Porenta v. Porenta

• Decision Date: 15 November 2017
• Docket Number: No. 20160243,20160243
• Citation: 416 P.3d 487
• Parties: Louise PORENTA, Appellant, v. Patricia PORENTA, Appellee.
• Court: Utah Supreme Court

416 P.3d 487

Louise PORENTA, Appellant,

v.Patricia PORENTA, Appellee.

No. 20160243

Supreme Court of Utah.

Filed November 15, 2017

Stephen A. Starr, Layton, for appellant.

Jennifer P. Lee, Salt Lake City, for appellee.

Justice Durham authored the opinion of the Court, in which Chief Justice Durrant, Justice Pearce, and Judge Mortensen joined.

Associate Chief Justice Lee filed a dissenting opinion.

Having recused himself, Justice Himonas does not participate herein; Court of Appeals Judge David N. Mortensen sat.

On Direct Appeal

Justice Durham, opinion of the Court:

INTRODUCTION

¶ 1 Patricia and Robert Porenta were married for approximately seventeen years before the couple filed for divorce. During the divorce proceedings, Robert transferred his interest in the couple's marital home to his mother with the intent to avoid Patricia's claim to the home. After transferring his interest in the home, Robert died and the divorce case was dismissed for lack of jurisdiction. Patricia filed this action against Robert's mother alleging that the transfer was fraudulent under the Utah Fraudulent Transfer Act and sought to gain full ownership of the home. On appeal, both parties concede that the transfer was fraudulent at the time it was made. Robert's mother merely argues that the debtor-creditor relationship was extinguished when Robert died, and that the Utah Fraudulent Transfer Act requires an ongoing debtor-creditor relationship when a claim under the act is filed, therefore entitling her to retain her interest in the home. Robert's mother also argues that the only remedy available under the act is an award of money damages rather than the return of the fraudulently transferred asset. While we hold that an ongoing debtor-creditor relationship is required, we affirm the district court's grant of the marital home to Patricia.

BACKGROUND

¶ 2 The plaintiff, Patricia Porenta (Wife), married Robert Porenta (Husband) in 1988. During their marriage, the couple purchased a home as joint tenants. After the home was purchased the couple began having marital problems, and in November 2005, Wife filed for divorce. The disposition of the home was at issue in the divorce as part of the distribution of the marital estate. During the divorce proceedings, Husband filed a motion asking the divorce court for an order to list and sell the home, with the net proceeds to be held in escrow pending distribution by the court or by written agreement of Husband and Wife.

¶ 3 Seven days after filing his motion, Husband executed a quit claim deed transferring "an undivided 01/100 ^th share of" Husband's interest in the home to himself and his mother, Louise Porenta (Mother), a defendant in the current action, as joint tenants. The deed transferred the remaining "undivided 99/100 ^th share of" Husband's interest in the home to Mother as a tenant in common. Seven days after executing the quit claim deed, Husband filed a reply memorandum in support of his original motion to sell the home. In the reply memorandum, Husband stated that "[o]nce the home is listed, either side has the option of buying it.... If [Wife] wants the house, she can buy it. Proceeds can then be paid into escrow pending equitable division or by a court order." The reply memorandum does not disclose that Husband had already fraudulently transferred a large portion of his interest in the home to Mother, retaining only a minor fraction for himself.

¶ 4 The divorce court held a hearing on Husband's motion, with Husband, Wife, and Mother present. Husband continued to represent to Wife and the divorce court that the home was still within the marital estate under the jurisdiction of the divorce court, and that he desired to sell the home and leave the proceeds in escrow. The divorce court denied Husband's motion, and reserved the issue of the sale of the home until trial unless a "danger of loss" arose.

¶ 5 Wife discovered the transfer to Mother in the spring of 2008, roughly one and a half years after Husband executed the quit claim deed. Then, in September 2008, while the divorce case was still pending before the divorce court, Husband died. The divorce court subsequently dismissed the case for lack of jurisdiction.

¶ 6 Shortly thereafter, Wife filed the current action against Mother, asking the trial court to set aside the quit claim deed under the Utah Fraudulent Transfer Act (UFTA).¹

Mother answered and counterclaimed, alleging that the transfer was repayment of $200,000 in loans she had made to the couple.²

¶ 7 In September 2014, a trial was held on whether the transfer to Mother was fraudulent and whether the home should be awarded to Wife. Nine days before the trial on Wife's UFTA claim, without any disclosure to Wife or the court, Mother executed a quit claim deed purporting to transfer the entire home to Diamond Fork Land & Livestock Company. This company, according to Mother, is owned by Robert Copier, the attorney who represented Husband in the underlying divorce case and represented Mother at the beginning of the present action. At the September trial, Mother again did not disclose the transfer to Diamond Fork. Rather, she actively concealed the fact that she had transferred all of her interest a week before the trial. During the September trial, Mother suffered from a medical issue and was transported to the hospital. The trial was continued, and Wife later learned of the transfer from Mother to Diamond Fork. Wife then amended her complaint to include a claim under UFTA that Mother had fraudulently transferred her interest in the home to Diamond Fork and Robert Copier.

