Kimball v. Kimball

• Decision Date: 27 August 2009
• Docket Number: No. 20060263-CA.,20060263-CA.
• Citation: 217 P.3d 733,2009 UT App 233
• Parties: James Lewis KIMBALL, Petitioner, Appellant, and Cross-appellee, v. Merae KIMBALL, Respondent, Appellee, and Cross-appellant. Merae Kimball, Plaintiff and Appellee, v. James Lewis Kimball, Defendant and Appellant.
• Court: Utah Court of Appeals

217 P.3d 733

2009 UT App 233

James Lewis KIMBALL, Petitioner, Appellant, and Cross-appellee, v. Merae KIMBALL, Respondent, Appellee, and Cross-appellant.

Merae Kimball, Plaintiff and Appellee, v. James Lewis Kimball, Defendant and Appellant.

No. 20060263-CA.

Court of Appeals of Utah.

August 27, 2009.

Wendy J. Lems, Midvale, for Appellant.

Thomas R. Blonquist, Salt Lake City, for Appellee.

Before Judges THORNE, ORME, and BILLINGS.¹

OPINION

ORME, Judge:

INTRODUCTION

¶ 1 This consolidated appeal arises from a divorce action filed by James Lewis Kimball (Husband) against Merae Kimball (Wife), and a fraud and unjust enrichment action filed by Wife against Husband. The key issues, among the many others raised, are whether Wife's stock proceeds that were originally deposited into joint accounts but later transferred to Wife's individual account retained their nature as separate property; whether prejudgment interest was appropriate on the unjust enrichment award, which award was calculated based on canceled checks showing both a date and the amount; and whether the trial court erred in refusing to award attorney fees to Husband when it reasoned that Husband had no financial need because his family had already paid his attorney fees. Except for the attorney fees determination, we affirm the trial courts' various rulings in the two actions.

BACKGROUND

¶ 2 On March 18, 2002, after being married to Wife for a little over fifteen years, Husband sought a divorce. The August 7, 2003 decree of divorce dissolved the parties' marriage. When the matter ultimately went to trial, the main issues remaining involved whether money obtained after the sale of Wife's stock was separate property and whether Husband was entitled to an award of attorney fees. The trial court determined both matters in Wife's favor. Wife filed a fraud and unjust enrichment action against Husband on February 7, 2003, claiming that Husband altered the amounts of, and forged Wife's name on, certain checks, and that Husband was unjustly enriched thereby.² At trial, the court dismissed the fraud claim against Husband but ruled in Wife's favor on the unjust enrichment claim. Both parties appeal from the trial court's final rulings in the divorce and unjust enrichment actions. The record is extensive. We discuss the relevant factual findings from both proceedings doing our best—believe it or not—to be as succinct as possible.

I. Wife's Stock

A. Wife's Receipt of the Stock

¶ 3 Wife's father formed Utah Bearing and Fabrication, Inc. (the Corporation). After her father's death in 1993, Wife, her mother, and her siblings reached an arrangement whereby Wife received 1005 shares of the Corporation's stock, which the Corporation repurchased for $2,500,000 in 1995. Under the terms of the sale, "[Wife] received a down payment of $500,000 during March of 1995, and a ten year trust deed note for $2,000,000 payable at the rate of $25,335.15 per month." Wife received the scheduled monthly payments through June 1997. During July 1997, she received the remaining balance owed, $1,697,039.70. Mindful of the family origins of the stock proceeds, the trial court characterized the money Wife received from the stock transaction as an "inheritance."

B. Separate Property that Was Not Commingled

¶ 4 Even though Wife used some of the stock proceeds for family purchases, and even though some of the stock proceeds at times were deposited into the parties' joint accounts, the trial court determined that Wife's actions as a whole manifested an intent to keep her stock proceeds as separate property. Wife also opened and used an individual account with Fidelity Investments to hold some of the stock proceeds. Wife "filed an individual tax return for 1998 and reported all earnings ... from the Fidelity Account." While during "1996 and 1997[] the trust deed monthly payment[s were] deposited in the parties' joint account," Wife's practice was to later transfer some of that money to her individual Fidelity account. The trial court accordingly characterized the joint account as "conduits" not "repositories" for her inheritance. While acknowledging that the money may have had a marital character while in the joint accounts or when used to purchase family items, the trial court determined that when the funds were removed from the joint accounts "they resumed their character as [Wife]'s inherited funds and as such they became the sole and separate property of [Wife]." The trial court viewed the stock proceeds as readily traceable, and further determined that "[t]o the extent ... inherited funds were placed in [other] joint accounts," such placement "was done as a convenience and did not have the legal, the factual or the intended legal [e]ffect of either commingling the funds or making them marital property."

