Autrey v. Autrey

516 P.3d 207

Audrey June AUTREY, Petitioner/Counterrespondent-Appellant,

v.Clint A. AUTREY, Respondent/Counterpetitioner-Appellee.

No. A-1-CA-38534

Court of Appeals of New Mexico.

Filing Date: April 5, 2022

Certiorari Granted, August 10, 2022, No. S-1-SC-39371

Michael Danoff & Associates, P.C., Michael L. Danoff, Brett J. Danoff, Albuquerque, NM, for Appellant

Cortez & Hoskovec, Michelle Cortez, Albuquerque, NM, L. Helen Bennett, Albuquerque, NM, for Appellee

YOHALEM, Judge.

{1} In this divorce proceeding, Audrey June Autrey (Wife) appeals the district court's characterization of assets and debts as separate or community property and the division of marital assets and debts between her and Clint A. Autrey (Husband). Wife contends that twenty-eighty of the district court's findings of fact are without supporting evidence in the record, and, that as a result, the district court erred in concluding that (1) the business started by the couple during the marriage, AJAC Enterprises, Inc. (AJAC), is community property, rather than the separate property of Wife; (2) the rent allegedly charged and a loan allegedly made to AJAC by Wife's father and the company owned by him are Wife's separate debts; (3) Wife is not entitled to interim support; (4) Wife is not entitled to reimbursement for the gambling losses she alleged Husband incurred during the marriage and paid with community funds; and (5) the parties’ Albuquerque residence (the Corona home) is an asset of a revocable trust and is therefore divisible marital property. With the exception of the court's finding that the Corona home was held in a revocable trust, and the court's conclusion that the home was, therefore, marital property, we hold that the district court's findings of fact are supported by substantial evidence and that the court correctly applied the law to its findings. With regard to the Corona home, we find that the Corona home was held in an irrevocable trust for the benefit of the parties’ son, and was therefore not marital property. We affirm on all issues with the exception of the court's treatment of the Corona home as community property and remand for further proceedings consistent with this opinion.

BACKGROUND

{2} The parties were married on April 6, 1991. Their one child, Phoenix Autrey, was a minor at the time of trial, but turned eighteen in July 2019, just before the judgment was entered. Phoenix was not separately represented in the district court proceedings characterizing and dividing the parties’ property. The district court determined it had jurisdiction over Phoenix at the time of trial, but not as of July 2019 when Phoenix reached the age of majority.

{3} The parties separated in 2006. Wife petitioned for legal separation in 2006, but that petition was dismissed in 2007 for lack of prosecution. Husband and Wife remained married for ten more years, continuing to work together, but living apart until 2017, when Husband reopened the divorce case and filed a counterpetition for dissolution of marriage.

{4} During the marriage, AJAC was a highly successful construction business that earned a sizeable income. The parties acquired substantial real property during the marriage, including two homes in New Mexico and a condominium in Arizona.

{5} In 2002, with the assistance of legal counsel, the parties created three trusts: a Family Revocable Trust, and two identical irrevocable Qualified Personal Residential Trusts (QPRTs). Husband and Wife put the Corona home, their marital residence, into the QPRTs—the Audrey June Autrey Irrevocable Trust, and the Clint A. Autrey Irrevocable Trust.

{6} The district court was asked to address the characterization and distribution of these assets, to address Wife's claim for interim support, and to consider whether gambling losses during the marriage paid with community property must be reimbursed to the community.

{7} Following a three-day trial, where more than two hundred exhibits were admitted into evidence, both parties filed extensive proposed findings of fact and conclusions of law. After considering both filings, the district court entered 141 findings of fact and 56 conclusions of law, along with a final decree of dissolution of marriage.

{8} Additional facts concerning each of the contested issues are detailed below to the extent necessary to our decision.

DISCUSSION

{9} We note at the outset that in our review of the district court's findings of fact, we do not reweigh the evidence but instead decide whether each challenged finding was supported by substantial evidence, indulging every reasonable inference in favor of the district court's disposition. Wisznia v. N.M. Hum. Servs. Dep't , 1998-NMSC-011, ¶ 10, 125 N.M. 140, 958 P.2d 98. The testimony of a single witness, if found credible by the district court, is sufficient to constitute substantial evidence supporting a finding. State v. Hamilton , 2000-NMCA-063, ¶ 20, 129 N.M. 321, 6 P.3d 1043. "As a reviewing court we do not sit as a trier of fact; the district court is in the best position to resolve questions of fact and to evaluate the credibility of witnesses." State v. Urioste , 2002-NMSC-023, ¶ 6, 132 N.M. 592, 52 P.3d 964. "[W]hen there is a conflict in the testimony, we defer to the trier of fact." Buckingham v. Ryan , 1998-NMCA-012, ¶ 10, 124 N.M. 498, 953 P.2d 33.

