Welch v. Welch, A-1-CA-35570

DARON WELCH, Petitioner-Appellee/Cross-Appellant, v. JANE CALTON FOSTER WELCH, Respondent-Appellant/Cross-Appellee.

No. A-1-CA-35570

COURT OF APPEALS OF THE STATE OF NEW MEXICO

August 6, 2018

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.

APPEAL FROM THE DISTRICT COURT OF ROOSEVELT COUNTY

Donna J. Mowrer, District Judge

Eric D. Dixon Attorney and Counselor at Law, P.A.

Eric D. Dixon

Portales, NM

for Appellee

Caren I. Friedman

Santa Fe, NM

Sandra E. Gallagher

Portales, NM

for Appellant

MEMORANDUM OPINION

BOHNHOFF, Judge.

{1} This appeal arises from the dissolution of the parties' marriage. Respondent Jane Calton Foster Welch (Wife) challenges the district court's orders granting partial summary judgment in favor of Petitioner Daron Welch (Husband) on Wife's claims of community liens against Husband's businesses as well as the district court's final decision and order on division of community property. In addition to contesting the community lien rulings, Wife contends that the district court abused its discretion in refusing to award ongoing spousal support to Wife and in not granting Wife all of the attorney's fees she sought. In his cross-appeal, Husband argues: (1) the district court erred in awarding Wife a $20,000 reimbursement on separate debt; (2) the district court erred in awarding Wife one-half of the income tax she paid following the parties' separation; and (3) the district court erred in awarding Wife temporary spousal support, a lump sum spousal support payment, and attorney's fees. This is a memorandum opinion and because the parties are familiar with the facts and procedural posture of the case, we set forth only such facts and law as are necessary to decide the issues raised.

BACKGROUND

{2} The parties were married on July 13, 2007. At the time of the marriage, Husband held ownership interests in three businesses, WTI, Inc. (WTI), Welch Trucking, Inc. (Welch Trucking), and Bubby & Son, Inc. (Bubby & Son). On October15, 2013, Husband filed a petition to dissolve the marriage. Husband filed a succession ofmotions for partial summary judgment on Wife's community lien claim; the district court ultimately granted partial summary judgment as to all three businesses. The district court entered an order dissolving the parties' marriage on March 25, 2015. The district court held an evidentiary hearing on the remaining issues on November 3 and December 17, 2015, and entered its final decision on March 16, 2016.

DISCUSSION

A. Community Lien

{3} Wife argues that for three reasons the district court erred in granting Husband's motions for partial summary judgment on her community lien claim: Husband did not make a prima facie showing of entitlement to summary judgment; genuine issues of material fact in any event precluded summary judgment; and the court additionally erred in granting summary judgment while discovery was ongoing.

{4} "Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. "The movant need only make a prima facie showing that he is entitled to summary judgment." Roth v. Thompson, 1992-NMSC-011, ¶ 17, 113 N.M. 331, 825 P.2d 1241. "Upon themovant making a prima facie showing, the burden shifts to the party opposing the motion to demonstrate the existence of specific evidentiary facts which would require trial on the merits." Id. "Arguments by counsel are not evidence and cannot be used to create a material issue of fact to defeat summary judgment." Cain v. Champion Window Co. of Albuquerque, LLC, 2007-NMCA-085, ¶ 14, 142 N.M. 209, 164 P.3d 90.

{5} "On appeal, we examine the whole record for any evidence that places a genuine issue of material fact in dispute." Rummel v. Lexington Ins. Co., 1997-NMSC-041, ¶ 15, 123 N.M. 752, 945 P.2d 970. "An issue of fact is 'genuine' if the evidence before the court considering a motion for summary judgment would allow a hypothetical fair-minded fact[-]finder to return a verdict favorable to the non-movant on that particular issue of fact." Associated Home & RV Sales, Inc. v. Bank of Belen, 2013-NMCA-018, ¶ 23, 294 P.3d 1276. (internal quotation marks and citation omitted). "We are mindful that summary judgment is a drastic remedial tool which demands the exercise of caution in its application, and we review the record in the light most favorable to support a trial on the merits." Woodhull v. Meinel, 2009-NMCA-015, ¶ 7, 145 N.M. 533, 202 P.3d 126 (internal quotation marks and citation omitted). We review de novo a movant's entitlement to summary judgment.

