development. She found the quit claim deed and discovered the property, in fact, had not been rezoned.

¶ 8 On June 10, 1997, soon after he learned about the deed to Mr. Demita, Mr. Bradford filed a complaint for divorce against Mrs. Bradford and included Mr. Demita as a party to the action. After a bench trial, the court awarded Mr. Bradford a divorce. The trial court also found that the transfer between Mrs. Bradford and Mr. Demita was fraudulent and set aside the conveyance. In awarding the subject property, the trial court concluded the house and real property were not partitionable and would have to be refinanced or sold if awarded to both Mr. Bradford and Mrs. Bradford. The court thus awarded the home and the real property to Mr. Bradford. In addition, the court awarded Mrs. Bradford alimony in the amount of $600 a month and divided equally the remaining marital property, including bank accounts, an IRA account, retirement funds, and the cash value of an insurance policy.

¶ 9 Mrs. Bradford moved the trial court to amend its findings of fact and conclusions of law, but the court denied her motion. Mrs. Bradford and her son then filed this appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 10 This case involves three critical issues. First, did Mrs. Bradford's conveyance of her joint tenancy interest in the home constitute a fraudulent transfer? Because this issue involves both questions of law and of fact, we review the trial court's findings of fact for clear error. See Jeffs v. Stubbs, 970 P.2d 1234, 1244 (Utah 1998). "In contrast, we review a trial court's conclusions as to the legal effect of a given set of found facts for correctness." Id. (citing State v. Pena, 869 P.2d 932, 936 (Utah 1994)). Nevertheless, "[w]e may still grant the trial court discretion in its application of the law to a given fact situation." Id.

¶ 11 Second, if the transfer was fraudulent, and therefore void, was the nature of the property marital or separate? This issue primarily presents a question of law; therefore, we review the trial court's legal conclusions concerning the nature of property for correctness. See Jefferies v. Jefferies, 895 P.2d 835, 836 (Utah Ct.App.1995) (considering whether 401(k) plan is marital property).

¶ 12 Third, did the trial court properly award the subject property entirely to Mr. Bradford? In deciding this question, we acknowledge that "[t]rial courts have considerable discretion in determining alimony and property distribution in divorce cases, and will be upheld on appeal unless a clear and prejudicial abuse of discretion is demonstrated." Howell v. Howell, 806 P.2d 1209, 1211 (Utah Ct.App.1991).

ANALYSIS

I. Fraudulent Conveyance

¶ 13 We first address the fraudulent conveyance issue. The trial court concluded the transfer was fraudulent under the Uniform Fraudulent Transfer Act, see Utah Code Ann. §§ 25-6-1 to -13 (1998), and declared the transfer void.

¶ 14 A fraudulent transfer in Utah first requires a creditor-debtor relationship. Essentially, a fraudulent transfer occurs when a debtor transfers substantially all his or her assets to another to defraud a creditor or avoid a debt. A "creditor," according to section 25-6-2(4), "means a person who has a claim." A "`claim' means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." Utah Code Ann. § 25-6-2(3) (1998) (emphasis added); see also Zuniga v. Evans, 87 Utah 198, 206, 48 P.2d 513, 516 (1935) (holding persons having tort claim against grantor that was not reduced to judgment at time of conveyance are "creditors").

¶ 15 Although no Utah cases directly address whether a husband or wife becomes a creditor of his or her spouse when contemplating divorce, the Oregon Supreme Court's statement on the subject is helpful to our analysis:

In Weber v. Rothchild, 15 Or. 385, 388-89, 15 P. 650, 3 Am. St. Rep. 162 (1887), we held that a person in the position of plaintiff may maintain a suit to set aside a transaction which may defeat her recovery and rights in a contemplated suit for divorce. This rule prevails in other jurisdictions that have considered the matter.

We conclude, as did the trial court, that the conveyance by deed of April 14, 1972, was obtained by fraud to hinder or prevent plaintiff's recovery of [defendant's] equitable interest in the fourplex, in the divorce suit, and is therefore set aside and held to be void.

Adamson v. Adamson, 273 Or. 382, 541 P.2d 460, 466 (1975) (citations omitted).

¶ 16 In this case, the trial court determined that "[p]ursuant to Utah Code Ann. § 25-6-2(4) and § 25-6-5 Mr. Bradford is a creditor of Mrs. Bradford in that he has a claim to the real property which Mrs. Bradford deeded to her son, Mr. Demita." The trial court based this conclusion on the fact that Mr. Bradford had threatened divorce just weeks before Mrs. Bradford made the transfer. That conclusion is consistent with the Oregon Supreme Court's analysis in Adamson, which we adopt. In our view, the trial court correctly concluded Mr. Bradford was, indeed, a creditor of Mrs. Bradford, given that his claim to the house — although not reduced to judgment in a divorce proceeding — had arisen through recent threats of divorce. We note this conclusion is consistent with our supreme court's admonition to construe the statute liberally "to reach all artifices and evasions designed to rob the Act of its full force and effect." Butler v. Wilkinson, 740 P.2d 1244, 1260 (Utah 1987); see also Givan v. Lambeth, 10 Utah 2d 287, 291, 351 P.2d 959, 962 (1960) ("`[A]ll statutes made against fraud should be liberally and beneficially expounded to suppress the fraud.'") (quoting Twyne's Case, 76 Eng. Rep. 809 (1601)).

¶ 17 Having concluded Mr. Bradford is a creditor of Mrs. Bradford, we next examine whether Mrs. Bradford made a fraudulent transfer of...