Knowlton v. Knowlton

• Decision Date: 09 February 2023
• Docket Number: 20200483-CA
• Citation: 2023 UT App 16
• Parties: Shondell Swenson Knowlton, Appellee, v. Bradley Lewis Knowlton, Appellant.
• Court: Utah Court of Appeals

2023 UT App 16

Shondell Swenson Knowlton, Appellee, v. Bradley Lewis Knowlton, Appellant.

No. 20200483-CA

Court of Appeals of Utah

February 9, 2023

Second District Court, Farmington Department The Honorable David M Connors No. 174701016

Julie J. Nelson, Troy L. Booher, and Alexandra Mareschal, Attorneys for Appellant

Jon M Memmott, Shaun L. Peck, and Shawn P. Bailey, Attorneys for Appellee

Judge Gregory K. Orme authored this Opinion, in which Judges Michele M. Christiansen Forster and Ryan M. Harris concurred.

OPINION

ORME JUDGE:

¶1 This appeal arises from the divorce of Bradley Lewis Knowlton and Shondell Swenson Knowlton. Bradley challenges various aspects of the trial court's valuation and equitable division of marital property, its reconciliation of expenses and its determination that Shondell was not in contempt of court.^[1] Because the court did not abuse its discretion in any of these respects, we affirm.

BACKGROUND

¶2 Bradley and Shondell separated in 2017 after 41 years of marriage. In August of that year, they entered a stipulated temporary order (the Temporary Order), which was then signed by the court. The Temporary Order governed how their substantial marital estate was to be treated during the pendency of the divorce proceeding. In July 2019, the trial court entered a bifurcated decree of divorce, dissolving the parties' marriage but reserving all other issues for trial "and continuing, unaltered," the Temporary Order.

¶3 The court held a fourteen-day bench trial over the course of multiple dates between May and November 2019 to value and divide the marital estate. It was undisputed that nearly all the parties' assets belonged to the marital estate and were subject to equitable division. We now discuss each asset bearing on an issue before us on appeal.

Ascent Construction, LLC

¶4 Ascent Construction, LLC (Ascent) is a private construction company Bradley founded during the marriage. Bradley is the "primary officer of Ascent Construction and continues to be active in its day to day business." In May 2018, the parties agreed to "jointly hire and retain" an expert (Ascent Expert) to prepare a "Fair Market Value of Ascent" and to value the parties' ownership interests in Ascent. The parties stipulated that "[t]he valuation date will be as of the most current, complete financial information available for" Ascent, and that it was "expected that such information will be as of December 31, 2017, or more current." Ascent Expert issued his report with a valuation that was current as of December 31, 2017.

¶5 Based on Ascent Expert's conclusion that Bradley held a 50% ownership interest in Ascent, the parties stipulated to value the ownership interest at $2,157,000. The parties further agreed that the asset should be awarded to Bradley.

¶6 In March 2019, Shondell moved to update Ascent Expert's valuation of Ascent on the grounds that "the valuation will be roughly 1.5 years out of date at the time of trial" and that the court had not ruled that a valuation date other than the time of trial was appropriate. In mid-May 2019, the court ruled that it was "appropriate for [Ascent Expert] to update his valuation of Ascent to the extent reasonably possible for purposes of the trial." The court ordered the parties to "jointly ask [Ascent Expert] to update the valuation and provide him with any information that he reasonably needs." The court further instructed Ascent to "produce the information and documents requested by [Ascent Expert], including any partial or preliminary materials." In the event "Ascent claims materials requested by [Ascent Expert] do not exist," the court directed that "as to any accounting or financial information, Ascent's accountant . . . must provide a sworn statement specifically identifying which of the materials requested by [Ascent Expert] do not exist and why they do not exist."

¶7 A week later-two days before trial was to begin-Ascent's accountant filed an affidavit stating that most of the financial documents Ascent Expert requested were not available-some because they were "[n]ot yet finalized." On the first day of trial, Ascent's accountant was questioned extensively regarding the requested documents. Ultimately, the issue of whether the valuation of Ascent could be updated remained unresolved.

¶8 Later that day, the parties resolved this dispute by entering a second stipulation (the May 2019 Stipulation) in the course of the following exchange:

MR. PECK^[2]: [I]n light of where we are actually at [in] the case, with time that is available to us, and in light of the difficulty, I think, it would impose on [Ascent Expert] to try and do his work . . . [Shondell] offers as a stipulation to accept the 2017 year-end value in the case with no further questioning about the issue.

