McFarland v. McFarland

547 P.3d 204

2024 UT App 31

Bruce Ray MCFARLAND, Appellee,

v.Nicole S. MCFARLAND, Appellant.

No. 20221044-CA

Court of Appeals of Utah.

Filed March 14, 2024

Second District Court, Farmington Department, The Honorable David J. Williams, No. 084701533

Angilee K. Dakic, Attorney for Appellant

Jacob K. Cowdin, Attorney for Appellee

Judge Ryan M. Harris authored this Opinion, in which Judges Michele M. Christiansen Forster and David N. Mortensen concurred.

Opinion

HARRIS, Judge:

¶1 This domestic dispute between Bruce Ray McFarland (Bruce) and Nicole S. McFarland (Nicole) comes before us for a second time. This time, we are asked to assess the propriety of two aspects of the district court’s most recent set of orders: the court’s decision to modify the parties’ divorce decree and award the house in which the parties lived while they were married (the Home) to Bruce instead of to Nicole, and the court’s decision to require Nicole to pay Bruce’s attorney fees incurred in litigating the petition to modify. We see no reversible error in the court’s award of the Home to Bruce, and we therefore affirm on that issue. But we agree with Nicole that the court erred in awarding attorney fees to Bruce, and we therefore reverse that fee award.

BACKGROUND

¶2 In our previous opinion, we set forth many of the relevant facts underlying the parties’ dispute. See McFarland v. McFarland, 2021 UT App 58, ¶¶ 2–18, 493 P.3d 1146. In the interest of brevity, we recite in this opinion only those facts necessary to our decision.

¶3 Bruce and Nicole’s divorce decree (the Decree) was entered in 2009 following a negotiated settlement As relevant here, the Decree required Bruce to pay Nicole $1,700 per month in alimony, and it awarded the Home to Nicole "subject to" her "assumption" of the mortgage, tax, and insurance obligations associated with the Home as well as "a judicial lien in the sum of $12,034.24 payable to" Bruce. According to the Decree, Nicole was to pay Bruce the lien amount on the occurrence of the first of these events: (1) when Nicole remarries or cohabits; (2) when the Home is sold or rented; (3) when Nicole "moves from" the Home or no longer uses it as her primary residence; or (4) when the parties’ youngest child graduates from high school. Several of those events have long since occurred; indeed, the district court later found that Nicole "abandoned" the Home in 2010. At no point did Nicole ever make any of the mortgage, tax, or insurance payments on the Home, nor did she ever pay Bruce the lien amount.

¶4 Instead, after a brief period in which he did not live in the Home, Bruce moved back into the Home in 2009 and has lived there at all times since. And after entry of the Decree, Bruce—rather than Nicole—has made all mortgage, tax, and insurance payments on the Home, and he has also maintained and made improvements to the Home. But other than one single payment in January 2009, Bruce paid no alimony to Nicole. Thus, soon after the Decree was entered, both parties began to ignore many of the Decree’s important provisions. But for the next seven years, neither party seemed bothered by the other’s noncompliance, and neither sought to modify or enforce the terms of the Decree.

¶5 In 2017—apparently motivated by a desire to refinance the Home—Bruce filed a petition to modify (Bruce’s Petition), asking the court to modify the Decree to (among other things) award him the Home. Nicole responded not only by resisting Bruce’s Petition, but also by filing two motions asking the court to hold Bruce in contempt for (among other things) failing to pay alimony and for "willfully occup[ying Nicole’s] property," namely, the Home. Concerning the Home, Nicole asked that the court "immediately restore[ ]" her "to the use and possession of’ the Home. Later, in 2019, the court found Bruce in contempt for failing to pay alimony, and it ordered Bruce to pay Nicole over $150,000 in unpaid alimony. But the court declined to find Bruce in contempt for occupying the Home. The court made no ruling on Bruce’s Petition, however, because that matter had apparently not yet been certified for trial. But the court allowed Bruce to continue living in the Home "on a temporary basis" until the matter was finally resolved.

¶6 Both parties appealed several aspects of the court’s 2019 rulings and, in this case’s first trip to this court, we affirmed the court’s alimony award to Nicole and remanded "the case for further proceedings" regarding (among other things) Bruce’s Petition. Id. ¶¶ 46–47.

¶7 Following remand, the district court held a hearing to consider matters regarding the Home. Bruce asserted that any claim Nicole might make regarding possession of the Home was barred by several equitable doctrines, including waiver and laches. In particular, Bruce claimed that Nicole had waived any claim to the Home by moving out in 2010 and taking no action in the intervening years to challenge Bruce’s possession of it, and that Nicole’s claim was barred by laches because her "delay in bringing her claim" was "unreasonable" and "prejudicial to Bruce." Nicole resisted all of these arguments and, in addition, claimed that Bruce’s Petition was barred by res judicata.

