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McQuarrie v. McQuarrie

Court of Appeals of Utah

August 29, 2019

Melvin C. McQuarrie, Appellant and Cross-appellee,
Janette Colledge McQuarrie, Appellee and Cross-appellant.

          Third District Court, Salt Lake Department The Honorable Robert P. Faust No. 084904419

          James A. McIntyre and Richard R. Golden, Attorneys for Appellant and Cross-appellee

          Douglas B. Thayer, Andrew V. Wright, and Cole L. Bingham, Attorneys for Appellee and Cross-appellant

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


          APPLEBY, JUDGE:

         ¶1 Melvin C. McQuarrie appeals the district court's order dismissing his counter-petition to modify a divorce decree (Decree). He argues the court erred in determining that his alimony obligation did not terminate when Janette Colledge McQuarrie remarried. Janette[1] cross-appeals, arguing the court erred in calculating her attorney fees award and in denying portions of her motion for an order to show cause why Melvin should not be held in contempt of court (Show Cause Motion). We affirm the district court's determination that Melvin's alimony obligation continued after Janette's remarriage. We conclude the court abused its discretion in denying portions of the Show Cause Motion but not in calculating Janette's attorney fees award. We therefore affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.


         ¶2 Janette and Melvin divorced in 2008, and a Decree was entered pursuant to a mediated stipulation for divorce. The Decree named Janette primary caregiver to the parties' minor child and ordered Melvin to pay $3, 000 per month in child support until the child reached "the age of 26 or so long as [the child remained] a college student, whichever occur[red] later." A child support obligation worksheet was attached to the stipulation. In that worksheet, the parties acknowledged that Janette's child support award was greater than the amount set by the statutory guidelines and indicated that the reason for the upward deviation was the parties' "property settlement."

         ¶3 The Decree ordered Melvin to pay "$2, 000.00 per month as alimony with a cost of living increase up to 3% per annum" while child support continued. After child support terminated, alimony would be "adjusted pursuant to the sum set forth in 'Exhibit C' to the [parties' stipulation], with a cost of living increase of up to 3% per annum." Exhibit C is a spreadsheet that appears to summarize the payments and assets Janette would receive under the stipulation. It lists yearly payments from 2008 to 2039 (372 months) in each of the following categories: (1) Alimony and Child Support, (2) Taxes on Alimony, (3) Health Insurance, (4) Car Allowance, (5) Utilities and Property Taxes, and (6) House Maintenance. Exhibit C also provides sums labeled "House Value," "New Furniture," and "Personal Assets," as well as a sum labeled "Total Net Present Value." The alimony and child support category provides for a $5, 000 payment in 2008, and the payment increases each year until the final payment of $12, 500.40 in 2039. The Decree states that alimony will continue "until the first of any of the following occurrences: [Melvin's] death; [t]he expiration of 372 months from the signing of the [Decree]; or [Janette's] death."

         ¶4 The Decree ordered Melvin to purchase a $1, 000, 000 annuity for Janette within "[t]hirty-six months after the signing of the [Decree]." Janette was "to be irrevocably designated as the beneficiary of the annuity during her lifetime with the power to designate any blood relative as the beneficiary of any death benefit provided by the annuity" and was to dictate a "payout duration in excess of fifteen years." The Decree said it was "anticipated that the annuity [would] provide a stream of income to [Janette] for her lifetime sufficient to supplement what [Melvin] pays as alimony." In a footnote, the Decree ordered Janette and Melvin to meet every three years "at the Hyatt Regency, or comparable hotel, in San Diego, California" "without spouses or attorneys" "to review their respective standard of living." To maintain an "equal" standard of living, the footnote also permitted "an upward adjust[ment] of alimony . . ., but never a downward adjustment."

