Porenta v. Porenta
This text of 2017 UT 78 (Porenta v. Porenta) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinions
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).
Mother answered and counterclaimed, alleging that the transfer was repayment of $200,000 in loans she had made to the couple.
¶ 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
,
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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).
Mother answered and counterclaimed, alleging that the transfer was repayment of $200,000 in loans she had made to the couple.
¶ 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
,
¶ 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
,
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.
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
¶ 13 UFTA's apparent purpose is to prevent insolvent debtors from transferring all of their assets to avoid their creditors' claims, and to provide a means whereby creditors can collect against a fraudulently transferred asset.
See
UTAH CODE §§ 25-6-5, -6. A creditor cannot typically execute against a fraudulently transferred asset under UFTA if the creditor no longer has a claim against the debtor because the debt has been satisfied or is otherwise no longer enforceable.
See
Tolle v. Fenley
,
¶ 14 In this case, the trial court held that "[t]he creditor-debtor relationship, and [Wife's] claim against [Husband], arose when [Wife] filed for divorce on November 10, 2005." It further held that Wife's underlying claim against Husband was for "the whole of the marital estate, including the right to preserve the joint tenancy or require [Husband] to convey his interest free and clear to [Wife]."
¶ 15 On appeal, Mother argues that the divorce court's orders for "child support and medical and insurance expenses" were vacated when Husband died.
¶ 16 However, an order and a claim are two distinct things. A claim is "[t]he assertion of an existing right; any right to payment or to an equitable remedy, even if contingent or provisional." Claim , BLACK'S LAW DICTIONARY (10th ed. 2014). An order or judgment is a court's adjudication of the viability of a claim. Id . Order ("A written direction or command delivered by a government official, esp. a court or judge."). Mother did not argue that the district court erred in holding that Wife had a claim to preserve the joint tenancy. Nor did she argue why that specific claim-the primary claim at issue in this case-abated upon Husband's death. She argues primarily that court orders that award a spouse with property abate upon the death of a spouse. Regarding claims, she simply makes the general statement that Wife's claims against Husband are unenforceable because Husband is dead and she cannot bring a claim against a dead person.
¶ 17 Whether court ordered child support versus a claim for a joint tenancy abate upon the death of a spouse are two very distinct questions. Utah courts have only ever wrestled with whether court orders dealing with property rights abate upon the death of a spouse. Whether a claim for equitable distribution or some other property claim survives the death of a spouse during a divorce proceeding has never been addressed by this court, and we decline to address it for the first time without adequate briefing. We first address our precedent discussing the effect of the death of a party on court orders entered during a divorce proceeding. Next, we address the effect of the death of a party on a claim that was or could have been brought against that party. Finally, we address some additional arguments that Mother raised for the first time during oral arguments concerning the debtor-creditor relationship.
A. Utah's Treatment of Court Orders Dealing With Property Rights in Divorce Proceedings Where One Party Dies Prior to a Final Decree
¶ 18 We have previously addressed whether a court order addressing marital property survives the death of a party in a divorce proceeding, and we originally held that it does. In a string of cases we purportedly abandoned our original holding, but we now dismiss those cases as dicta and reaffirm our original holding that a court order dealing with marital property survives the death of a spouse.
¶ 19 A claim for equitable distribution arises when one party in a marriage threatens divorce.
See
Bradford v. Bradford
,
¶ 20 Our precedent has addressed what happens when a divorce court enters an order that relates to the marital property, but then a spouse dies before the final divorce decree is entered. Originally, a court order that divided marital property did not abate upon the death of a spouse before a final divorce decree could be entered. In In re Harper's Estate , this court held that
[w]hen the death of one of the parties occurs after the entry of a divorce decree and before the decree is final the decree becomes ineffective to dissolve the marriage, death having terminated that personal relationship. However, the occurrence of death does not abate the action itself and to the extent that property rights are determined by the decree it remains effective and becomes final ....
