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Lindsey v. Lindsey

Court of Appeals of Utah

March 2, 2017

Rick J. Lindsey, Appellee,
Karen M. Lindsey, Appellant.

         Fourth District Court, Heber Department The Honorable Fred D. Howard No. 134500010

          Douglas B. Thayer and Mark R. Nelson, Attorneys for Appellant

          Dean C. Andreasen, Diana L. Telfer, Troy L. Booher, and Julie J. Nelson, Attorneys for Appellee

          Judge Jill M. Pohlman authored this Opinion, in which Judges Stephen L. Roth and David N. Mortensen concurred.

          POHLMAN, Judge

         ¶1 Rick J. Lindsey and Karen M. Lindsey were married for almost twenty years, and during that time the value of Mr. Lindsey's premarital business interests substantially appreciated. The issue on appeal is whether the trial court properly granted summary judgment awarding those business interests solely to Mr. Lindsey, as his separate property, during the Lindseys' divorce proceeding. We affirm.


         ¶2 Mr. and Ms. Lindsey were married in November 1996.[1]They had one child together, and they each had minor children from prior marriages. The parties initiated divorce proceedings in early 2013, and they obtained a decree of divorce in 2015.

         ¶3 Both before and during the marriage, Mr. Lindsey held considerable business interests in the insurance industry. When the parties married in 1996, Mr. Lindsey owned Evolution Insurance Group and its subsidiaries (collectively, Evolution) and was part owner of Prime Holdings Insurance Services Inc. and its subsidiaries (collectively, Prime Holdings). In November 1997, about a year after the parties married, Mr. Lindsey's interests in Evolution were merged into Prime Holdings. Mr. Lindsey then became CEO of Prime Holdings and obtained a substantial ownership interest in that entity.

         ¶4 At that time, Mr. Lindsey's business interests were valued at approximately $3.6 million.[2] During the parties' marriage, those interests appreciated in value. By December 2012, Mr. Lindsey's equity in Prime Holdings was worth approximately $6 to $7 million. And in June 2014, Mr. Lindsey's equity in Prime Holdings was valued at approximately $10.9 million.

         ¶5 Due to Mr. Lindsey's employment with Prime Holdings as well as his ownership of Prime Holdings stock, the Lindseys enjoyed a high standard of living during their marriage. Mr. Lindsey was highly compensated via his annual salary, bonus, car allowance, and vacation payout. Due to his equity in the company, Mr. Lindsey also received large cash dividends from Prime Holdings between 2011 and the end of 2012, which totaled over $2 million. Because Mr. Lindsey elected to receive certain dividends in stock rather than cash, Mr. Lindsey also received fifty-seven shares of Prime Holdings stock between 2004 and 2012.

         ¶6 Ms. Lindsey was not employed outside the home at the time of the parties' marriage or during the marriage. Ms. Lindsey was responsible for meeting many of the parties' household and family needs, while Mr. Lindsey handled most of the parties' finances and most of the tasks related to financing and building their marital home.

         ¶7 Ms. Lindsey also supported Mr. Lindsey's efforts to strengthen relationships with his clientele. When clients or business associates came to visit, sometimes with their families, Ms. Lindsey took on the additional responsibilities associated with those visits-preparing guest rooms and welcome baskets, cooking, cleaning, assisting in laundry, and entertaining. On one occasion, she even loaned her car to their visiting guests. But Ms. Lindsey did not otherwise provide services for Prime Holdings or act as its employee.

         ¶8 As noted above, in early 2013 the parties initiated divorce proceedings. They resolved by stipulation many issues related to their separation, but they were unable to agree on the amount of alimony to be paid to Ms. Lindsey, the division of their marital property, and whether or how Mr. Lindsey's business interests would be divided.

         ¶9 Mr. Lindsey moved for partial summary judgment asserting that, as a matter of law, his premarital interests in Evolution and Prime Holdings, together with any appreciation or enhancement of their value, were his separate property. He asserted that he was presumptively entitled to retain that property following divorce and no equitable principles called for a different result.