Hernandez v. Wells Fargo Bank N.M., N.A., 2006-NMCA-018, ¶ 5, 139 N.M. 68, 128 P.3d 496.

1. Community Lien Legal Principles and Burden of Proof

{6} Where the separate character of property "[is] established, it maintains that character until the contrary has been made to appear by direct and positive evidence." Katson v. Katson, 1939-NMSC-021, ¶ 5, 43 N.M. 214, 89 P.2d 524. "Therefore, any increase in the value of separate property is presumed to be separate property." Bayer v. Bayer, 1990-NMCA-106, ¶ 13, 110 N.M. 782, 800 P.2d 216. Further, an "increase[] in the value of separate property arising from an increase in market value or natural growth belong[] to the owner of the separate property." Id. ¶ 21.

{7} "The presumption may be rebutted by direct and positive evidence that the increase is attributable to community funds or labor." id. ¶ 13. A lien in favor of the community may be imposed on a business that is separate property if the "evidence supports a determination that community skill and labor have resulted in an increase in the value of the [business] and whether such efforts were uncompensated or undercompensated." Zemke v. Zemke, 1993-NMCA-067, ¶ 21, 116 N.M. 114, 860 P.2d 756 (internal quotation marks and citation omitted). The value of community labor performed on behalf of such business may be established by evidence of the amount of wages paid for comparable work. See Jurado v. Jurado, 1995-NMCA-014,¶ 10, 119 N.M. 522, 892 P.2d 969. Importantly, however, the party claiming the community lien on separate property bears the burden of proving its existence and amount. See Trego v. Scott, 1998-NMCA-080, ¶ 8, 125 N.M. 323, 961 P.2d 168; Smith v. Smith, 1992-NMCA-080, ¶ 12, 114 N.M. 276, 837 P.2d 869. In particular, if the spouse was paid a definite salary for his or her services, "in the absence of definite evidence of their value, it will be presumed that the salary paid was the value of the services." Zemke, 1993-NMCA-067, ¶ 21 (internal quotation marks and citation omitted).

2. The Partial Summary Judgment Motions

{8} We note initially that the district court was sensitive to the summary judgment requirement that there be no disputed issues of material fact. Husband first sought summary judgment on Wife's community lien claims as to all three of his businesses in a motion filed on June 18, 2014. In an August 20, 2014 order, the district court denied the motion on the grounds that "material issues of fact exist and summary judgment is not appropriate at this time."

{9} Husband's Renewed Motion. Husband filed a renewed motion for partial summary judgment on August 25, 2014 (Renewed Motion). He supported the Renewed Motion with his affidavit as well as the affidavit of the accountant who prepared tax returns for the three businesses. The affidavits stated that Husbandacquired his interests in the businesses prior to marrying Wife; the fair market value of the businesses was not enhanced during the marriage by Wife's labor; the book value of Welch Trucking and WTI had decreased during the marriage; any increase in the value of all three businesses was attributable to the normal growth of the businesses due to market conditions; and Husband was not undercompensated for any of his services to the businesses.

{10} In her response to Husband's Renewed Motion, Wife generally disputed whether the businesses were acquired before the marriage and disputed the value of the three companies. However, she did not respond, as required by Rule 1-056(D) NMRA, in opposition to Husband's statement of undisputed material facts. Wife also did not support her arguments with any of her own evidence regarding when she contended Husband acquired his ownership interests in the companies, the values of the companies, or whether Husband was undercompensated for his labor on behalf of the companies. Wife summarily argued that discovery was incomplete, but did not support her argument with an affidavit as contemplated by Rule 1-056(F), explaining why she could not respond to Husband's motion.

{11} Following an October 30, 2014, hearing, the district court granted in part and denied in part Husband's Renewed Motion by order entered on November 6, 2014. Citing Smith, the district court observed that to prevail on the motion, Wife had todemonstrate "genuine issues of fact regarding an increase in the value of the business due to the efforts of community labor." Because Wife had not rebutted any of Husband's undisputed facts regarding Welch Trucking and WTI, the district court granted the motion as to those entities. The district court determined, however, that, because Husband's statement of undisputed facts did not address the value of Bubby & Son, Husband had not met his prima facie burden of demonstrating the absence of genuine issues of fact regarding the business and denied the motion to that extent.

{12} Wife's Motion to Set Aside. On December 1, 2014, Wife filed a motion to set aside the district court's November 6, 2014 rulin...