Sanchez v. Sanchez

• Decision Date: 13 October 2021
• Docket Number: NO. CAAP-17-0000407,CAAP-17-0000407
• Citation: 150 Hawai‘i 144,497 P.3d 159 (Table)
• Parties: Betty Lou SANCHEZ, Plaintiff-Appellee/Cross-Appellant, v. Gerald M. SANCHEZ, Defendant-Appellant/Cross-Appellee
• Court: Hawaii Court of Appeals

150 Hawai‘i 144

497 P.3d 159 (Table)

Betty Lou SANCHEZ, Plaintiff-Appellee/Cross-Appellant,

v.Gerald M. SANCHEZ, Defendant-Appellant/Cross-Appellee

NO. CAAP-17-0000407

Intermediate Court of Appeals of Hawai‘i.

October 13, 2021

On the briefs:

Peter Van Name Esser for Defendant-Appellant/ Cross-Appellee.

Ronald P. Tongg (Tongg and Tongg) for Plaintiff-Appellee/ Cross Appellant.

(By: Leonard, Presiding Judge, Wadsworth and Nakasone, JJ.)

SUMMARY DISPOSITION ORDER

This appeal arises out of divorce proceedings between Defendant-Appellant and Cross-Appellee Gerald M. Sanchez (Husband ) and Plaintiff-Appellee and Cross-Appellant Betty Lou Sanchez (Wife ). Husband appeals from the May 2, 2017 Divorce Decree (Divorce Decree ) and the October 12, 2017 "Order Granting [Wife's] Motion for Reconsideration, Alteration or Amendment of Divorce Decree Entered May 2, 2017 Filed Ex Officio May 10, 2017" (Order Granting Motion for Reconsideration ), both entered in the Family Court of the Fifth Circuit (Family Court ).¹ Husband contends that the Family Court erred in: (1) denying him credit for $418,000 in Category 1 and 3 contributions to the marital estate, because of the creation of a marital trust; 2) deviating from partnership principles, because of Husband's alleged financial misconduct during the marriage; and 3) granting Wife's post-judgment motion to amend the Divorce Decree five months after the motion was filed. Wife cross-appeals from the Divorce Decree, contending that the Family Court erred in failing to award her post-divorce spousal support.

Upon careful review of the record and the briefs submitted by the parties and having given due consideration to the arguments advanced and the issues raised by the parties, as well as the relevant statutory and case law, we resolve the parties' contentions as follows.

(1) Category 1 and Category 3 Contributions

Husband contends that the Family Court erred in denying him credit for $418,000 in Category 1 and 3 contributions to the marital estate, "when [the court] presumed a gift of [two] properties to wife or the marital estate" based on the creation of the 2009 Sanchez Revocable Living Trust (Trust ). Husband maintains that he conveyed these separately-owned properties to the Trust "to placate Wife and provide for his four children to inherit the ... properties," and he never intended to give the properties to Wife or the marital estate.

In divorce proceedings, marital property is divided according to partnership principles, which distinguish between property brought into the marriage and property acquired during the marriage, and which assign category values based on these considerations. Gordon v. Gordon, 135 Hawai‘i 340, 349, 350 P.3d 1008, 1017 (2015) (citing Tougas v. Tougas, 76 Hawai‘i 19, 26, 868 P.2d 437, 444 (1994) ). Family courts use the following five categories of net market values (NMV ) in dividing property:

Category 1. The [NMV], plus or minus, of all property separately owned by one spouse on the date of marriage (DOM) but excluding the NMV attributable to property that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party.

Category 2. The increase in the NMV of all property whose NMV on the DOM is included in category 1 and that the owner separately owns continuously from the DOM to the DOCOEPOT [date of the conclusion of the evidentiary part of the trial].

Category 3. The date-of-acquisition NMV, plus or minus, of property separately acquired by gift or inheritance during the marriage but excluding the NMV attributable to property that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party.

Category 4. The increase in the NMV of all property whose NMV on the date of acquisition during the marriage is included in category 3 and that the owner separately owns continuously from the date of acquisition to the DOCOEPOT.

Category 5. The difference between the NMVs, plus or minus, of all property owned by one or both of the spouses on the DOCOEPOT minus the NMVs, plus or minus, includable in categories 1, 2, 3, and 4.

Selvage v. Moire, 139 Hawai‘i 499, 507, 394 P.3d 729, 737 (2017) (citing Tougas, 76 Hawai‘i at 27, 868 P.2d at 445 ).

"Each partner's individual contributions to the marriage, i.e. , the values of Category 1 and Category 3, are to be repaid to the contributing spouse absent equitable considerations justifying a deviation." Gordon, 135 Hawai‘i at 349, 350 P.3d at 1017 (footnote omitted); see Selvage, 139 Hawai‘i at 507, 394 P.3d at 737 ("The NMVs 'in Categories 1 and 3 are the parties' "capital contributions," and pursuant to general partnership law, they are returned to each spouse.'" (quoting Kakinami v. Kakinami, 127 Hawai‘i 126, 138, 276 P.3d 695, 707 (2012) ).

