Oldroyd v. Oldroyd
| Decision Date | 22 December 2022 |
| Docket Number | 20210073-CA |
| Parties | Robben Ann OLDROYD, Appellant, v. Farrell Lynn OLDROYD, Appellee. |
| Court | Utah Court of Appeals |
Brent D. Wride, Attorney for Appellant
Brian E. Arnold and Lauren Schultz, Attorneys for Appellee
Opinion
¶1 Prior to their marriage, Robben Ann Oldroyd (Ann) and Farrell Lynn Oldroyd (Farrell) built a home on property owned by Ann. Ann paid for the materials and contractors used in the construction of the home, and Farrell contributed his skills and labor to build the specialty log home. When the parties divorced many years later, a dispute arose regarding their relative interests in the home. This is the third time questions relating to their dispute have come before this court. In the current appeal, we are asked to consider whether the district court erred in awarding Farrell a share of Ann's premarital equity in the home based on its application of the contribution and extraordinary situation exceptions to the separate-property presumption. We conclude that the contribution exception does not apply to premarital contributions and that the extraordinary situation exception does not apply because Farrell had other means of protecting his alleged interest in the home. Accordingly, we reverse the district court's ruling and remand with instructions for the court to award the disputed equity to Ann.
¶2 This is the third time this matter has come before this court. See Oldroyd v. Oldroyd (Oldroyd I ), 2017 UT App 45, 397 P.3d 645 ; Oldroyd v. Oldroyd (Oldroyd II ), 2019 UT App 155, 474 P.3d 467. Each appeal has concerned the parties’ home. Ann purchased the land on which the home was built before the parties were married. Oldroyd I , 2017 UT App 45, ¶ 2, 397 P.3d 645. While Ann and Farrell were dating, Ann arranged to have the home built. Id. Ann paid for the costs of materials and construction, but Farrell contributed "supervision, labor, work, expertise, and conceptual direction" for the construction. Id. ¶¶ 2, 4 (quotation simplified). Subsequently, the parties married and lived together in the home, but the land and home remained in Ann's name alone. Id. ¶ 2.
¶3 While both parties agree that Ann should receive a credit for what she spent on the land on which the home was built, the parties disagree about how the remaining equity in the home should be distributed. Farrell argues that all remaining equity should be shared equally between the parties. Ann, on the other hand, maintains that she should receive a credit for both the amount she spent on the land and the amount she spent on construction costs before the parties divide the remaining equity.1
¶4 In its original findings of fact and conclusions of law in the parties’ divorce, the district court found that Farrell's non-monetary contributions were "roughly equal" to Ann's financial contributions and that he had therefore acquired "a separate premarital interest in the improvements on the property." Id. ¶ 4 (quotation simplified). However, we overturned that determination on appeal because the court "did not explain what legal theory gave rise to that equitable interest." Id. ¶ 8.
¶5 On remand, the district court again determined that Farrell had a premarital interest in the home but this time premised its ruling on a theory of unjust enrichment. Oldroyd II , 2019 UT App 155, ¶ 4, 474 P.3d 467. However, we once again reversed the court's ruling, this time on the basis that Farrell had never asserted an unjust enrichment claim. Id. ¶¶ 7–9.
¶6 In Oldroyd II , we further explained that Farrell's pleadings did not raise a claim that he had acquired a premarital interest in the home. Rather, Farrell asserted that because he had "exerted hours and money into the home, including trade work," he "should be awarded a sum certain from [Ann's] equity in the home for all the work he has completed on the home, and for value of his trade work that he has performed for investment on the marital home." Id. ¶ 7 (quotation simplified). In other words, Farrell raised not an equitable claim "for a premarital interest in property," but "a claim for an equitable award of a portion of [Ann's] premarital asset." Id. However, because the district court had not considered equitable bases on which Farrell might be entitled to a share of Ann's premarital interest, we left open the possibility that the court might determine that such an award was appropriate. Id. ¶ 11 & n.3.
¶7 On remand, the district court, for the third time, awarded Farrell a share of equity in the home. This time, the court recognized that the property was Ann's premarital asset but concluded that Farrell was entitled to a portion of Ann's premarital equity based on the contribution exception and the extraordinary situation exception. Ann again appeals.
