Lopez v. Lopez

• Docket Number: 84950-COA
• Decision Date: 30 November 2023
• Citation: 139 Nev.Adv.Op. 54
• Parties: MARIA LOPEZ, Appellant, v. PEDRO LOPEZ, Respondent.
• Court: Nevada Court of Appeals

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139 Nev.Adv.Op. 54

MARIA LOPEZ, Appellant,
v.
PEDRO LOPEZ, Respondent.

No. 84950-COA

Court of Appeals of Nevada

November 30, 2023

Appeal from a district court decree of divorce. Eighth Judicial District Court, Family Division, Clark County; Dawn Throne, Judge.

Affirmed.

McFarling Law Group and Emily McFarling, Las Vegas, for Appellant.

Leavitt Law Firm and Dennis M. Leavitt and Frank A. Leavitt, Las Vegas, for Respondent.

BEFORE THE COURT OF APPEALS, GIBBONS, C.J., and BULLA and WESTBROOK, JJ.

OPINION

GIBBONS, C.J.

In this appeal, we examine the district court's authority in a divorce action to resolve community property disputes over property held in a revocable inter vivos trust. Our analysis brings us to an issue of first impression: whether a revocable inter vivos trust holding community property must be named as a necessary party in a divorce action where the

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divorcing spouses are co-trustees, co-settlors, and beneficiaries. Because we conclude that the spouses are the materially interested parties, and that divorce revokes every devise given by a settlor to their former spouse in a revocable inter vivos trust, we hold that the parties are not required to name such a revocable inter vivos trust as a necessary party in a divorce action where the spouses are co-settlors, co-trustees, and beneficiaries. We accordingly uphold the district court's distribution decisions and, ultimately, affirm its decree of divorce.

FACTS AND PROCEDURAL HISTORY

Appellant Maria Lopez and respondent Pedro Lopez were married in Mexico in 1995. After they were married, the parties moved to the United States and created the P & D Family Trust, a revocable inter vivos trust over which they, as co-settlors and co-trustees, retained the right to revoke, alter, or amend at any point during their lifetimes.^[1] During their marriage, the parties collectively placed eight properties into the P & D Family Trust. Of those eight properties, Maria and Pedro had jointly purchased seven; they rented out six and used one as their marital residence. Maria's father purchased the eighth property and gave it to Maria's brother. That property is currently titled in the name of both Maria's brother and the family trust.^[2] Maria, a licensed realtor, managed the six rental properties and oversaw rent collection.

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Around 2008, Maria and Pedro defaulted on their mortgage payments for three of the trust properties that they controlled (Grizzly Forest, Abrams Avenue, and San Gervasio). After defaulting, Maria and Pedro sold Grizzly Forest and Abrams Avenue via short sales to third-party buyers with whom they had close relationships, and they financed these short sales with personal funds. Specifically, Maria and Pedro gave Maria's sister $280,000 to purchase Grizzly Forest and a close family friend $80,000 to purchase Abrams Avenue. Maria contends that the funds came from her separate property, while Pedro argues that the funds came from their community assets. Almost immediately after Maria's sister and the parties' friend purchased the properties, they gifted the properties back to Maria, in her name alone, titled as her sole and separate property. As to San Gervasio, Maria alleges that she used her inheritance to pay off the mortgage, after which Pedro signed over his community interest in the property to Maria.^[3] Pedro denies conveying his interest in San Gervasio to Maria and alleges that Maria forged his signature on the deed.^[4]

Throughout the parties' marriage, Maria and Pedro each maintained separate and joint bank accounts. The parties, particularly Maria, were neither forthcoming nor transparent regarding their funds-

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each made several transfers from the joint accounts to their separate accounts without telling the other. Shortly before the divorce, Maria also deviated from her historical practice of depositing rental payments into the parties' joint accounts and instead began placing the proceeds in her separate accounts.

