Gardner v. Gardner, 19246

• Decision Date: 04 January 1988
• Docket Number: No. 19246,19246
• Citation: 748 P.2d 1076
• Parties: Betty M. GARDNER, Plaintiff and Appellant, v. William James GARDNER, Defendant and Respondent.
• Court: Utah Supreme Court

Page 1076

748 P.2d 1076

Betty M. GARDNER, Plaintiff and Appellant, v. William James GARDNER, Defendant and Respondent.

No. 19246.

Supreme Court of Utah.

Jan. 4, 1988.

Pete N. Vlahos, Ogden, for plaintiff and appellant.

C. Gerald Parker, Ogden, for defendant and respondent.

STEWART, Associate Chief Justice:

Plaintiff Betty Gardner appeals from a decree awarding alimony and attorney fees in a divorce action she brought against her former husband, William Gardner. We reverse and remand for further consideration.

Mr. and Mrs. Gardner were married at Steels Tavern, Virginia, on April 17, 1950. No children were born to them, but the couple adopted two children who are now both adults. Early in the marriage, Mrs. Gardner worked full-time as a secretary while Mr. Gardner completed his medical training. Mr. Gardner also worked various jobs, and his parents provided support in the form of medical school tuition. Mrs. Gardner has not worked since 1958, when Mr. Gardner completed his medical training. Mr. Gardner is now employed as a general surgeon, earning $6,000 per month.

While married, Mr. and Mrs. Gardner acquired substantial real and personal property. Their major asset was a farm, including a home and equipment located near Eden, Utah, worth between $246,000 and $280,000. Other assets included Mr. Gardner's medical assets and retirement funds with an uncertain valuation of between $73,000 and $177,000; a contract for the sale of stock in the Ogden Clinic Investment Company; a certificate of deposit; household furniture, furnishings and fixtures; boats and automobiles; sporting equipment; and two horses and associated equipment. At the time of divorce, the couple's only outstanding debts were a first mortgage on the family home and a loan for the purchase of one automobile.

The trial court ordered that the farm, home, and equipment be sold and the proceeds be divided equally. Until the farm was sold, Mrs. Gardner was entitled to its use, although she had to pay the mortgage, taxes, and insurance. The court also ordered that the motor vehicles and boats be sold and the proceeds divided equally, with the exception of one personal automobile for each party. The household furnishings and other items of personal property were divided roughly equally, according to personal need. Mr. Gardner was awarded his medical and business assets, including retirement funds, except Mrs. Gardner was awarded one-third of the proceeds from the sale of the Old Ogden Clinic building to pay her attorney fees. They were to share equally a money market certificate. The court granted Mrs. Gardner $1,200 per month alimony, to be reduced to $600 per month following Mr. Gardner's retirement. Mrs. Gardner was also to have a claim for $50,000 against Mr. Gardner's estate in the event that he predeceased her.

Mrs. Gardner asks this Court to reverse the judgment of the lower court. She cites Woodward v. Woodward, 656 P.2d 431 (Utah 1982), for the proposition that she has a spousal right to an equitable distribution of Mr. Gardner's retirement funds. She also asserts a property interest in his medical degree and business and claims that the alimony award was insufficient. Finally, she asks this Court for an award of attorney fees.

In a divorce proceeding, the trial court should make a distribution of property and income so that the parties may readjust their lives to their new circumstances as well as possible. Turner v. Turner, 649 P.2d 6 (Utah 1982); MacDonald v. MacDonald, 120 Utah 573, 236 P.2d 1066 (1951). Although this Court may modify decisions of the trial court, its apportionment of marital property will not be disturbed unless it is clearly unjust or a clear abuse of discretion. Turner, 649 P.2d at 8.

The trial court awarded Mr. Gardner his retirement account and medical assets, without placing a present value on any of those assets. The trial court called both those types of assets "futuristic" and indicated that their value would be utilized at retirement. The court did not attempt to resolve the differing valuations of the assets and provided little explanation for the award to Mr. Gardner.