         ¶10 To preempt any argument to the contrary, Mr. Lindsey averred that his premarital business interests had not been commingled with the marital estate or augmented, maintained, or protected by any effort of Ms. Lindsey. Mr. Lindsey also asserted that no extraordinary circumstances warranted awarding a portion of his business interests to Ms. Lindsey, arguing that the parties had benefitted from Mr. Lindsey's work efforts while married; Ms. Lindsey's contributions to the marriage would "be reflected in an award of alimony"; and the rate of return on his business interests was below average for a closely held company and attributable to his premarital holdings rather than Mr. Lindsey's work effort while married, particularly given the significant salary and dividends received by Mr. Lindsey during the marriage. Thus, according to Mr. Lindsey, there was "no marital value" in his business interests.

         ¶11 In response, Ms. Lindsey did not challenge the initial characterization of Mr. Lindsey's business interests as his separate property. Rather, she asserted that separate property may become subject to equitable distribution when it has been consumed or has lost its identity through commingling; when "the other spouse has contributed to the enhancement, maintenance, or protection of that property"; or when "the distribution of separate property achieves a fair, just, and equitable result." Ms. Lindsey claimed that all three principles applied and that factual disputes precluded resolution of those issues on summary judgment.

         ¶12 With regard to commingling, Ms. Lindsey asserted that, at one point in the marriage, she had been "aware that [Mr. Lindsey] needed money for his business." Therefore, when she received $54, 000 from the sale of real property she had owned with her prior husband, she "turned the money over" to Mr. Lindsey, who "took [it] and told [her] he put it into his business." Ms. Lindsey also alleged that, among other things, Mr. Lindsey's acquisition of fifty-seven shares of Prime Holdings stock during the parties' marriage created a fact issue as to commingling because "[a]ll dividends ha[d] been historically used in the marriage as marital income."

         ¶13 As to her enhancement of Mr. Lindsey's business interests, Ms. Lindsey cited her "efforts to grow [the] business" by entertaining and hosting business-related guests; discussing Mr. Lindsey's business in conversations with him; supporting Mr. Lindsey in his profession; and enabling Mr. Lindsey to attend to his business by caring for the parties' child and other children from prior marriages, maintaining the parties' residence, and attending to other household duties.

         ¶14 Finally, Ms. Lindsey asserted that the court could "award an interest in [separate property] when equity requires." Ms. Lindsey argued, without elaboration, that the trial court was required to consider several factors before fashioning an equitable property division, and "it [would be] more appropriate . . . to hear the equitable issues more fully at trial where the [c]ourt can observe the parties' demeanor" and "hear all the evidence." Ms. Lindsey asserted that if the court awarded Mr. Lindsey's business interests to him, prior to trial, the court might not be able to achieve an equitable outcome, but she did not specify how that might occur or point to disputed facts that would bar summary judgment on that ground.

         ¶15 On reply, Mr. Lindsey addressed each allegedly disputed fact in turn. With regard to commingling, Mr. Lindsey submitted a forensic accountant's declaration that the fifty-seven shares of Prime Holdings received during the marriage were not marital income but "a return on Mr. Lindsey's premarital stock holdings." Regarding the $54, 000 allegedly provided to him for investment in Prime Holdings, Mr. Lindsey pointed to Ms. Lindsey's deposition, in which she stated that she did not remember "exactly the conversation [they] had the day [she] handed [Mr. Lindsey] the check, " and that Mr. Lindsey "[c]ould have done anything" with it-like depositing it into "[s]ome joint account of his" or "possibl[y]" depositing it into her marital account. Mr. Lindsey claimed the $54, 000 went toward "marital expenses, " and he submitted a declaration from Prime Holdings' CFO, who reported that none of the Lindseys' "personal funds . . . were invested in Prime Holdings" during the relevant year.

         ¶16 As to the alleged enhancement of his business, Mr. Lindsey noted that neither Ms. Lindsey's household duties nor her clientele-related activities were in dispute. According to Mr. Lindsey, even assuming Ms. Lindsey's claims in that regard were correct, she had never been involved "in the creation, organization, development, or growth of [his] business nor was she ever ...

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