         ¶5 Next, the Decree "divided and awarded" the parties' property and their "marital debts and obligations." Janette was awarded the parties' marital house. The Decree ordered Melvin to pay various expenses related to the house, and those payments were listed in sub-paragraphs 18(a)-(g). Sub-paragraph 18(a) ordered Melvin "to satisfy the monthly payments owing on the first deed of trust," and sub-paragraphs 18(b)-(g) ordered him to, among other things, pay the "real property taxes and homeowner's insurance" until the first deed of trust was satisfied. But paragraph 21 provides, "Upon [Melvin's] purchase of the annuity . . . [his] responsibility for the payments outlined in paragraph 18(b)-(g) is ordered to cease and [his] obligation with respect to those items will be at an end." The Decree states that "[Melvin's] payment of the first deed of trust, the real property taxes, and the homeowner's insurance constitutes a part of the property settlement." Janette also received an award of "one-half of [Melvin's] 401(k) retirement benefits accrued during the parties' marriage."

         ¶6 As "part of the property settlement agreed upon by the parties," the Decree ordered Melvin to permanently "employ [Janette] with one of his companies" and, as a benefit of that employment, the company was required to "pay for [Janette's] health insurance premiums for as long as [she] require[d] medical insurance." The Decree also ordered Melvin to "maintain medical insurance for the medical expenses of the [parties'] minor child" and to "pay for the minor child's out-of-pocket costs" and "uninsured medical expenses." The Decree ordered that if Janette incurred "medical expenses on behalf of the minor child," she was to either "provide written verification of the cost and payment of the medical expenses she paid on the minor child's behalf" to Melvin or make arrangements "so that [Melvin] may be billed directly." Following the provisions dealing with medical insurance, the Decree states that "[t]he payment of [Janette's] health insurance premiums and uncovered medical expenses constitute a portion of the property settlement."

         ¶7 Many of the Decree's provisions mention Janette's potential remarriage, and the Decree provides that certain obligations will terminate if she remarries. For example, sub-paragraph 7(a) states that Melvin "shall not be responsible for any medical premium, prescription, out of pocket, or co-pay expense related to [Janette's] future spouse, or spouse's children." (Emphasis added.) Paragraph 11 allows Janette "to designate any blood relative as the beneficiary of any death benefit provided by the annuity," but "in the event she remarries, she may not designate her spouse or his children as beneficiaries." (Emphasis added.) Paragraph 28 provides, "In the event [Janette was] unmarried, commencing in 2011, and every five years thereafter so long as [Janette] remain[ed] single, [Melvin was] ordered to purchase or lease for [her] . . . a model year 2012 Cadillac Escalade, or equivalent." (Emphasis added.) Under paragraph 19, "should [Janette] remarry," Melvin shall "continue to pay the first deed of trust until it is paid in full" but he will be "relieved of any and all obligations to pay and maintain the items in . . . sub-paragraphs 18(b)-(g)." (Emphasis added.) Finally, paragraph 29 provides that the parties cannot divest assets to a future spouse, and paragraph 30 prohibits the disclosure of any settlement or of the terms of the Decree to future spouses. The Decree does not contain a separate provision addressing whether Melvin's alimony obligation would terminate or continue if Janette remarried.

         ¶8 Janette remarried in 2014. That year, she filed a petition to modify the Decree (Petition to Modify) based on Melvin's alleged fraud. She claimed Melvin did not disclose certain assets and "misrepresented the value of the marital home . . . for purposes of inducing her to enter into the property settlement." Janette also filed the Show Cause Motion, asserting Melvin should be held in contempt of court for, among other things, failing to pay a cost of living increase on the alimony award, Janette's "uncovered" and "out-of-pocket medical expenses," and "one-half of [his] 401(k)," and for failing to purchase the $1, 000, 000 annuity.

         ¶9 Melvin filed a counter-petition to modify (Counter-petition). He asserted Janette's remarriage constituted "a substantial and material change in the parties' circumstances" that justified terminating his alimony obligation. Specifically, he argued that alimony terminated as a matter of law upon Janette's remarriage because the Decree did not "specifically provide otherwise." See Utah Code Ann. § 30-3-5(9) (LexisNexis Supp. 2018) ("Unless a decree of divorce specifically provides otherwise, any order of the court that a party pay alimony to a former spouse automatically terminates upon the remarriage or death of that former spouse.").

