Hillam v. Hillam

554 P.3d 1137

2024 UT App 102

John Dinsdale HILLAM, Appellee,

v.Tara HILLAM (Loveland), Appellant,

v.Dustin Hancock, Appellee.

No. 20220488-CA

Court of Appeals of Utah.

Filed July 18, 2024

Second District Court, Farmington Department, The Honorable David J. Williams, No. 174700031

Bart J. Johnsen and Alan S. Mouritsen, Salt Lake City, Attorneys for Appellant

Julie J. Nelson, Salt Lake City, Attorney for Appellee John Dinsdale Hillam

Joshua L. Lee, Salt Lake City, Attorney for Appellee Dustin Hancock

Judge Ryan D. Tenney authored this Opinion, in which Judges David N. Mortensen and John D. Luthy concurred.

Opinion

TENNEY, Judge:

¶1 John Hillam and Tara Hillam were married in 2000.¹ John filed for divorce in 2017, and John and Tara then spent several years litigating various questions relating to their divorce, most of which concerned the proper distribution of their assets. The district court issued findings of fact and conclusions of law in December 2021 that resolved all remaining issues.

¶2 Tara now appeals several of the district court’s rulings. We decide the various issues as follows:

• Tara first raises several challenges to the court’s conclusion that, as part of this divorce, it could not divide certain assets that John had placed in an irrevocable trust (the Trust) during the marriage. We reject two of Tara’s challenges for lack of preservation, and we reject a third on the merits.

• Also related to the Trust, Tara claims that the district court abused its discretion when it concluded that John had not dissipated marital assets by placing them into the Trust. We conclude that the court erred in its analysis of two of the dissipation factors, so we remand this matter for the court to reconsider the dissipation question in light of the principles set forth below.

• Finally, separate from the Trust issues, Tara argues that the court erred by not awarding her half of a stock payout that John had received after he filed for divorce. On this issue, we conclude that there was no abuse of discretion.

BACKGROUND²

The Marriage and John’s Employment

[1] ¶3 John and Tara married in June 2000, and they had three children between 2001 and 2005. Except for occasional hairdressing jobs, Tara stopped working once the parties had children. John "earned the vast majority of the household income" during the marriage.

¶4 In August 2010, John stated working for Maverik, Inc. His compensation consisted of two components: (i) salary and (ii) deferred compensation, under which John shared in a portion of the company's profits and which the parties have referred to during the litigation as "stock options" or "stock payouts."³ "In 2010 and 2011, Maverik grant- ed [John] 1000 shares of stock options." The deferred compensation scheme changed in 2012 such that John received "stock payouts" between the years 2013 to 2017. The district court later found that the payouts made from 2013 to 2016 "presumably were used for marital expenses." John received a stock payout in 2017 after he had initiated divorce proceedings, and that payout, which was for about $570,000, was placed into John’s personal bank account.

John Counsels with an Attorney and Creates a Trust

¶5 In late 2012, John consulted with an attorney (Attorney) for two purposes. The first was that John and Tara were experiencing marital difficulties, so John sought assistance "with the negotiation of a postnuptial agreement." John later testified that the couple’s marital difficulties during that period ‘were no different than what they had experienced in earlier portions of the marriage," though he acknowledged that Tara had "threatened divorce" somewhere around that time. In spite of John’s discussions with Attorney about a postnuptial agreement, the couple didn’t execute such an agreement.

¶6 John’s second purpose in consulting with Attorney was to discuss the potential creation of a trust. John and Tara had discussed creating a trust before John met with Attorney, and Tara understood that "other Maverik executives who were starting to retire were … establish[ing] trusts as a means of saving money on the taxes of a stock buyback." John asked Tara to meet with Attorney "regarding the formation of the trust." Though Tara would later testify that "she did not feel she had a choice in the matter," she also testified that "she trusted [John] and trusted that he was doing what was in the best interest of the family."

¶7 Tara met with Attorney "on one or perhaps two occasions," during which they discussed "the assets used to fund the trust." While it is not clear the extent to which Tara understood which assets would ultimately fund the Trust, "she knew that marital assets of some kind would be used to form what she believed was a ‘family trust.’ " The district court later found that Tara "was not provided any draft documents to review" but that, even so, Tara did not "object[ ] to the formation of the trust" at the time that it was created.

