Wadsworth v. Wadsworth

• Decision Date: 03 March 2022
• Docket Number: 20190106-CA, No. 20200430-CA
• Parties: H. Candi WADSWORTH, Appellant, v. Guy L. WADSWORTH, Appellee.
• Court: Utah Court of Appeals

507 P.3d 385

H. Candi WADSWORTH, Appellant,

v.Guy L. WADSWORTH, Appellee.

No. 20190106-CA

No. 20200430-CA

Court of Appeals of Utah.

Filed March 3, 2022

Michael D. Zimmerman, Troy L. Booher, Salt Lake City, and Julie J. Nelson, Attorneys for Appellant

Clark W. Sessions, T. Mickell Jimenez, Salt Lake City, Marcy G. Glenn, and Kristina R. Van Bockern, Attorneys for Appellee

Judge Michele M. Christiansen Forster authored this Opinion, in which Judges Ryan M. Harris and Ryan D. Tenney concurred.

Amended Opinion¹

CHRISTIANSEN FORSTER, Judge:

¶1 This appeal arises from the divorce and division of the marital estate belonging to H. Candi Wadsworth and Guy L. Wadsworth. Candi² challenges various aspects of the district court's marital property valuation, its decision to defer the payment of her share of the marital estate, its award of alimony, and various other findings and orders. Guy cross-appeals, raising challenges relating to terms of the deferred payment and the alimony award. In a separate appeal, Candi also challenges the district court's decision not to grant her a security interest in her portion of the marital estate, which she will not receive in full until December 31, 2024. Because that issue is intertwined with various issues raised in the first appeal, we address both appeals in this consolidated opinion.

¶2 We remand for the district court to add certain notes receivable to the value of the marital estate, to adjust its alimony award to account for Candi's tax burden, to clarify its decision on whether security is required for the alimony award, and to grant Candi a security interest in her portion of the marital estate. We otherwise affirm the district court's decision.

BACKGROUND

¶3 Candi and Guy married in 1979. Guy started Wadsworth Brothers Construction (WBC) in 1991, and over the years, it grew into a multimillion-dollar company. The parties also have interests in numerous other business entities, including two restaurants, a hotel, and various real estate holdings.

¶4 In 2009, Candi filed for divorce, suspecting that Guy was involved in an extramarital affair. Guy denied the infidelity, and the couple reconciled. However, a year later, Guy confessed to an affair, and Candi again filed for divorce.

Pre-Divorce Proceedings and Temporary Orders

¶5 During the period between these two divorce filings, Guy purchased two restaurants, a plane, a cabin, and a yacht. He did not discuss any of these purchases with Candi, and she learned about them from other people. The yacht cost $2,502,800, but by the time of trial, the yacht was under water—Guy still owed $1,175,399, but the yacht was worth only $790,500.

¶6 Without consulting Candi, Guy also assigned fractional shares of various marital entities to the Wadsworth Children's 2007 Irrevocable Trust (the Trust) in 2009. Although Guy had created the Trust two years before, he had originally funded it with only $10. By the time of trial in 2017, the fractional shares held by the Trust were worth approximately $4 million.

¶7 While the divorce was pending, Guy maintained control of the marital estate, apart from $1 million and two interest-generating accounts that he transferred to Candi early in the proceedings. In February 2012, the district court adopted the parties’ stipulation regarding temporary orders (the Stipulation) stating that, on a temporary basis, Guy "shall pay all of the children's expenses as he has in the past as well as all of [Candi's] expenses as he has in the past." Because Guy was paying these expenses, he was not ordered to pay temporary child support or alimony at that time. The Stipulation also addressed the use of marital assets during the pendency of the divorce proceedings:

1. Based upon the parties’ stipulation, [Guy] shall maintain, in the regular course of business, the management and control of [WBC], as he has in the past.

2. Based upon the parties’ stipulation, neither party shall sell, gift, transfer, dissipate, encumber, secrete or dispose of marital assets other than in the course of their normal living expenditures, ordinary and necessary business expenses and to pay divorce attorneys and expert fees and costs. [Guy] shall have the right to conduct the business hereinabove identified as he has in the past, which may include incurring debt, paying expenses and acquiring assets.