         ¶10 After a hearing, a court commissioner entered a recommendation on the Petition to Modify, the Show Cause Motion, and the Counter-petition. To start, the commissioner recommended denying Melvin's request to terminate alimony. The commissioner reasoned, "[A]lthough the decree does not state alimony will not terminate upon remarriage, the Decree is clear on its face considering all the other references to remarriage in the other provisions . . . that the parties intended for alimony to survive remarriage."

         ¶11 Next, the commissioner addressed the Show Cause Motion, beginning with the cost of living adjustment to alimony. First, the commissioner concluded that the alimony provisions established "a cost of living increase of up to 3% per annum (and never downward)," but that the actual increase was "to be determined by the Consumer Price Index [(CPI)]." Second, the commissioner concluded "the Decree does not require [Melvin] to pay for [Janette's] out of pocket medical costs." Third, the commissioner found "the payment of half of [Melvin's] 401(k) account ha[d] been satisfied . . . by [Melvin's] payment to [Janette] in the amount of $8, 885.52." Fourth, because Melvin did not purchase the annuity within thirty-six months of the entry of the Decree, the commissioner recommended that Janette receive "a judgment in an amount sufficient to compensate her for the loss of the stream of income, past and future, from the ordered annuity." But if Melvin purchased "an annuity which pa[id] $6, 728.63 per month for 140 months," the commissioner concluded "his purchase of the annuity [would] satisfy the judgment entered against him." The commissioner also concluded that Melvin should receive "credit against the annuity judgment for payments he made . . . (that [Janette] would have otherwise been paying herself out of the stream of income from the annuity) . . . past the date that the annuity should have been purchased."

         ¶12 Janette filed an objection to the commissioner's recommendation. First, she claimed the cost of living adjustment to alimony should "be a straight 3% each year," regardless of the CPI. Second, she asserted Melvin should not receive credits against his annuity obligation for payments listed in sub-paragraphs 18(b)-(g) of the Decree because those payments "were to continue until [he] purchased the annuity-which he did not do." She objected to the recommended amount for Melvin's annuity obligation, claiming the written recommendation differed from what the commissioner orally recommended at the hearing. Third, she argued that Melvin had not paid her half the value of his 401(k) account. Fourth, she asserted Melvin should pay her out-of-pocket medical expenses because "the Decree clearly states that [Melvin's] payment of [Janette's] health insurance premiums and uncovered medical expenses constitute a portion of the property settlement."

         ¶13 After a period of discovery, Janette filed a motion to limit issues for trial. While that motion was pending, Melvin filed a motion for partial summary judgment on his claim that alimony terminated as a matter of law when Janette remarried because the Decree did not "specifically provide otherwise." The court scheduled a hearing on the motion to limit issues for trial, and the court commissioner scheduled a hearing on the motion for partial summary judgment.

         ¶14 At the hearing on the motion to limit issues for trial, the district court told the parties it wanted to "simply have a discussion" about the case. It explained that the parties' stipulation that "made the basis of the [Decree was] going to be followed" and the only issue worth pursuing in the case was "the possibility of the allegation of fraud." The court determined that alimony did not terminate upon Janette's remarriage because the Decree "could be fairly read and interpreted that the parties either negotiated away-or clearly understood . . . what those alimony provisions were." And "[e]ven though they may have been characterized as . . . alimony, when you look at the way they were treated, . . . it clearly looks to be . . . that it was a-in a way, a property settlement agreement." The court also said "you could interpret [the Decree] to read the parties specified, clearly, the terms of-as it relates to the alimony and waived, knowingly, the statutory benefit that they would have had on the issue of remarriage."