¶ 5 Based on these facts, the trial court found that "[e]very act of [Wife] manifested her intent that her inheritance be handled separately" when the "inheritance was placed in a separate account accessible through the writing of checks by [Wife] only"; the "inherited funds were placed in the Fidelity Account that was in [Wife]'s name at all times"; and the parties' "[j]oint accounts were used as conduits for [Wife]'s inherited funds, not as repositories in which they became commingled."

C. Husband's Claimed Enhancement

¶ 6 When Wife received the first offer for her stock, the amount proposed was $1,700,000. Husband claims he discouraged acceptance of the offer. As mentioned above, Wife ultimately sold her stock for considerably more, namely $2,500,000. The trial court determined that "[Husband] did not enhance [Wife]'s inheritance," finding that "[n]o act of [Husband] increased the [number] of shares of the Family Business that [Wife] received, caused [Wife]'s holdings in the Family Business to have greater value or resulted in [Wife] receiving a greater price for her holdings." It reasoned that "[Husband's] efforts ... were to at best encourage seeking brief replacement stock; but there is no evidence that his efforts directly resulted in a greater price being paid, or that the stock had a greater value because of his efforts."

II. Husband's Dishonest and Questionable Actions

¶ 7 In the divorce proceeding, the trial court found that "[Husband], without authorization, forged [Wife]'s name on Fidelity Account checks totaling $142,467 made payable to himself or [to] `cash' that he converted to cash." While claiming that he used the money "for family purposes," Husband did not disclose the transactions to Wife at the time, did not at any time tell Wife how he used the funds, and did not provide an accounting of how the funds were spent. The trial court found that "[Husband] did not substantiate his testimony by producing receipts, cancelled checks or other documentation." Husband additionally, "without authorization, altered 6 checks given to him by [Wife] by increasing them from $1,000 to $4,000" and these "alterations reduced [Wife]'s balance in the Fidelity Account [by] $18,000 more than [Wife] intended when she wrote the checks." Husband also did not substantiate his claim that he used the $18,000 for family expenses. In making its ruling on the altered checks, however, the trial court found Husband's testimony credible and determined that "[i]t [wa]s reasonable that the money so obtained by [Husband] was used for family purposes for the benefit of all members of the family, including [Husband]." The trial court further determined that "[Husband] should not be punished in this [divorce] proceeding" for altering or forging the checks at issue.

¶ 8 The trial court additionally found that Husband misrepresented his income to Wife from 1998 to 2001, apparently overstating his productivity as a salesman, and that he also "failed to disclose collection actions and lawsuits filed against him." Further, Husband represented to Wife that a Suburban, a vehicle the parties needed to acquire following an accident, could be purchased entirely with insurance proceeds. Husband then "forged [Wife's] name on a $30,510.95 check drawn on the Fidelity Account and made payable to Larry H. Miller Bountiful to pay for the ... Suburban." This "check was returned by Fidelity Investments marked `signature does not match.'" Husband later obtained a loan from Zions Bank because the insurance proceeds did not cover the full price of the Suburban, without informing Wife of the loan. Husband also did not tell Wife that he signed her name to checks, drawn on the Fidelity Account, to make payments on the Zions loan. Further, during December 2000, Husband represented on a credit application that he made $60,000 per month while his income from 1998 to 2000 was inconsequential, if he earned anything at all. He claims that this was an error on his application, which was supposed to reflect an income of $60,000 per year.³

¶ 9 In the unjust enrichment action, the trial court found that Husband denied acting wrongly in altering or signing Wife's name to checks and instead Husband insisted "that he acted consistent with his role as manager of family finances." Husband claimed that he had Wife's "tacit approval" to sign her name to the checks or to alter the amounts of the checks. Husband also continued to state that he used the money for "family purposes." The trial court found that his claim that the money was used for family purposes was "not corroborated by any credible evidence." It further determined that "[his] actions constitute[d] theft and forgery and he deceived [Wife] into believing he was working" and that "[he] took improper advantage of his managerial position" within the family. Finally, the court determined that none of the proceeds obtained from the altered checks, or checks made payable to Husband or to "Cash" that Husband signed in Wife's name, were used for family purposes.

¶ 10 The trial court further concluded that Husband was unjustly enriched from the money taken to which he was not...