¶8 At the conclusion of the hearing, the court made an oral ruling granting Bruce’s Petition and denying Nicole’s motion regarding the Home. The court later issued a written ruling setting forth its findings and conclusions. In that ruling, the court found that Nicole’s abandonment of the Home in 2010 constituted "a material and substantial change in circumstances." The court also rejected Nicole’s claim that Bruce’s Petition was barred by res judicata. And the court determined that modification of the Decree to award Bruce the Home was appropriate; the court found merit in several of Bruce’s equitable arguments. Specifically, the court determined that Nicole had waived any claim to the Home by moving out and failing to make any payments related to the Home since the Decree was entered. And the court concluded that laches also barred Nicole’s claim to the Home because she had delayed bringing any such claim and her delay had prejudiced Bruce because Bruce had made payments and improvements on the Home in the intervening years. The court noted that Bruce had also delayed in bringing his petition, but it found that Nicole had not been prejudiced by Bruce’s delay.

¶9 Bruce asked the court to award him attorney fees incurred in litigating his petition. As the district court interpreted it, this request was grounded not in the attorney fees statute found in the family law code, see Utah Code § 30-3-3, but, instead, in Utah’s bad-faith attorney fees statute, see id. § 78B-5-825. The court granted Bruce’s request, but it made no specific finding that Nicole’s claims and defenses regarding the Home had been "without merit." It did make an express finding that "Nicole’s effort to pursue an award of [the Home] roughly eight (8) years after abandoning [it] was an act of bad faith" that Nicole undertook with a "retaliatory" motive in reaction to the filing of Bruce’s Petition. And the court noted that, during the intervening years, Nicole "had not satisfied the conditions in the Decree that allowed her to take possession of" the Home. Based on these findings, the court concluded that "law and equity call for an award of attorney fees in Bruce’s favor as it relates to the issue of’ the Home. The court later quantified that attorney fee award, ordering that Nicole pay Bruce $7,390.67 for attorney fees he incurred litigating issues related to the Home.

ISSUES AND STANDARDS OF REVIEW

[1–3] ¶10 Nicole appeals two aspects of the court’s rulings. First, she challenges the court’s order modifying the Decree to award the Home to Bruce. "In this context, we review the district court’s underlying findings of fact, if any, for clear error," and we review "its ultimate determination regarding the petition to modify[ ] for an abuse of discretion." Myers v. Myers, 2023 UT App 20, ¶ 19, 526 P.3d 1253. Whether the court chose and applied the correct legal standard is a question of law "that we review for correctness." Peeples v. Peeples, 2019 UT App 207, ¶ 11, 456 P.3d 1159.

[4, 5] ¶11 As discussed below, our analysis on this point focuses on the court’s application of the doctrine of laches and, in particular, on its determination that Bruce was prejudiced by Nicole’s delay in asserting a right to possession of the Home. "The application of laches to a particular set of facts and circumstances presents a mixed question of law and fact." Peterson v. Pierce, 2019 UT App 48, ¶ 9, 440 P.3d 833 (quotation simplified). While "[l]aw-like mixed questions are reviewed de novo," mixed questions that are more "fact-like" are "reviewed deferentially." Sawyer v. Department of Workforce Services, 2015 UT 33, ¶ 11, 345 P.3d 1253. For the reasons discussed more fully later, see infra ¶¶ 18–21, we conclude that a district court’s prejudice determination made in the laches context is more fact-like than law-like and, therefore, calls for a more deferential standard of review.

[6, 7] ¶12 Second, Nicole challenges the court’s award of attorney fees to Bruce under the bad faith statute. "We review a trial court’s grant of attorney fees under the bad faith statute as a mixed question of law and fact." Outsource Receivables Mgmt., Inc. v. Bishop, 2015 UT App 41, ¶ 11, 344 P.3d 1167 (quotation simplified). "A finding of bad faith is a question of fact and is reviewed by this court under the ‘clearly erroneous’ standard," but a ‘"without merit’ determination is a question of law" that we review "for correctness." Id. (quotation simplified).

ANALYSIS

I

¶13 We first address Nicole’s challenge to the district court’s grant of Bruce’s Petition and its accompanying order modifying the Decree to award the Home to Bruce. The court based its ruling on several distinct legal doctrines, including waiver and laches. Nicole challenges the application of these doctrines,...