¶ 8 Trial finally resumed in November 2015, seven years after the original complaint had been filed. The trial court ultimately held that Husband's transfer to Mother was fraudulent under UFTA. Additionally, the trial court awarded Wife her attorney fees because of Mother's misconduct during trial. Diamond Fork and Robert Copier defaulted, and the trial court found that Mother's "transfer to Diamond Fork Land & Livestock Company was an attempt to transfer the subject property beyond the jurisdiction of the court to avoid the remedy sought by" Wife. The trial court further found that Mother "filed at least sixty motions during the pendency of this case, many of them repeating previously denied motions." It held that Mother's "defenses were brought in bad faith, made with the intention of hindering or delaying restoration of the property to [Wife] or forcing [Wife] to abandon her case because of the legal fees required by [Mother's] paperwork blizzard for repetitive, baseless, unsupported motions." Mother appealed.

STANDARD OF REVIEW

¶ 9 Mother appeals two issues. First, she argues that the Utah Fraudulent Transfer Act requires an ongoing debtor-creditor relationship when the action is filed, and that the death of Husband extinguished any such relationship prior to Wife filing her UFTA claim. Our interpretation of a statute is a question of law that we review for correctness. Sill v. Hart , 2007 UT 45, ¶ 5, 162 P.3d 1099. Whether a debtor-creditor relationship exists is an "application of a legal standard to a set of facts unique to a particular case." In re Adoption of Baby B. , 2012 UT 35, ¶ 42, 308 P.3d 382. Thus, it is a mixed question in which "our review is sometimes deferential and sometimes not." Id . The amount of deference we grant to a lower court is based to some extent on whether the question is more "fact-like" or more "law-like." Id. ¶¶ 43-47 ; see also Martinez v. Media-Paymaster Plus/Church of Jesus Christ of Latter-Day Saints , 2007 UT 42, ¶¶ 28–29, 164 P.3d 384. The question of whether a debtor-creditor relationship is extinguished upon the death of the debtor during a divorce proceeding is more law-like, as the only real fact at issue is the death of the spouse. The remainder of the inquiry is a legal question, determining the effect of that death on the debtor-creditor relationship. Because this question is more law-like, we review this mixed question for correctness. Adoption of Baby B. , 2012 UT 35, ¶¶ 42, 44, 308 P.3d 382.

¶ 10 The second issue is whether UFTA authorized the trial court to award Wife with Mother's interest in the home, rather than awarding Wife money damages. This is a question of statutory interpretation, which we review for correctness. Sill , 2007 UT 45, ¶ 5, 162 P.3d 1099.

ANALYSIS

¶ 11 Mother raises two issues on appeal: 1) whether the death of Husband extinguished any debtor-creditor relationship, and 2) whether UFTA authorized the trial court to award Wife the entire home, or if it was limited to awarding Wife with money damages.³ Finally, Wife argues that she is entitled to attorney fees under Utah Rule of Appellate Procedure 33 because Mother's appeal was brought for an improper purpose. We address each issue in turn.

I. DEBTOR-CREDITOR RELATIONSHIP UPON DEATH OF A SPOUSE

¶ 12 The trial court held that the transfer from Husband to Mother was fraudulent under three different sections of UFTA: Utah Code sections 25-6-5, 25-6-6(1), and 25-6-6(2). All of these require a debtor-creditor relationship. UTAH CODE §§ 25-6-5, -6 (2016) (stating that a transfer by a "debtor is fraudulent as to a creditor" when certain requirements are met). A "debtor" is defined as "a person who is liable on a claim." Id . § 25-6-2(6) (emphasis added). A "creditor" is defined as "a person who has a claim." Id . § 25-6-2(4) (emphasis added). The existence of a claim, or right to payment, is at the heart of the debtor-creditor relationship. See id. § 25-6-2(3) (a claim is a "right to payment"). Both of these definitions use the present tense when discussing the claim, indicating that there must be a claim or right to payment held by the creditor against the debtor at the time a UFTA claim is filed. See In re Discipline of Bates , 2017 UT 11, ¶ 23, 391 P.3d 1039 (use of present tense informs our interpretation of rules and statutes); Bagley v. Bagley , 2016 UT 48, ¶ 10, 387 P.3d 1000 (when interpreting a statute...