Olson v. Olson

• Decision Date: 04 February 2010
• Docket Number: No. 20080666-CA.,20080666-CA.
• Citation: 2010 UT App 22,226 P.3d 751
• Parties: Marian C. OLSON, Petitioner and Appellant,v.Bradley L. OLSON, Respondent and Appellee.
• Court: Utah Court of Appeals

226 P.3d 751

2010 UT App 22

Marian C. OLSON, Petitioner and Appellant,v.Bradley L. OLSON, Respondent and Appellee.

No. 20080666-CA.

Court of Appeals of Utah.

Feb. 4, 2010.

M. Darin Hammond, Ogden, for Appellant.

Joseph M. Chambers, Logan, for Appellee.

Before Judges DAVIS, McHUGH, and THORNE.

OPINION

THORNE, Judge:

¶ 1 This appeal arises from a divorce action between Marian C. Olson (Wife) and Bradley L. Olson (Husband). Wife appeals from the district court's judgment and decree of divorce. We affirm.

BACKGROUND

¶ 2 The parties married in 1989, separated in 2004, and initiated this divorce proceeding in 2005. There were no children born into the marriage. A trial on property distribution and alimony issues took place in February 2008, and the district court issued its findings of fact, conclusions of law, and decree of divorce in July 2008.

¶ 3 Among the contested issues at trial was the appropriate treatment of the parties' family corporation, B & B Drywall. The parties were 50/50 shareholders in B & B Drywall and were its sole officers and directors. By the time of the divorce, B & B Drywall had essentially no assets but significant amounts of debt. This debt included outstanding loans owing to Cache Valley Bank (CVB) in the amount of approximately $326,000, LKL Associates (LKL) in the amount of approximately $41,000, and Capitol Building Supply (CBS) in the amount of approximately $62,000. Husband had personally guaranteed each of these three loans, but Wife had guaranteed only the LKL debt.

¶ 4 The district court found that the parties had so commingled their personal and corporate finances “that in order ... to make an equitable division of the marital property and debts, it is reasonable and equitable to treat all of the parties['] personal and business assets and business debts as marital debts and make an equitable division of the same.” Accordingly, the district court ordered that the marital home be sold and the proceeds be used, in part, to retire the debt to CVB.¹ The district court also ordered that Husband was to assume the CBS debt, Wife was to assume the LKL debt, and each party was to hold the other harmless as regards the assumed debts.

¶ 5 As to alimony, the district court awarded Wife $1000 per month, “to be paid beginning 30 days after closing” on the sale of the marital home and terminating eighteen years after July 1, 2008, unless earlier terminated by law. The delay in implementing the alimony payment appears to reflect the fact, found by the district court, that Wife had been in exclusive possession of the marital home since December 2004 and was living there subject only to the payment of property taxes and insurance. The district court also expressly recognized that Wife's financial need would increase upon the sale of the marital home and the resulting necessity for Wife to obtain other housing arrangements.

¶ 6 Wife now appeals, raising multiple challenges to various district court rulings. Due to inadequacies in Wife's appellate briefing,² we address only some of Wife's issues on appeal. See, e.g., Valcarce v. Fitzgerald, 961 P.2d 305, 313 (Utah 1998) (“It is well established that an appellate court will decline to consider an argument that a party has failed to adequately brief.”).

ISSUES AND STANDARDS OF REVIEW

¶ 7 Wife raises several arguments attacking the district court's treatment of the parties' corporate debt in its property distribution order. “ ‘We afford the trial court considerable latitude in adjusting financial and property interests, and its actions are entitled to a presumption of validity.’ ” Leppert v. Leppert, 2009 UT App 10, ¶ 9, 200 P.3d 223 (quoting Davis v. Davis, 2003 UT App 282, ¶ 8, 76 P.3d 716).

Accordingly, changes will be made in a trial court's property division determination in a divorce action only if there was a misunderstanding or misapplication of the law resulting in substantial and prejudicial error, the evidence clearly preponderated against the findings, or such a serious inequity has resulted as to manifest a clear abuse of discretion.

Id. (internal quotation marks omitted).

¶ 8 Wife challenges the amount and timing of the district court's alimony award. The district court is granted “considerable discretion in determining alimony,” id. ¶ 8 (internal quotation marks omitted), and its alimony determinations “will be upheld on appeal unless a clear and prejudicial abuse of discretion is demonstrated,” id. (internal quotation marks omitted).