¶8 The Trust (formally, the John D. Hillam 2012 Irrevocable Trust) was finalized on November 27, 2012. The Declaration of Trust and Agreement (the Trust Agreement) listed John as settlor, with Dustin Hancock as trustee (the Investment Trustee). The listed beneficiaries included, among others, John, John’s "spouse," and John’s "children." The Trust Agreement named Tara as the "spouse," but it then defined the term by providing:

All references to [John’s] spouse are to Tara Hillam. However, if [John] and [John’s] spouse divorce after the date of this Trust Agreement, then as of the date the divorce is effective, the terms "spouse" and "[John’s] spouse" shall no longer refer to Tara Hillam, and for all purposes of this Trust Agreement[,] … she shall be deemed to have died on the divorce’s effective date.

As to the Trust’s other terms, we note (for purposes of this appeal) that the Trust Agreement contained a spendthrift clause, a provision designating its situs and choice of law as Nevada, and various terms rendering the Trust irrevocable.

¶9 On the same day the Trust was finalized, John transferred his rights in the 1,000 shares of Maverick stock options that he had received in 2010 and 2011 to the Trust as a gift, and those options were valued at $350,000.

Divorce Proceedings

¶10 John filed for divorce in January 2017. What followed was, as later described by the district court, a "high conflict" multi-year divorce case. We recount just the proceedings from the district, court that are relevant to this appeal.

¶11 John and Tara appeared before a domestic relations commissioner in March 2017, after which the commissioner entered temporary orders (the Temporary Orders). The Temporary Orders allotted custody and parent-time, assigned temporary alimony and child support, and awarded certain property for the duration of the divorce proceedings. Notably, the Temporary Orders "imputed" John with a gross monthly income of $29,792.

¶12 In November 2017, the parties met for a so-called "4-903 Settlement Conference" (the Settlement Conference).⁴ At that conference, the commissioner bifurcated the divorce proceedings, mostly for purposes of reserving certain issues that had arisen regarding the Trust for future proceedings. But the corresponding order also reserved "[a]ll other objections or issues not addressed below." It emphasized that "[b]y entering this partial order, neither party has, or intends to, abandon any agreement or stipulation reached and placed on the record following the 4-903 Settlement Conference." This order superseded the Temporary Orders and entered new amounts for child support and alimony payments, but it did not detail what income figures those determinations were based on.

¶13 The next month, Tara submitted a proposed Bifurcated Decree of Divorce. The district court apparently believed that the terms contained in this proposal had been agreed to by both parties, so it soon signed and entered this as the Bifurcated Decree of Divorce (the First Decree). John almost immediately filed a motion under rule 60(b) of the Utah Rules of Civil Procedure, wherein he asked the court to set aside the First Decree. In this motion, John alleged that the parties had not actually agreed to its terms and that Tara had engaged in "objectionable conduct" by submitting the proposed decree to the court.

¶14 Around the same time, John filed an amended divorce petition (the Amended Petition). The Amended Petition added a new claim in which John requested a declaration from the court that the Trust was valid and enforceable. The Investment Trustee was notified of this and was subsequently involved in proceedings on behalf of the Trust. Tara later answered the Amended Petition, and in her answer, she denied that the Trust was valid or enforceable.

¶15 The court later set aside the First Decree, and in December 2018, it entered an Amended Bifurcated Decree (the Second Decree) that reflected a stipulation by the parties. The Second Decree reiterated many of the same terms concerning custody, parenttime, child support, alimony, and the division of property that were present in the First Decree, but it now included a broader list of reserved issues. Specifically, it outlined that "the main remaining issue is a complex trust issue," and it also reserved the allocation of attorney fees, as well as "issues, objections, and defenses" raised following the Settlement Conference. The Second Decree established the "valuation date for marital and/or trust property" as June 13, 2018.

The Trust’s Motion for Summary Judgment

¶16 In March 2020, the Investment Trustee filed a motion for summary judgment on the portion of the Amended Petition relating to the Trust. The Investment Trustee asked the court to rule that "the undisputed facts demonstrate that the Trust is valid and enforceable, and is not subject to division as part of the divorce." As part of this motion, the Investment Trustee noted that, a month earlier, John had renounced his rights in the Trust as both...