And to the extent that opposing counsel is willing to agree to that stipulation as well, I think we will just proceed on the 2017 valuation. We can waive calling [Ascent Expert] since that report has already been stipulated to. . . .

So with that in mind, I think that's what we offer to do.

THE COURT: You're offering as a stipulation? Is there a stipulation or-

MR. PECK: Well, [Ascent Expert's] report is already stipulated as to 2017.

THE COURT: Well, I know that. I know that part. But I was trying to figure out if the rest of it has been stipulated.

MR. PECK: The stipulation, in essence, is let's let go of the rest of the issues on that, and let's proceed with the information that's already been stipulated as to the value of 2017, and we're okay with that. We will simply ask no more questions about that and just rely on [the] 2017 valuation by [Ascent Expert].

THE COURT: Mr. Rudd?^[3]

MR. RUDD: No objection. We're comfortable with that. It's the agreement of the parties as well. So no.

THE COURT: Okay. Well, with that in mind, I'm good with that too. So essentially what we're saying is [Ascent Expert's] already stipulated to . . . report regarding the 2017 valuation will be the valuation we'll use on this asset for this trial.

MR. PECK: Yes.

MR. RUDD: And we would ask that his report be received in evidence.

THE COURT: Is there any objection?

MR PECK: No.

THE COURT: All right. So his report will be received into evidence. All right. Thank you.

The parties thus agreed to cease further inquiry into whether Bradley complied with the court's order and to use Ascent Expert's existing, un-updated 2017 valuation of the marital estate's ownership interest in Ascent at trial.

¶9 But in her written closing argument, Shondell argued that despite the stipulated valuation of $2,157,000, Ascent should instead be valued at $2,396,000 because Ascent Expert applied a 10% "lack of control discount" to the 2017 valuation. She asserted that Bradley testified "three different times" at trial that he owned a controlling interest in Ascent. Accordingly, she contended that the 10% discount should be removed. Bradley argued for enforcement of the May 2019 Stipulation, insisting that they had already "stipulated to both the value ($2,157,000) and the distribution of Ascent" to him.

¶10 In October 2019-in the midst of the ongoing trial-an Ascent client filed a complaint against Ascent, alleging claims based in contract and tort and seeking damages in excess of $38 million. In late-February 2020-after the trial in the present case had already concluded but before the court issued its ruling-"the sureties issuing the performance bonds for Ascent Construction . . . sent a formal demand letter from their attorney . . . demanding that Ascent Construction together with Brad and Shondell jointly and severally indemnify the Sureties for up to $40 million in performance and payment bond claims."

¶11 In response, Bradley changed his position on the inviolability of the May 2019 Stipulation and filed an expedited motion to update the valuation of Ascent. He asserted that this indemnity demand "will dramatically affect the valuation of Ascent Construction, and it may affect the personal liability of both Brad and Shondell tremendously" and "it therefore will affect the value of the marital estate in a correspondingly dramatic manner." Shondell opposed the motion, now arguing that the May 2019 Stipulation was binding and should not be revisited. She also argued that Bradley was aware of the underlying dispute as early as October 2019 but did not present that information at trial despite having an opportunity to do so.

¶12 In its trial ruling, issued in April 2020, the court first addressed Shondell's request that the valuation of Ascent be increased by 10%. The court held that the May 2019 Stipulation "as to the value of the marital interest in Ascent Construction did not leave room for Shondell to now argue for a different valuation, even if that different valuation is still based on [Ascent Expert's] valuation report." And although "subsequent testimony regarding Brad's percentage interest in Ascent Construction is not entirely clear and it would be difficult to reach a conclusion on whether that interest is exactly 50%, as Brad says, or is slightly more than 50%, as Shondell now claims[,] . . . there is no ambiguity in the stipulation reached by the parties and announced in open court at the outset of trial."

¶13 Next, the court denied Bradley's expedited motion to update the valuation of Ascent. The court stated that because "there was no stipulation by the parties to the possibility that the stipulated value of Ascent Construction might change between the date of the valuation (December 31 2017) and the date of the divorce decree," it was "persuaded that the [May 2019 Stipulation] to the Value of Ascent Construction purported to fix the value of the asset for all purposes related to the equitable division of ...