¶ 9 Wife challenges the district court's factual finding as to the value of the marital home. We review a district court's factual findings only for clear error. See Davis, 2003 UT App 282, ¶ 7, 76 P.3d 716.

¶ 10 Finally, Wife challenges the district court's purported disallowance of testimony from one of Wife's fact witnesses. We review the district court's evidentiary rulings under an abuse of discretion standard. See In re G.C., 2008 UT App 270, ¶ 9, 191 P.3d 55; see also Vigil v. Division of Child & Family Servs., 2005 UT App 43, ¶ 8, 107 P.3d 716 (“Trial courts are afforded broad discretion in determining the admissibility of evidence; thus we will not disturb a trial court's ruling whether to admit or exclude evidence absent an abuse of discretion.”).

ANALYSIS

I. Corporate Debt as Marital Debt

¶ 11 Wife raises several related arguments pertaining to the district court's treatment of B & B Drywall's corporate debt as marital debt and the district court's equitable apportionment of that debt between the parties. Specifically, Wife argues that the district court's ruling requiring the parties to sell the marital home to pay off B & B Drywall's debt to CVB violates Utah Code section 30-2-5 see Utah Code Ann. § 30-2-5(1) (Supp.2009) (stating that, with certain exceptions, “[n]either spouse is personally liable for the separate debts, obligations, or liabilities of the other”); the district court erred in finding Wife liable to CVB because she did not personally guarantee B & B Drywall's debt to CVB; and the district court erred in its apportionment of the CBS and LKL debts because Wife had not personally guaranteed the CBS debt.

¶ 12 Wife's arguments mischaracterize the district court's actual ruling, which neither imposed direct liability on Wife for the CVB debt nor imposed liability against either party based on their personal guarantees of B & B Drywall's corporate debt. Rather, the district court found that the parties had so commingled their personal and corporate finances that it was appropriate to treat the corporate debt as marital property and apportion it as part of the overall property division. The district court concluded,

[Husband] has demonstrated that the strict observance of the corporation would lead to an inequitable result. For several years the parties have received substantial financial benefits from a corporation which they largely disregarded when it came to taking money from the corporation for their personal benefit.... There has been such a co-mingling of the corporate funds with the marital assets acquired by the parties that it would be inequitable to treat the assets of the parties as marital assets and try to divide them equitably while disregarding the debts of the corporation from which the parties directly received the financial benefit.

Accordingly, the district court disregarded B & B Drywall's corporate form utilizing the equitable alter ego doctrine as discussed in Colman v. Colman, 743 P.2d 782, 786-88 (Utah Ct.App.1987).

¶ 13 Colman, which was also a divorce case,³ stated as follows:

To disregard the corporate entity under the equitable alter ego doctrine, two circumstances must be shown: (1) Such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, but the corporation is, instead, the alter ego of one or a few individuals; and (2) if observed, the corporate form would sanction a fraud, promote injustice, or result in an inequity. It is not necessary that the plaintiff prove actual fraud, but must only show that failure to pierce the corporate veil would result in an injustice.

Certain factors which are deemed significant, although not conclusive, in determining whether this test has been met include: (1) undercapitalization of a one-man corporation; (2) failure to observe corporate formalities; (3) nonpayment of dividends; (4) siphoning of corporate funds by the dominant stockholder; (5) nonfunctioning of other officers or directors; (6) absence of corporate records; (7) the use of the corporation as a facade for operations of the dominant stockholder or stockholders; and (8) the use of the corporate entity in promoting injustice or fraud.

Id. at 786.

¶ 14 The district court made extensive findings addressing the Colman factors as they apply to this case:

In addressing the Colman factors set forth above, the [district c]ourt is satisfied that: (1) at the time the divorce was filed the corporation was insolvent and by stipulation of the parties was placed into a court-supervised receivership and was undercapitalized; (2) based on [Wife's] own testimony they discussed matters almost daily but failed to observe the corporate formalities of holding shareholders' or directors' meetings; (3) there was no evidence of the payment of dividends and in fact the [B & B Drywall] corporate tax returns and other corporate financial records placed into evidence disclose no dividends were paid; (4) the parties knowingly and willfully siphoned off corporate funds to their own personal benefit; (5) other than the parties there were no other functioning officers or directors; (6) no evidence either way was produced as to the absence or existence of corporate records [and the district court] therefore finds this factor neutral; (7) the manner in which the parties used the corporation for their personal financial benefit as dominant shareholders would be a facade; and (8) use of the corporate entity or shell to obtain

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