¶ 21 Despite this general agreement among jurisdictions, this court, without analysis, purportedly abandoned the majority approach in
Daly v. Daly
,
¶ 22 This statement was mentioned in
Nelson v. Davis
,
¶ 23 We abandon any implication that this statement was anything more than
dictum
. The dissenting opinion argues that this
dictum
from
Nelson
means that
all
court orders and
all
claims that arise in a divorce proceeding abate upon the death of a spouse.
¶ 24 This court failed to apply this outcome in
In re Estate of Knickerbocker
,
¶ 25 This was not the outcome in
Knickerbocker
, and for good reason. As we stated in
Knickerbocker
, a divorce case or any order prohibiting a transfer of marital property in a divorce case is not intended to " 'freeze' the status of the parties' assets," or to "freeze each party's estate plan."
¶ 26 Before the divorce action was filed in this case, Husband and Wife were joint tenants. Wife did not acquire her interest as a joint tenant in the property during the divorce proceeding; it pre-existed as an interest that was part of the marital estate and was subject to equitable distribution. Under the
Nelson dictum
, we would be required to restore the joint tenancy. As joint tenants, Wife would have succeeded to Husband's interest in the home upon Husband's death. If the statements in
Nelson
are not
dictum
but are binding precedent, we must affirm the
district court on alternative grounds. However, we reject this statement as
dictum
, and reaffirm our holding in
In re Harper's Estate
regarding the effect of the death of a spouse on court orders dealing with property rights.
¶ 27 Conversely, all interlocutory orders that are effective only during litigation abate upon the dismissal of a divorce case. In
Knickerbocker
, the district court ordered that, "[e]ach of the parties is restrained from selling ... the assets of the parties ... during the pendency of this action."
B. Mother Inadequately Briefed Whether a Claim Arising in the Context of a Divorce Proceeding Abates Upon the Death of a Spouse
¶ 28 While we reaffirm our precedent in In re Harper's Estate , we note that this line of precedent addresses only the effect of the death of a party on a court order dealing with property rights. Indeed, Mother expressly argued that the Nelson v. Davis line of cases only applies to "those [property] rights granted by the court via an order issued during the divorce." She did not argue that it applied to any claims that could be held by Wife. None of these cases address the effect of the death of a party on a claim for equitable distribution or any other property rights claim. This question appears to be an issue of first impression in Utah.
¶ 29 "On appeal, the burden is upon the appellant to convince us that the trial court committed error...."
Brigham v. Moon Lake Elec. Ass'n
,
¶ 30 At oral argument, Mother conceded that any claim held by Wife against Husband that survived the abatement of the divorce proceeding extended to Husband's estate once he died.
¶ 31 The dissent argues that Mother's briefing did not address this issue because Mother "is arguing for a broad rule that doesn't require the nuance now demanded by the majority."
¶ 32 Mother never filed a reply brief and never grappled with this important question. As the appellant, Mother had the burden of establishing that the district court erred. Without adequate briefing from Mother, we do not believe the time is right to rule on this issue. We are rightly hesitant to address an issue of first impression without the aid of adequate adversarial briefing. Mother failed to adequately address the question of whether Wife's claim for the joint tenancy survived the death of Husband and thereby failed to meet her burden on appeal, so we affirm the district court's holding. Because of this, we hold that Wife's claim against Husband for the joint tenancy extended to Husband's estate.
C. Claims Raised by Mother for the First Time During Oral Argument
¶ 33 After conceding at oral argument that any claim that survived the death of Husband extended to his estate, Mother alleged for the first time that Wife actually brought a claim against the estate, but that it was disallowed by the personal representative and Wife did not timely seek review by the probate court. Thus, her underlying claim against the estate is time barred. If the underlying claim against the debtor is barred then a UFTA claim against the transferee could be barred as well.
But see
Goldberg, Bowen & Co. v. Demick
,
¶ 34 Additionally, Mother failed to point to any part of the record before us to support the assertion that a claim against the estate was made, or the result of such a claim. On appeal, "we do not abrogate a [party's] obligation or assume the role of an advocate by researching all applicable law and searching the entire record for each and every indication of possible or potential error."