I. The District Court Did Not Err in Determining That AJAC Was Community Property and Not Wife's Separate Property

{10} Wife argues that the district court erred by designating the parties’ business, AJAC, as community property. Wife makes two arguments in support of her claim that AJAC is her separate property. First, although Wife admits that the business was started after the parties’ marriage, Wife claims that it was funded solely with her separate property and retained its status as her separate property throughout the marriage. Wife next argues that, even if AJAC was funded with community property, Husband knowingly and intentionally waived his community interest in the business.

A. Wife Failed to Rebut the Presumption That Property Acquired During Marriage Is Community Property

{11} The status of property acquired during a marriage is determined at the time the property is acquired and by the manner of its acquisition. Bayer v. Bayer , 1990-NMCA-106, ¶ 12, 110 N.M. 782, 800 P.2d 216. Property acquired by either or both spouses during their marriage is presumptively community property. NMSA 1978, § 40-3-12(A) (1973). The party seeking to establish such property as separate—in this case, Wife—has the burden of rebutting that presumption by a preponderance of the evidence. Hodges v. Hodges , 1984-NMSC-031, ¶ 6, 101 N.M. 67, 678 P.2d 695. The presumption can be rebutted by a showing that property acquired during marriage was acquired with a spouse's separate funds, as Wife attempted to show in the district court. See NMSA 1978, § 40-3-8(A)(4) (1990) (noting that property acquired by either spouse by gift is separate property). Such property generally retains its status as separate property even if the other spouse later contributes funds or labor to that property. Campbell v. Campbell , 1957-NMSC-001, ¶ 80, 62 N.M. 330, 310 P.2d 266.

{12} Wife relies on these principles of law, claiming that because Husband did not specifically refute her testimony that AJAC was started with a $2,000 gift to her from her mother, the district court was required to find that AJAC was acquired with Wife's separate funds and remained her separate property throughout the marriage. The district court found, however, that Wife's testimony that AJAC was funded with a $2,000 gift from her mother was not credible, that Wife generally was not a credible witness, and the "vast majority of the evidence" supported AJAC being a community asset built during the marriage.

{13} "It is for the [district] court to weigh the testimony [and] determine the credibility of witnesses." Lopez v. Adams , 1993-NMCA-150, ¶ 2, 116 N.M. 757, 867 P.2d 427. "If a finding is made against the party with the burden of proof, we can affirm if it was rational for the [district] court to disbelieve the evidence offered by that party." Id. Our review of the record reveals evidence that supports the rationality of the district court's decision not to credit Wife's testimony about having received a $2,000 gift. Wife did not support her testimony with any documentation of the gift; the $2,000 amount alleged was unlikely to have been sufficient to fund the launch of a corporation engaged in heavy earth-moving; and undisputed evidence showed that Husband was involved from the outset in every aspect of creating and running the corporation. Even the name of the corporation reflected Husband's ownership interest. Husband testified AJAC stood for "A.J. and Clint," a combination of Wife's and Husband's names. Notably also, the district court finding that it was the parties’ joint efforts, as joint owners and business partners, that made the business a success for many years, is not challenged on appeal. Given the evidence before the district court, we conclude that the district court did not err in refusing to credit Wife's unsupported and self-serving testimony that she started the business with a $2,000 gift.

B. Substantial Evidence Supports the District Court's Findings That Husband Did Not Intend to Waive His Community Property Interest in AJAC and That There Was No Consideration for Such a Waiver

{14} Wife next claims that even if AJAC was funded with community property, as the district court found, Husband waived his community interest in the corporation, thereby transmuting AJAC into her separate property. Wife relies on incorporation documents filed with the State of New Mexico at the start of the business that names her as the sole shareholder of AJAC, together with shares of stock issued in her name and, in particular, a statement in the incorporation documents signed by Husband, waiving his community property rights.

{15} Although the...