Recently, in Acton v. Deliran, 737 P.2d 996, 999 (Utah 1987), we noted:

Failure of the trial court to make findings on all material issues is reversible error unless the facts in the record are "clear, uncontroverted, and capable of supporting only a finding in favor of the judgment." Kinkella v. Baugh, 660 P.2d 233, 236 (Utah 1983). ... The findings of fact must show that the court's judgment or decree "follows logically from, and is supported by, the evidence." Smith v. Smith, 726 P.2d 423, 426 (Utah 1986). The findings "should be sufficiently detailed and include enough subsidiary facts to disclose the steps by which the ultimate conclusion on each factual issue was reached." Rucker [v. Dalton], 598 P.2d [1336] at 1338 [Utah 1979]. See also Mountain States Legal Foundation v. Public Service Commission, 636 P.2d 1047, 1051 (Utah 1981).

The trial court's statement in its findings that the retirement account and Mr. Gardner's medical assets are "futuristic" was apparently intended to mean that they could not be given a present value or should not for other reasons be taken into account. That, however, does not follow from the evidence presented at trial, nor is it supported by our cases. Regardless of how remote the full value of an asset is, it still has present value. The testimony adduced at trial devoted to differing valuations by the parties merited more precise findings.

In Woodward v. Woodward, 656 P.2d at 432, we recognized that retirement benefits, whether vested or not, are a form of deferred compensation which a court should at least consider when dividing marital assets. A right to deferred compensation acquired during marriage, or that portion of one's right to deferred compensation acquired during marriage, should not be entirely ignored in dividing assets, irrespective of when the vested funds are payable. Thus, marital property "encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived; and this includes any such pension fund or insurance." Englert v. Englert, 576 P.2d 1274 (Utah 1978).

However, an award of a part of a spouse's retirement funds may create significant problems. In some instances, marital assets are sparse, income is low, and an award of an equitable share of retirement assets might work a substantial hardship. Courts have, however, awarded the value of the assets on a periodic payment plan and, in some instances, have provided for payments when payout begins. This alternative should be employed only in rare instances. In Woodward, the Court stated:

Long-term and deferred sharing of financial interests are obviously too susceptible to continued strife and hostility, circumstances which our courts traditionally strive to avoid to the greatest extent possible....

... [W]here other assets for equitable distribution are inadequate or lacking altogether, or where no present value can be established and the parties are unable to reach agreement, resort must be had to a form of deferred distribution based upon fixed percentages.

656 P.2d at 433 (quoting Kikkert v. Kikkert, 177 N.J.Super. 471, 478, 427 A.2d 76, 79-80 (1981)).

Obviously, dividing retirement or pension funds is not necessarily consistent with principles of equitable distribution in all cases. The purpose of divorce is to end marriage and allow the parties to make as much of a clean break from each other as is reasonably possible. An award of deferred compensation which ties a couple together long after divorce can frustrate that objective.

Nevertheless, the division of retirement funds between two persons can be accomplished when necessary. For example, in Rayburn v. Rayburn, 738 P.2d 238 (Utah App.1987), a physician was required to pay one-half the net present value of his retirement plan, $56,850, to his former wife in five annual installments. The court awarded present value of the share to be paid within five years to avoid "leaving the parties in a 'financial entanglement that would continue for approximately twenty or thirty years and would probably result in further court hearings and cause future animosity between the parties.' " Id. at 241-42. Rayburn provides a possible alternative for dealing with the value of the retirement account in this case. Because of the sizeable assets in this case, another alternative would be reapportionment of the property distribution to offset the value of the retirement account.

In any event, it will be necessary on remand to determine the value of the retirement account. The account has a present value of between $73,000 and $177,000, and the Court should at least consider the value of the account in making the property distribution.

Another alternative for the apportionment of property lies in the trial court's discretion to award the entire value of a solely owned professional corporation to the husband. Dogu v. Dogu, 652 P.2d 1308 (Utah 1982). In Dogu, the earning power of the corporation resulted entirely from Dr. Dogu's continuing ability to work; however, there were questions as to his ability to do so. The trial court awarded the wife savings certificates, bank accounts, and stock to offset the present liquid assets of the corporation (accounts receivable and bank accounts). The trial court did not attempt to value the future earnings potential of the corporation, presumably because of questions regarding the ability of Dr. Dogu to continue to generate income for the corporation.

The Ogden Clinic, of which Mr. Gardner is a member, is a well-entrenched institution, whose twenty-three members have banded together in a business organization. It is not likely to be highly susceptible to earnings interruptions because of the ill health of one of its members. The Ogden Clinic is not entirely valueless. Mr. Gardner's share,...