         ¶15 The court also expressed skepticism toward the merits of the Petition to Modify. It said, "I don't have any indications of all the facts or the evidence, but I don't see any fraud here. Okay? There was negotiation and understanding with respect to what the settlement agreement was." But "[i]f there really was two or three items left out of this property agreement," the court explained, "whether they were left out intentionally, on purpose, [or] negligently, . . . fairness and equity would clearly require that they be looked at." Janette responded that she was "willing to waive that claim altogether" and then said, "that leaves us-there's nothing else to decide . . . other than the issue of fees."

         ¶16 Melvin informed the court that a summary judgment motion on "the issue of remarriage and the fact that the [Decree] does not specifically provide that alimony doesn't terminate upon remarriage . . . [was] before the commissioner [the following] week." After acknowledging the commissioner's order determining that alimony did not terminate upon remarriage-which was signed by the district court-Melvin said he would "like to have [the commissioner] have the opportunity to make a recommendation" with "the benefit of the [new] briefing that's involved . . . [and] there are several more recent Utah Court of Appeals and Supreme Court cases that bear on the issue." The court responded, "If you want to try to get a second bite at the apple and convince [the commissioner], that's fine."

         ¶17 But the court concluded that it was "ready to issue an order of dismissal"[2] and saw no "need to set trial," and turned to address Janette's request for attorney fees. The court determined she was entitled to fees "that relate to the enforcement in the first place and the requirement for [Melvin] to give the annuity and to comply with the other terms and provisions" of the Decree. Specifically, the court found that Janette was the prevailing party on the Show Cause Motion, explaining that "the hearings brought up such quick decisions . . . [b]ecause [Melvin] was not in compliance with the [Decree]." But the court said it would view other fees "with some skepticism" because both parties "lost on [their petitions to modify] with respect to not being able to prove a substantial material change in circumstances."

         ¶18 Although the district court dismissed the case, the court commissioner nevertheless held a hearing on Melvin's motion for partial summary judgment and recommended that the motion be denied. Melvin filed an objection to the commissioner's recommendation, asserting again that Utah Code section 30-3-5(9) required termination of his alimony obligation. The court rejected Melvin's objection to the recommendation and entered an order denying his motion for summary judgment.

         ¶19 The court then entered an order memorializing its verbal dismissal of the Petition to Modify and the Counter-petition. It found "that the Stipulation and Decree between the parties [would] be followed as written." And after reviewing "all the language in the Decree," it concluded the alimony provisions "were not something that would be terminated or eliminated based upon the remarriage of [Janette]." That is, it found "that the Decree language specifically provides that the alimony/child support payments would continue beyond remarriage and were structured to provide the appropriate division of the marital assets to [Janette]." The order also stated the court would "award [Janette's] attorney's fees regarding her attempts to enforce the Decree's terms" and requested that Janette "submit the required affidavit on [her] attorney's fees."

         ¶20 After the petitions had been dismissed, Janette filed a request to submit for decision her objection to the commissioner's recommendation on the Show Cause Motion. The court denied Janette's objection. It explained, "[T]he recommendation signed by the commissioner and the court is the order that will be complied with by the parties as the court has not found the commissioner erred as a matter of law and the court independently agrees with the decision made by the commissioner."

         ¶21 Janette submitted an attorney fees declaration that claimed she incurred $302, 602 in attorney fees throughout the case with $275, 659 "incurred in [her] efforts to enforce the terms of the [Decree]" and $61, 448 relating "to the prosecution of [the Show Cause Motion]." Janette then filed a proposed order with an award of $275, 659 in attorney fees. The court responded with a notice titled "Not Signed Order (Proposed) Awarding Attorney Fees and Costs." The notice stated that "the only fees that [would] be awarded [were] those the court already so stated for the [Show Cause Motion]." Janette then filed a second proposed order with an award of $61, 448 in attorney fees. Again, the court refused to sign the proposed order and noted, "These fees are not ...

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