¶8 During the divorce proceedings, Candi asked the court to hold Guy in contempt based on alleged violations of the Stipulation. She asserted that he made numerous financial transactions that violated the Stipulation, including selling his home, buying a new home, selling a hotel, creating a new business entity and loaning it money, investing money in a property development company (FDFM), purchasing a jet to "flip," and making an "undisclosed sale" of $697,448.72. The court accepted Guy's and his estate planning attorney's testimonies that "Guy had a history of setting up different corporate entities for liability protection purposes" and that he "did not create any entity or transfer any asset with the intention of hiding it from Candi." The court found that "the transactions Candi complains of were consistent with Guy's historical practice of transferring assets from one entity to another or from one form into another" and that those actions fell within the Stipulation's condition permitting Guy "to conduct the business hereinabove identified as he has in the past, which may include incurring debt, paying expenses and acquiring assets." The court also found that "[t]here is no indication that these transactions were out of the ordinary or done with the intent to hide assets."

¶9 In September 2014, Guy sought to modify the Stipulation, explaining that the parties’ last child had reached majority, that he had paid off the mortgage on Candi's house, and that he had purchased Candi a new vehicle, thereby eliminating many of her expenses. Guy asked the court to modify its order to require him to pay Candi $20,000 per month rather than all her expenses without limit. Following a hearing in January 2015, the court ordered that Guy pay Candi $20,000 per month in temporary alimony. It also ordered that Candi "keep an accounting of how the money is spent if she desires more funds." During the first month following the order, Candi exceeded the $20,000 budget and "she had to repay Guy for amounts she had previously spent as well as cancel planned travel with the children." In April 2015, the court issued a written order in which it clarified that Guy should "reimburse" Candi "as to any payments beyond the $20,000" unless he could show it was "an inappropriate or excessive expense." Candi never requested additional funds from Guy after the court issued the written April 2015 order. She claims this was because she elected to curtail her spending rather than ask Guy for extra money; she maintains that she did not believe he would comply with her requests and she did not want to incur more attorney fees to collect the money. During this period, Guy was spending approximately $60,000 per month.

¶10 Guy represented that Candi continued to have access to the parties’ boats and planes, a cabin, free dining at the restaurants, and a country club and other exclusive resorts for which Guy continued to pay the membership fees. However, to use the planes and boats, Guy expected Candi to pay for the cost of the pilot, captain, and other expenses out of her $20,000 monthly funds. Candi did not do so because she understood the cost to be between $5,000 and $10,000 per trip. Candi also alleged that Guy refused a number of requests she made to use the parties’ shared assets.

Procedural History of the Divorce

¶11 The parties spent more than six years conducting discovery and other pretrial litigation before the matter finally came before the district court for an eight-day bench trial in February 2017. The court held a second four-day trial in May 2017 concerning Candi's attempt to revoke the Trust. See infra ¶ 25.

¶12 The court issued a Memorandum Decision, Findings of Fact and Conclusions of Law in September 2017 (the 2017 Findings). Subsequently, Candi filed a Motion to Clarify, and both parties also filed Motions to Amend. The court issued an order addressing those motions in May 2018 (the May 2018 Order). In response to that order, both parties filed additional Motions to Amend, which the district court ruled on in a Memorandum Decision and Order in October 2018 (the October 2018 Order). The court then directed Guy to prepare supplemental findings of fact to incorporate the various rulings encapsulated in the May 2018 Order and the October 2018 Order.

¶13 Following the October 2018 Order, Guy filed an Ex Parte Motion for Expedited Entry of Decree of Divorce. Guy pointed out that new federal tax law would change how alimony was taxed for any divorce decrees entered on or after January 1, 2019. Instead of alimony being taxable to the payee spouse and deductible to the payor spouse, alimony would become taxable to the payor and deductible to the payee. Since the trial had occurred and the 2017 Findings had been entered over a year before, "predicated on the application of the existing divorce laws," Guy asserted that it would be inequitable to enter the divorce decree after December 31, 2018. Although the court indicated that it believed "both parties are to blame" for the delays in finalizing the decree, it ultimately did enter Supplemental Findings of Fact and Conclusions of Law (the 2018 Supplemental Findings), as well as the Decree of Divorce, on December 31, 2018.

¶14 The parties then filed a third set of cross-motions to amend the findings and conclusions, and the court held a hearing on those motions in early 2019. The court entered a Memorandum Decision and Order in May 2019, which it subsequently amended in June 2019 (the 2019 Order). The court directed Candi to prepare corrected Supplemental Findings of Fact and Conclusions of Law and a Supplemental Decree of Divorce. The court...