State v. Honie
,
¶ 35 At oral argument, the nature of Wife's claim against the estate-whether it is for the entire marital estate or some lesser amount-was also raised for the first time. Once again, Mother did not raise this issue in her opening brief, nor did she argue how this should affect our analysis during oral arguments, nor point to any will or other evidence in the record to indicate how Wife's claim should be decreased. For these reasons, we do not address this issue.
¶ 36 "On appeal, the burden is upon the appellant to convince us that the trial court committed error ...."
Brigham
,
¶ 37 While Wife's underlying claim for the joint tenancy is against Husband's estate, her UFTA claim was brought only against Mother. But Wife's failure to bring her UFTA claim against the estate as well as Mother is not fatal to her claim. Nothing in UFTA requires a fraudulent transfer claim to be brought by the creditor against the debtor.
See
Hoesman v. Sheffler
,
¶ 38 While the debtor does not always need to be added as a defendant, we note that Utah Rule of Civil Procedure 19 applies to UFTA claims, and in a fraudulent transfer case, the underlying debtor is typically a necessary and indispensable party when "the creditor has not reduced [the underlying] claim to judgment." 37 AM. JUR. 2d Fraudulent Conveyances and Transfers § 163 (2017 update). This is because the debtor has an interest in proving whether the creditor's underlying claim against the debtor is valid. See UTAH R. CIV. P. 19(a) (a person is a necessary party when they have an "interest relating to the subject of the action" and the person will be "impair[ed] or impede[d]" from protecting that interest if not added). Thus, when the creditor has not already obtained a judgment on the underlying claim, the debtor is typically necessary to "be heard in regard to the validity or amount of the [underlying] claim" that serves as the basis for the UFTA claim. 37 AM. JUR. 2d Fraudulent Conveyances and Transfers § 163 (2017 update).
¶ 39 Mother, however, has not argued on appeal that Husband's estate should be added as a defendant under Utah Rule of Civil Procedure 19, nor did the estate assert an interest pursuant to rule 19. UTAH R. CIV. P. 19(a) ("A person ... shall be joined as a party in the action if ... he claims an interest relating to the subject of the action...."). In the trial court, Mother did argue that the estate was an indispensable party, but she only moved to have herself added in her official capacity, as personal representative of Husband's estate, as a plaintiff rather than as a defendant. This would have positioned her both as plaintiff (in her official capacity) and defendant (in her individual capacity) in the case. Wife acquiesced to joining the estate as a defendant because the estate "could conceivably assert a claim that would be relevant to the issues of this case," but argued that it made no sense to add the estate as a plaintiff . The trial court held that Mother could not add the estate as a plaintiff, but that she could "join herself, in her capacity as personal representative of the decedent's estate, as a second Defendant." Mother (in her individual and official capacities) refused to add the estate as a defendant. Thus, any argument that the estate was a necessary party has clearly been waived.
¶ 40 While there may be questions about whether Wife's underlying claim is still for the "entire marital estate" and whether any claim against the estate may still be brought, Mother has not adequately raised these issues in her briefing nor provided an adequate record for us to review them on appeal. Without adequate argument that Wife's claim for the joint tenancy abated when Husband died, we refuse to vacate the holding of the district court. Additionally, Mother's concession that any claim "that still exists that was not abated by the divorce" extends to the estate appears to be an accurate statement of the law. Without Mother pointing to anywhere in the record showing that the claim against the estate is barred, we must affirm the district court's holding that Wife had a claim against Husband at the time she filed the current suit. We now turn to whether the trial court erred in granting Wife the entire home rather than money damages.
II. REMEDIES AVAILABLE UNDER THE UTAH FRAUDULENT TRANSFER ACT
¶ 41 Utah Code section 25-6-8 provides the remedies available to a creditor when a transfer is fraudulent. Mother argues that section 25-6-8 does not authorize the trial court's holding that Wife "is the sole owner of the [home] in fee simple absolute and that neither [Mother] nor any subsequent transferees have any interest whatsoever in this property." She argues that, while an earlier version of UFTA allowed for a transfer to be voided, the "current version of UFTA now only allows a creditor ... to obtain a judgment in an amount necessary to satisfy her right to payment based on the value of the property transferred."