Pedro filed for divorce in April 2021. During the case management conference (CMC), the district court urged the parties to comply with their mandatory NRCP 16.2 financial disclosure requirements and produce accurate and thorough financial disclosure forms (FDFs).^[5]Throughout the CMC and later hearings, Maria represented that the Grizzly Forest, Abrams Avenue, and San Gervasio properties were her separate property and should not be included in the court's community property distribution decisions. She also argued that the district court did

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not have the authority to make distributions of the family trust's assets because it did not have jurisdiction over the family trust. Additionally. Maria claimed a prenuptial agreement existed that the parties signed in Mexico; the agreement supposedly demonstrated that Maria had $80,000 in personal savings and a $250,000 inheritance from her father that were to remain her separate property throughout the marriage. Pedro denied the agreement's existence and expressed his concern that Maria would attempt to fabricate a document with her sister, an attorney in Mexico, to use at trial. The district court repeatedly cautioned Maria that she would need to produce the prenuptial agreement before trial with an official translation for the court to admit it into evidence. The district court also expressed frustration that neither party had engaged in sufficient discovery; subpoenaed bank records; or obtained formal appraisals for their real property, which at that point had approximately $3 million in equity.

Prior to trial, the district court held a hearing to resolve all pending motions. At that hearing, the district court found that both Maria's and Pedro's FDFs were inadequate and did not provide the court with a sufficient basis from which it could distribute the parties' community assets. The district court noted that any party claiming family trust property to be his or her separate property would need to overcome the presumption of community property by clear and convincing evidence. The district court also acknowledged Pedro's concern that Maria had yet to produce the prenuptial agreement.

At trial, Maria argued that the Grizzly Forest, Abrams Avenue, and San Gervasio properties were her separate property because she financed the Grizzly Forest and Abrams Avenue short sales with separate property and paid off the San Gervasio mortgage with funds from her

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inheritance. The district court was unconvinced and found that Maria had not produced adequate tracing evidence (through her NRCP 16.2 disclosures or otherwise) sufficient to show that the funds used to finance the short sales and pay off the mortgage came from anywhere other than the parties' community assets.^[6] The district court also conveyed its strong belief that the parties had used "straw-buyers" to engage in mortgage fraud. The judge emphasized her distaste for the parties' behavior and. expressed her distrust for both parties.

During Maria's cross-examination of Pedro, she questioned him about the alleged prenuptial agreement, and Pedro flatly denied its existence. After Pedro's denial, Maria proffered an unsigned physical document, written in Spanish, purporting to be a copy of the alleged prenuptial agreement. Pedro objected to its admission, and Maria responded that she had been able to obtain the document from Mexico only two days before trial. Maria did not explain why she did not disclose the document to Pedro in those two days or how she was finally able to procure it. Pedro argued that the document was untimely and not properly authenticated. The district court agreed, stating that because Maria had not produced the document prior to trial as the court had instructed, and because the document was in Spanish, with no signatures, and without any translation, the document was inadmissible. The district court explained that allowing Maria to cross-examine Pedro on an unproduced document

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that had not been properly authenticated or translated would amount to trial by ambush.

When questioning Maria about the bank accounts, the district court instructed Maria to open and display her online banking information, which revealed that Maria had understated the total amount in the accounts by almost $342,000 during her testimony.^[7] The district court called this a material misrepresentation that Maria made in an attempt to defraud Pedro.

In its findings of fact, conclusions of law, and decree of divorce, the district court deemed all family trust properties to be community property and ordered them distributed equally between the parties because neither party offered a compelling reason for an unequal distribution. This appeal followed.

ANALYSIS

On appeal, Maria argues that the district court (1) did not have authority to distribute the P & D Family Trust's assets; (2) made an unequal distribution of property and abused its discretion because it distributed the Grizzly Forest, Abrams Avenue, and San Gervasio properties as community property and not Maria's separate property; and (3) abused its discretion when it did not allow Maria to question Pedro on cross-examination about the alleged prenuptial agreement. Maria also claims (4) that, on remand,

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this case should be reassigned to a new judge because of alleged prejudicial comments the district court judge made during the trial.^[8]

The district court had authority to distribute the P &D Family Trust's assets

Maria argues that the district court erred when it exercised authority over the family trust's assets. Because the trust was a revocable inter vivos trust established after marriage, and the parties were co-settlors, co-trustees, and beneficiaries, we conclude that the district court did not err in concluding it had authority to distribute trust assets.

The trust's distributions were immediately revoked upon divorce

Maria argues that the district court...