Clarke v. Clarke

542 P.3d 935

2023 UT App 160

Edwin M. CLARKE, Appellee,

v.Angozi R.S. CLARKE, Appellant.

No. 20220067-CA

Court of Appeals of Utah.

Filed December 29, 2023

Third District Court, Silver Summit Department, The Honorable Teresa Welch, No. 174500147

Cassie Medura and Jarrod H. Jennings, Attorneys for Appellant

Julie J. Nelson and Rebecca Ross, Attorneys for Appellee

Judge Ryan M. Harris authored this Opinion, in which Judges Gregory K. Orme and John D. Luthy concurred.

Opinion

HARRIS, Judge:

¶1 After about twenty years of marriage, Edwin (Ed) and Angozi (Anne) Clarke separated in 2016, and their divorce case proceeded to a four-day bench trial in late 2020 and early 2021. Anne appeals from some of the trial court’s findings and conclusions regarding the financial aspects of the case, chiefly the court’s determination as to how much alimony Ed was ordered to pay. And she appeals the court’s denial of her motion for a new trial. We reject Anne’s arguments and affirm the court’s rulings.

BACKGROUND

¶2 Ed and Anne¹ married in September 1996. Ed commenced this divorce action in 2017. During their marriage, the parties had three children together, none of whom are minors now and only one of whom was a minor at the time of trial. The bulk of the pretrial litigation in this case concerned the parties’ children, but none of the trial court’s eventual rulings regarding custody are at issue in this appeal; rather, the matters at issue here are exclusively financial.

¶3 Ed is an airline pilot by trade, and in the years leading up to trial he worked for Delta Air Lines (Delta); in 2016, he was promoted to captain. Anne was also employed during the marriage; the trial court found that, since 2006, she had been "self-employed as an Independent Clothing Salesperson" affiliated with a clothing company. Prior to trial, the parties exchanged several financial disclosures, including information about their respective incomes and claimed monthly expenses. As trial approached, the court entered a pretrial order commanding that the parties exchange "[u]pdated [f]inancial [s]tatements … 21 days prior to the scheduled trial date."

¶4 Trial was eventually scheduled for a three-day setting in November 2020. In keeping with the pretrial scheduling order, the parties exchanged updated financial information in the weeks prior to the scheduled trial date. Anne submitted an updated financial declaration in September 2020, therein asserting that her gross employment income was $1,674 per month (not including alimony and child support payments Ed was making pursuant to a temporary order), that her total net income (including alimony and child support, but after taxes) was $3,894 per month, and that her expenses were $8,093 per month. Regarding expenses, the form she used contained two columns for each line item, one for the "current amount" and one for "marital expenses." Anne filled out only the "current amount" column; she left the "marital expenses" column blank.

¶5 In his final pretrial disclosures, Ed submitted an updated financial declaration indicating that his net income was $14,849 per month. Regarding expenses, Ed filled out both columns, indicating that his "current" expenses were $16,399 and that his monthly "marital expenses" had been $17,007. Ed also produced documentation supporting his assertions regarding income and expenses, including his tax returns from 2015 through 2019, as well as a paystub dated September 30, 2020 that included 2020 year-to-date income information. While Anne raised one pretrial concern with Ed’s financial disclosures, she did not litigate that concern to completion,² and she lodged no other objection prior to or during trial to the scope of Ed’s financial disclosures.

¶6 Trial began on November 10, 2020. The most prominent issues at trial were financial ones, chiefly Anne’s request for alimony, and much of the trial was devoted to evidence of the parties’ respective incomes and expenses. The disputes were especially pointed regarding Ed’s income and Anne’s expenses. Neither side called any financial experts to the stand; the only witnesses to offer evidence regarding the parties’ finances were the parties themselves.