¶ 42 When interpreting a statute, our primary objective is "to ascertain the intent of the legislature."
Bagley v. Bagley
,
¶ 43 Prior to 1988, UFTA provided that a fraudulent transfer "shall be void," UTAH CODE § 25-1-8 (1987), and that creditors had the right to "have the conveyance set aside,"
id
. § 25-1-15 (1987). In 1988, UFTA was amended, removing the reference to the transfer being void
(1) In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in Section 25-6-9, may obtain:
(a) avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim;
(b) an attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by the Utah Rules of Civil Procedure;
(c) subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
...
(iii) any other relief the circumstances may require.
(2) If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court orders, may levy execution on the asset transferred or its proceeds.
¶ 44 The trial court granted Wife the home under subsection (1)(a). It held that "the 'extent necessary to satisfy' [Wife's] nascent claims that were created by the filing of the divorce action is to entirely set aside the Transfer." (quoting UTAH CODE § 25-6-8(1)(a) ). Section 25-6-8(1)(a), discussing the "avoidance of the transfer," is further clarified by section 25-6-9(2) which provides that,
to the extent a transfer is voidable in an action by a creditor under Subsection 25-6-8(1)(a), the creditor may recover judgment for the value of the asset transferred ... or the amount necessary to satisfy the creditor's claim, whichever is less.
(Emphases added).
¶ 45 Mother argues that this language limits the remedy available under section 25-6-8(1)(a) to a judgment for money damages. However, this interpretation does not comport with the plain language of the statute. Section 25-6-9(2) states that a trial court "
may
" authorize money damages when a
"transfer is
voidable
."
¶ 46 Husband executed a quit claim deed to Mother. Voiding that deed places title back into the name of Husband. Because we hold that Husband's transfer to Mother was fraudulent under UFTA, the joint tenancy was never severed and Wife likely takes title to the property through the operation of law.
See
Hobbs v. Fenton
,
¶ 47 We note that Wife only likely takes title because of a procedural oddity which requires remand for further factual findings. Utah Code section 25-6-9(2) provides that "[a] judgment [under subsection 25-6-8(1)(a) ] may be entered against: (a) the first transferee of the asset ...; or (b) any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee."
¶ 48 Just prior to trial on Wife's UFTA claim, Mother transferred her interest in the property to Diamond Fork Land & Livestock Company-a company that appears to be owned by Robert Copier (one of Husband's and Mother's attorneys). The trial court found that this transfer was made in bad faith with the intent to "transfer the subject property beyond the jurisdiction of the court to avoid the remedy sought by [Wife]." Both Diamond Fork and Mr. Copier were added as parties in this action after Wife discovered the transfer, and both defaulted. Thus, we may declare the transfer from Husband to Mother void, and we may also declare the transfer from Mother to Diamond Fork void because Diamond Fork was not a good faith transferee and because it defaulted. See UTAH CODE § 25-6-9(2) (stating that judgment may be entered against any "subsequent transferee" so long as they did not take the property in good faith).
¶ 49 However, we do not know the current status of the title. Diamond Fork apparently attempted to further transfer an interest in the property to another individual, who later "denied claiming any interest in the property." While, based on the record before us, it appears as though no other parties claim an interest from Mother or Diamond Fork, we cannot be sure at this point. If Diamond Fork sold its interest in the property to a good faith buyer, money damages against Mother and Diamond Fork may be the only remedy available under Utah Code section 25-6-8(1)(a). Given the fact that Mother and Mr. Copier appear to have no qualms with transferring the property while this case is pending, we determine that a remand to verify the current status of the title is warranted.