Here, Husband contends that the Family Court erred in denying him credit for Category 1 and Category 3 capital contributions to the marital estate. Specifically, in its December 7, 2017 Findings of Fact and Conclusions of Law (FOFs/COLs ), the Family Court found, and neither party disputes, the following:

FOF 17 5956 Kuamoo Road, 5990 Kuamoo Road and 210 Kamalu Road

The real property located at 5956 Kuamoo Road, Kapaa, Kauai 96746 ("5956 Kuamoo Road") was separately owned by Defendant Husband on the DOM.

The real property located at 210 Kamalu Road, Kapaa, Kauai 96746 ("210 Kamalu Road") was separately acquired by Defendant Husband by gift on April 7, 1992....

Husband asked the Family Court to credit him for the Category 1 net market value of 5956 Kuamoo Road on the date of marriage, which was $125,000, and the Category 3 net market value of 210 Kamalu Road on the date of the gift, which was $292,000, for total contributions to the marital estate of $417,000.

Instead, the Family Court denied Husband credit for these asserted capital contributions on the ground that they had been gifted by Husband to the parties and were thus Category 5 property. Specifically, in FOF 17, the Family Court made the following additional findings of fact (which are actually mixed findings of fact and conclusions of law) regarding the two properties:

Both properties were subsequently gifted by Defendant Husband to the parties by creating a joint revocable trust [i.e. , the Trust].

Both parties were the trustee of the Trust. Moreover, if one party was not alive or disabled or had resigned as Trustee, the other party would be Trustee.

While both were alive and not disabled, distributions of income and principal would be made at their direction. If either of them was unable to so direct, distributions of income and principal could be made at the other's direction.

Defendant Husband and Plaintiff Wife were both beneficiaries of the [T]rust. While either party was alive, both were entitled to distributions of income and principal from the Trust.

The parties further reserved the power acting alone to revoke the Trust, to alter or amend the Trust in any manner and to withdraw from the Trust all or any portion of the trust assets.

Defendant Husband claimed [sic] that he did not understand the trust document when he signed it is not credible because Defendant Husband made changes to the trust document in removing Plaintiff Wife's children as beneficiaries of the [T]rust.

The [NMV] of 5956 Kuamoo Road is $259,548.73, while the NMV of 210 Kamalu Road is $781,740.24.

Based on these findings, the Family Court concluded in COL 11: "Both the real property located at 5956 Kuamoo Road ... and the real property located at 210 Kamalu Road ... are Category 5 properties." On this basis, the Family Court denied Husband credit for any Category 1 and 3 contributions to the marital estate, computed $1,041,288 in Category 5 real estate (i.e. , the sum of the NMVs of 5956 Kuamoo Road ($259,548.73) and 210 Kamalu Road ($781,740.24)), and divided that amount, among other amounts, between Husband and Wife in the Divorce Decree.

As set forth above, Category 1 marital partnership property includes property separately owned by one spouse on the date of marriage, but excludes the net market value attributable to property "that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party." Selvage, 139 Hawai‘i at 507, 394 P.3d at 737 (citing Tougas, 76 Hawai‘i at 27, 868 P.2d at 445 ). Similarly, Category 3 marital partnership property includes property separately acquired by gift during the marriage, but excludes the net market value attributable to property "that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party." Id. (citing Tougas, 76 Hawai‘i at 27, 868 P.2d at 445 ). Thus, the issue here is whether the Family Court erred in finding that Husband gifted the two identified properties to the parties by creating the Trust.

This court has held:

[W]hen one marital partner conveys Category 1 and/or Category 3 property to the other marital partner or to both marital partners, there is no presumption of a gift of Category 1 and/or Category 3 net market value (NMV) and the marital partner who alleges the gift has the burden of proving a gift.

Wong v. Wong, 87 Hawai‘i 475, 482, 960 P.2d 145, 152 (App. 1998). "To constitute a gift, there must be: (1) donative intent; (2) delivery; and (3) acceptance." Hamilton v. Hamilton, 138 Hawai‘i 185, 204, 378 P.3d 901, 920 (2016) (citing Tougas, 76 Hawai‘i at 27, 31, 868 P.2d at 445, 449 ).

In Gussin v. Gussin, 73 Haw. 470, 836 P.2d 484 (1992), the family court did not make any findings as to donative intent or any other issue bearing on whether the husband had gifted his separate property on the date of marriage to his wife or the marital estate. Id. at 488, 836 P.2d at 493. "Because the family court failed to make any findings as to donative intent or any other element bearing on whether a legal gift had been made," the supreme court concluded that this court "erred in not remanding the issue of gift for the family court to decide." Id. at 489, 836 P.2d at...