Jurado v. Jurado

• Decision Date: 09 February 1995
• Docket Number: No. 15516,15516
• Citation: 1995 NMCA 14,892 P.2d 969,119 N.M. 522
• Parties: Jacqueline Duran JURADO, Petitioner-Appellee/Cross-Appellant, v. Pedro D. JURADO, Jr., Respondent-Appellant/Cross-Appellee.
• Court: Court of Appeals of New Mexico

Page 969

892 P.2d 969

119 N.M. 522

Jacqueline Duran JURADO, Petitioner-Appellee/Cross-Appellant, v. Pedro D. JURADO, Jr., Respondent-Appellant/Cross-Appellee.

No. 15516.

Court of Appeals of New Mexico.

Feb. 9, 1995.

[119 N.M. 525] Charlotte Greenfield, Reeves, Chavez, Greenfield, Acosta & Walker, P.A., Las Cruces, for petitioner-appellee/cross-appellant.

Lloyd O. Bates, Jr., Bates Law Firm, Las Cruces, for respondent-appellant/cross-appellee.

OPINION

PICKARD, Judge.

This divorce case involves an appeal by Husband and a cross-appeal by Wife. Husband argues that Wife should not have been awarded a lien for a portion of the increased value of his separate property. Wife argues that she should have been awarded prejudgment interest on the community lien for the two years between the time the divorce was entered and the time the property issues were resolved and that the trial court's calculation of Husband's child support obligation was erroneous. We affirm on all issues regarding the trial court's award of a lien to Wife, and we reverse and remand on the calculation of child support.

ISSUES

On appeal, Husband raises the following specific issues: (1) whether the trial court erred in awarding Wife a portion of the value of Husband's separate property; (2) whether the trial court failed to give Husband credit for the natural appreciation of his separate property; (3) whether the trial court selected an arbitrary rate of return; (4) whether there was no legal or evidentiary basis for the trial court's apportionment of the increase in the value of Husband's property; and (5) whether the trial court erred in admitting Wife's exhibits 75 and 76 (two reports purporting to show the rates of return on capital investment properties).

In her cross-appeal, Wife raises the following issues: (1) whether the trial court's child support calculation violates standards and policies of the New Mexico Child Support Guidelines, and (2) whether Wife should be awarded interest from the date of the valuation of the community lien until payment.

FACTS

The parties were married from 1980 to 1991. Shortly before the marriage, Husband became a 50% partner in Jurado Farms, his family's business. Jurado Farms is a diversified business consisting of farming property, agricultural processing property, and miscellaneous other real property, and it is Husband's sole and separate property. In 1980, Jurado Farms was valued at $965,714. At the time of the divorce in 1991, Jurado Farms was valued at $4,819,858. The trial court found, and the parties do not dispute, that Husband's share of the business at the time of dissolution was $2,409,929.

During the course of the marriage, Husband worked at Jurado Farms full-time. Wife worked at Jurado Farms as a bookkeeper intermittently and set up the bookkeeping computer system. Later in the marriage, Wife acted as the real estate agent for real estate in a subdivision owned by Jurado Farms.

The trial court found that both parties were undercompensated by Jurado Farms for their talents, work, and labor during the marriage. The trial court divided the appreciation in Jurado Farms equally between Husband and his brother. The amount of the original pre-marital equity, plus a rate of return of 10%, was deducted from the total value. One-half of Husband's remainder was awarded to Wife as her share of the community efforts. Although the trial court found that some of the properties' enhancement was due to natural appreciation, the judge did not make a precise determination as to what that would be; rather, natural appreciation was included in the rate of return figure.

HUSBAND'S APPEAL

Substantial Evidence

Issues 1, 2, 3, and 4 basically concern questions of substantial evidence. All of Husband's arguments may be distilled into the contention, frequently appearing in his brief, that Wife "presented no evidence ... regarding any amount of increase in the value of separate property resulting from undercompensated community labor." More specifically, Husband complains that "[n]o witness called by [Wife] and no exhibit introduced by [Wife] identified an amount of increase of value in [Husband's] separate property due to the uncompensated community efforts," and "[Wife] presented no testimony and no properly admitted exhibit described a fair rate of return for the nature of [Husband's] business."

It is well settled that in reviewing Husband's challenge, we view the evidence in the light most favorable to the findings and judgment entered below. Smith v. Smith, 114 N.M. 276, 280, 837 P.2d 869, 873 (Ct.App.1992). If substantial evidence exists, then the conclusion of law must be upheld absent an abuse of discretion. Id. This Court indulges in all reasonable inferences that can be drawn from the evidence in support of the judgment. Zemke v. Zemke, 116 N.M. 114, 118, 860 P.2d 756, 760 (Ct.App.), cert. denied, 116 N.M. 71, 860 P.2d 201 (1993).