¶ 50 We therefore remand to the trial court for further factual findings and its determination on this issue. We also take this opportunity to give a word of warning to Mother, Mr. Copier, Diamond Fork Land & Livestock Company, and any other party or attorney who claims an interest in the property. Given Mother's and Mr. Copier's apparent disregard for the courts of this state and the application of justice, we take the odd step as a court of last resort and order that no party or attorney in this action attempt to further convey this property without approval from the trial court. Mother and Mr. Copier have caused this case to drag on long enough through their dilatory tactics.
III. WIFE'S CLAIM FOR ATTORNEY FEES ON APPEAL
¶ 51 Wife was granted her attorney fees in the trial court, and seeks attorney fees on appeal. Specifically, she "submits that double attorney fees should be awarded pursuant to" Utah Rule of Appellate Procedure 33. Rule 33 provides two instances in which attorney fees are appropriate: 1) if the appeal is "frivolous," and 2) if the appeal is taken for "delay." If either of these are found, the appellate court "shall award just damages, which may include single or double costs, as defined in Rule 34, and/or reasonable attorney fees, to the prevailing party." UTAH R. APP. P. 33(a). We first note that double
attorney fees
are not available under rule 33, only double
costs
"as defined in Rule 34." Thus, if Wife is entitled to anything, the most she may receiver are her actual attorney fees and double costs. But parties seeking attorney fees under rule 33 face a high bar. "[T]he imposition of such a sanction is a serious matter and only to be used in egregious cases, lest the threat of such sanctions should chill litigants' rights to appeal lower court decisions."
Redd v. Hill
,
¶ 52 Utah Rule of Appellate Procedure 33 defines a frivolous appeal as "one that is not grounded in fact, not warranted by existing law, or not based on a good faith argument to extend, modify, or reverse existing law." We have further clarified that, "[s]anctions are appropriate for appeals obviously without merit, with no reasonable likelihood of success, and which result in the delay of a proper judgment."
Redd
,
¶ 53 However, attorney fees are also available when the appeal is taken for delay. See UTAH R. APP. P. 33(a). The trial court held that Mother's "defenses were brought in bad faith, made with the intention of hindering or delaying restoration of the property to [Wife]." Wife argues that this appeal "is but a continuation of the same bad faith litigation" and that it was brought solely to place another lis pendens on the property to prevent Wife from selling the home. While the trial court's holding appears to be partially based on its determination that Mother's claims were baseless, it was also based on Mother's trial tactics. For instance, the trial court found that Mother "has filed at least sixty motions during the pendency of this case, many of them repeating previously denied motions, and nearly all with 'little or no citation to legal authority, and little if any real analysis of the legal arguments.' " Also, Mother transferred her interest in the home to her previous attorney "in anticipation of trial," and for the purpose of moving the home "beyond the jurisdiction of the court to avoid the remedy sought by Plaintiff."
¶ 54 Mother's only argument that this appeal was not brought for any improper purpose is that she has a non-frivolous argument. While a frivolous argument is evidence that the appeal was brought for an improper purpose, it is not the only possible evidence. If it were, awarding attorney fees for "delay" would be completely subsumed by the frivolousness prong.
See
Lancer Ins. Co. v. Lake Shore Motor Coach Lines, Inc.
,
CONCLUSION
¶ 55 We conclude that the Utah Fraudulent Transfer Act requires an ongoing debtor-creditor relationship at the time a claim under the Act is filed. In this case, the debtor-creditor relationship existed between Patricia Porenta and Robert Porenta's estate. Because there was an ongoing debtor-creditor relationship, Wife's claim for fraudulent transfer is not barred by the Act. Additionally, we hold that the trial court did not err in granting Wife the entire marital home rather than money damages, but we remand for a determination of the current status of title. Finally, we award Wife double her costs on appeal and remand to the trial court for a determination of those costs.
Related
Cite This Page — Counsel Stack
2017 UT 78, 416 P.3d 487, 2017 Utah LEXIS 180, 2017 WL 5494698, Counsel Stack Legal Research, https://law.counselstack.com/opinion/porenta-v-porenta-utah-2017.