¶7 Ed was on the witness stand for the better part of three days, and he offered testimony about his income. He explained that, in 2016, he was promoted to captain and thereby earned a substantial raise, and that during the years 2016 through 2018 he earned relatively consistent annual amounts, from approximately $271,000 to $292,000. In 2019, however, he earned a significantly higher salary, making approximately $349,000. He testified that, given the COVID-19 pandemic and the ensuing change in worldwide travel conditions in 2020, this 2019 pay increase was anomalous and not representative of his earning capacity at the time of trial. He explained that his 2019 income was higher than usual because, during that year, "Delta experienced a pilot shortage" that enabled him "to work significant overtime" during this "high demand time." And he explained that the pandemic had significantly impacted Delta’s business in several ways. In 2020, there were "far too many pilots for the flight schedules being flown," and therefore he was not able to work even pre-2019 hours, let alone the increased 2019 hours. In addition, he explained that before the pandemic, he had, as a captain, received a profit-sharing payment from Delta; that payment from 2019 had been significant, totaling over $51,000. But he testified that, given the state of Delta’s business in 2020, he was unlikely to receive any profit-sharing payment for that year, or for the foreseeable short-term future. He testified that, given these circumstances, the income that he received during September 2020—as reflected on his paystub from that month—was most indicative of his earning capacity moving forward. In his proposed post-trial findings, Ed indicated that his net monthly income was $13,358.32, based on then-current tax codes. And he testified that his marital expenses were consistent with what he had listed on his most recent financial declaration.

¶8 Anne offered very little testimony regarding her income and expenses. She did, however, testify briefly about certain business expenses that she believed should be deducted from her income for alimony purposes. She offered no testimony regarding her total net income or how it should be computed, but she indicated in written filings (including her post-trial proposed findings) that her net income from employment (not including alimony and child support) was $920 per month.

¶9 Both parties also testified that they should receive credit, or "offsets," for previous expenditures made using their personal funds for items or matters for which they believed both parties should be equally responsible. For instance, Ed asked for reimbursement of payments he made for maintenance of the marital home and for certain child-related expenses. Anne asked for repayment of other child-related expenses and for costs incurred in moving out of the marital home around the time of separation, and she sought some sort of credit for various other instances where she alleged Ed had used her personal funds.

¶10 As the three scheduled November 2020 trial days drew to a close, it became apparent that the parties were going to need additional time to present their evidence. After some discussion, the court agreed to schedule a fourth trial day, but the parties and the court did not have mutual availability until February 2021. Thus, the court scheduled a fourth trial day for February 11, and it scheduled closing arguments to take place on March 9.

¶11 A few weeks after the closing arguments, the court issued a lengthy ruling containing its findings of fact and conclusions of law.³ In that ruling, the court indicated that it found Ed’s testimony about his income to be credible, and on that basis determined that the years 2019 and 2020 were both anomalous with regard to Ed’s income, and that neither year was "indicative of his normal or foreseeable income." Instead, the court determined that the most accurate measure of Ed’s earning capacity, as of the time of trial, was an average of his 2016, 2017, and 2018 earnings. The court also believed that Ed was unlikely to receive profit-sharing income from Delta "for the foreseeable future." Thus, the court did not include profit sharing as part of Ed’s gross income calculation. Using Ed’s 2016, 2017, and 2018 tax returns and averaging the income figures found there, the court determined that Ed’s gross monthly earning capacity, for child support and alimony purposes, was $20,452.25. And the court calculated Ed’s net income "by applying current tax rates to" the gross income figure it had come up with. Using this methodology, the court calculated Ed’s net monthly earning capacity as $13,358.32. And it calculated Ed’s reasonable monthly expenses, in light of the marital standard of living, to be $10,249.46.

¶12 The court calculated Anne’s gross earning capacity by averaging her earnings from 2015 through 2019 and then concluding, on that basis, that her earning capacity was $3,158.50 per month. The court declined Anne’s invitation to subtract business expenses from that figure, noting that, under applicable law, "[o]nly those expenses necessary to allow the business to operate at a reasonable level may be deducted from gross receipts," and concluding that Anne had "failed to explain which, if any, business expenses claimed on her tax returns are necessary to allow [her clothing enterprise] to operate at a reasonable level."

¶13 The court then noted that "[n]o testimony was offered at trial regarding" how to calculate Anne’s net income. The court found it "difficult to ascertain the amount of tax [Anne] actually [paid] based upon her income" given that Anne had "been receiving alimony during the pendency of the case" and had been "responsible for the tax consequences of her alimony...