On appeal, it was Husband's duty to set forth the evidence in the light most favorable to support the findings, and then demonstrate why the evidence failed to support the findings made by the trial court. See State ex rel. Martinez v. Lewis, 116 N.M. 194, 206, 861 P.2d 235, 247 (Ct.App.), cert. denied, 115 N.M. 709, 858 P.2d 85 (1993); SCRA 1986, 12-213(A)(3) (Repl.1992). However, Husband's briefs generally summarize the evidence most favorable to himself and omit many of the following important facts, together with the inferences that may be properly drawn therefrom. Husband claimed he was paid only $1,000 a month, but Jurado Farms paid his house payment, health insurance, car payment and repairs, utilities, gasoline, taxes, child support, and attorney fees. According to Wife's expert, the undercompensation of the parties contributed to Jurado Farms' growth; the work and skill levels of the parties contributed to the growth of the business; and the fair market value of Jurado Farms was enhanced exponentially by not paying competitive wages and by purchasing additional properties. Wife's expert also testified that Jurado Farms was profitable enough to pay off hundreds of thousands of dollars in debts "in one single swipe, so I figured that if they are able to do that, they could also be paying comparable compensation and maybe slow down their acquisition binge."

The community is entitled to a lien against the separate property of a spouse for the enhanced value of such property attributable to community labor during the marriage. Portillo v. Shappie, 97 N.M. 59, 60-64, 636 P.2d 878, 879-83 (1981); Martinez v. Block, 115 N.M. 762, 764, 858 P.2d 429, 431 (Ct.App.1993); Smith, 114 N.M. at 280, 837 P.2d at 873. The labor of the parties belongs to the community rather than to the individuals, but community labor, by itself, does not give rise to a community interest. Martinez, 115 N.M. at 764, 858 P.2d at 431. Rather, it is the increase in the value of the asset that is apportioned among separate and community interests. Id.

Once a property's separate character is established, it maintains that character until it is shown to be community property by direct and positive evidence. Zemke, 116 N.M. at 119, 860 P.2d at 761; Bayer v. Bayer, 110 N.M. 782, 786, 800 P.2d 216, 220 (Ct.App.), cert. denied, 110 N.M. 749, 799 P.2d 1121 (1990). Any increase in the value of separate property is presumed to be separate unless it is rebutted by direct and positive evidence that the increase was due to community funds or labor. Id.

The real question in this case is "What constitutes direct and positive evidence?" Husband appears to argue that there must be precision and a clearly defined, objective figure presented. He relies primarily on Bayer and its discussion of direct and positive proof. See id., 110 N.M. at 785-86, 800 P.2d at 219-20. Wife points to Portillo, contending that mathematical exactness is neither expected nor required, and that the goal should be substantial justice upon the particular facts of each case. See Portillo, 97 N.M. at 62, 636 P.2d at 881. Wife further argues that the trial court correctly applied the method for valuation expressed in Dorbin v. Dorbin, 105 N.M. 263, 268, 731 P.2d 959, 964 (Ct.App.1986).

In Dorbin, the Court articulated the following four-step formula:

1) The value of the separate asset or the separate portion of an asset at the date of marriage is determined.

2) That pre-marriage value is treated as though it had been a well-secured, long-term investment and such interest as a well-secured, long-term investment would have earned is added to the separate pre-marriage value. The total is the separate property interest.

3) The fair market value of the asset is determined as of the date of divorce.

4) The fair market value of the asset as of the date of divorce is apportioned with the separate property owner taking an interest equal to the value found at step 2 while the community receives the balance of the fair market value.

Id. at 268, 731 P.2d at 964. This method gives the separate property owner a " 'fair return on his investment.' " Id. In addition to the property's value at the time of the marriage and at the time of divorce, the formula requires proof of what constitutes a " 'fair return.' " Id.

In this case, both parties presented evidence of the value of Jurado Farms at the time of the marriage. The trial court determined Husband's valuation was proper. This finding is not disputed on appeal. An unchallenged finding of the trial court is binding on appeal. Stueber v. Pickard, 112 N.M. 489, 491, 816 P.2d 1111, 1113 (1991). Similarly, the trial court chose Husband's valuation of Jurado Farms at the time of divorce. See Cox v. Cox, 108 N.M. 598, 603, 775 P.2d 1315, 1320 (Ct.App.) (parties cannot complain of findings they request), cert. denied, 108 N.M. 624, 776 P.2d 846 (1989); Mitchell v. Mitchell, 104 N.M. 205, 217, 719 P.2d 432, 444 (Ct.App.) (conflicting evidence between experts must be resolved by the trial court), ...