¶8 Ann asserts that the district court erred in awarding Farrell a share of her equity in the home because Farrell's contributions occurred prior to the marriage and the extraordinary situation exception is not applicable. "We generally defer to a trial court's categorization and equitable distribution of separate property," Lindsey v. Lindsey , 2017 UT App 38, ¶ 26, 392 P.3d 968 (quotation simplified), so long as the court's judgment "fall[s] within the spectrum of appropriate resolutions," id. ¶ 29.
¶9 Historically, we have recognized three equitable exceptions that may justify an award of one spouse's premarital property to the other spouse: (1) the commingling exception, (2) the contribution exception, and (3) the extraordinary situation exception. See Lindsey v. Lindsey , 2017 UT App 38, ¶ 33, 392 P.3d 968. Only the contribution exception and the extraordinary situation exception are at issue in this case.
¶10 As a threshold matter, we note that it is somewhat unclear from the district court's discussion whether it was relying on the contribution exception, the extraordinary situation exception, or both exceptions in awarding the disputed funds. The parties’ arguments on appeal primarily concern the applicability of the extraordinary situation exception, and they appear to be operating under the assumption that the court's decision rested on that exception. However, given that the court's application of the extraordinary situation exception was based on its determination that Farrell's premarital contributions made it equitable to award him a share of Ann's premarital property, we think it appropriate to address both exceptions in our analysis.
¶11 "Under the contribution exception, a spouse's separate property may be subject to equitable distribution [upon divorce] when the other spouse has by his or her efforts or expense contributed to the enhancement, maintenance, or protection of that property, thereby acquiring an equitable interest in it." Lindsey v. Lindsey , 2017 UT App 38, ¶ 35, 392 P.3d 968 (quotation simplified). Common examples include a spouse working for the other spouse's premarital business without taking a salary, see, e.g. , Rappleye v. Rappleye , 855 P.2d 260, 263 (Utah Ct. App. 1993), or a couple using marital funds to make improvements to or pay a mortgage on a premarital property, see, e.g. , Schaumberg v. Schaumberg , 875 P.2d 598, 601 (Utah Ct. App. 1994). However, as we noted in Oldroyd II , "[p]revious cases addressing equitable division of premarital assets have involved contributions made to those assets during the course of the marriage," and "Utah courts have not had the opportunity to assess the extent to which one spouse's premarital contributions to another spouse's premarital assets may be considered in the context of a divorce court's equitable division of property."2 2019 UT App 155, ¶ 11 n.3, 474 P.3d 467.
¶12 Having now been presented with the opportunity to consider the applicability of the contribution exception to premarital contributions, we are convinced that it does not apply in this context. Unlike a married person, an unmarried person has no reasonable expectation of any benefit from or entitlement to separate property owed or acquired by their significant other. Here, Farrell chose to assist Ann in building her home without seeking compensation.3 At that time, even though he may have expected to eventually marry Ann and live in the home with her, he had no guarantee that would happen. "As a general rule, ... premarital property is viewed as separate property, and equity usually requires that each party retain the separate property he or she brought into the marriage." Walters v. Walters , 812 P.2d 64, 67 (Utah Ct. App. 1991) (quotation simplified), superseded by statute on other grounds as stated in Whyte v. Blair , 885 P.2d 791 (Utah 1994). Only "where unique circumstances exist" may a trial court "reallocate premarital property as part of a property division incident to divorce." Id. "Generally, trial courts are ... required to award premarital property, and appreciation on that property, to the spouse who brought the property into the marriage." Elman v. Elman , 2002 UT App 83, ¶ 18, 45 P.3d 176.
¶13 Farrell had several options for protecting his interests, which he chose not to take advantage of. First, he could have entered into a contract with Ann requiring her to pay him for his services. Second, he could have negotiated a prenuptial agreement acknowledging his premarital contributions and granting him an interest in the home in case of divorce. Third—though likely an undesirable option given his relationship to Ann—Farrell could have filed a lawsuit bringing a quasi-contract claim, such as unjust enrichment, to obtain compensation for his services. However, the contribution exception is simply not one of the options available where the contributions occurred prior to the parties’ marriage.
¶14 Just as Farrell's...
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