A-1-CA-38534•April 5, 2022- Audrey June Autrey v. Clint A. Autrey, No. A-1-CA-38534
April 5, 2022- Audrey June Autrey v. Clint A. Autrey, No. A-1-CA-38534
A-1-CA-38534Nmctapp
Texte intégral
Corrections to this opinion/decision not affecting the outcome, at the Court's discretion, can occur up to the time of publication with NM Compilation Commission. The Court will ensure that the electronic version of this opinion/decision is updated accordingly in Odyssey. IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 1 Opinion Number: ________________ 2 Filing Date: April 5, 2022 3 No. A-1-CA-38534 4 AUDREY JUNE AUTREY, 5 Petitioner/Counterrespondent-Appellant, 6 v. 7 CLINT A. AUTREY, 8 Respondent/Counterpetitioner-Appellee. 9 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 10 Jane C. Levy, District Judge 11 Michael Danoff & Associates, P.C. 12 Michael L. Danoff 13 Brett J. Danoff 14 Albuquerque, NM 15 for Appellant 16 Cortez & Hoskovec 17 Michelle Cortez 18 Albuquerque, NM 19 L. Helen Bennett 20 Albuquerque, NM 21 for Appellee 22 Court of Appeals of New Mexico Filed 4/5/2022 9:45 AM
OPINION 1
YOHALEM, Judge. 2
{1} In this divorce proceeding, Audrey June Autrey (Wife) appeals the district 3
court’s characterization of assets and debts as separate or community property and 4
the division of marital assets and debts between her and Clint A. Autrey (Husband). 5
Wife contends that twenty-eighty of the district court’s findings of fact are without 6
supporting evidence in the record, and, that as a result, the district court erred in 7
concluding that (1) the business started by the couple during the marriage, AJAC 8
Enterprises, Inc. (AJAC), is community property, rather than the separate property 9
of Wife; (2) the rent allegedly charged and a loan allegedly made to AJAC by Wife’s 10
father and the company owned by him are Wife’s separate debts; (3) Wife is not 11
entitled to interim support; (4) Wife is not entitled to reimbursement for the 12
gambling losses she alleged Husband incurred during the marriage and paid with 13
community funds; and (5) the parties’ Albuquerque residence (the Corona home) is 14
an asset of a revocable trust and is therefore divisible marital property. With the 15
exception of the court’s finding that the Corona home was held in a revocable trust, 16
and the court’s conclusion that the home was, therefore, marital property, we hold 17
that the district court’s findings of fact are supported by substantial evidence and 18
that the court correctly applied the law to its findings. With regard to the Corona 19
home, we find that the Corona home was held in an irrevocable trust for the benefit 202
of the parties’ son, and was therefore not marital property. We affirm on all issues 1
with the exception of the court’s treatment of the Corona home as community 2
property and remand for further proceedings consistent with this opinion. 3
BACKGROUND 4
{2} The parties were married on April 6, 1991. Their one child, Phoenix Autrey, 5
was a minor at the time of trial, but turned eighteen in July 2019, just before the 6
judgment was entered. Phoenix was not separately represented in the district court 7
proceedings characterizing and dividing the parties’ property. The district court 8
determined it had jurisdiction over Phoenix at the time of trial, but not as of July 9
2019 when Phoenix reached the age of majority. 10
{3} The parties separated in 2006. Wife petitioned for legal separation in 2006, 11
but that petition was dismissed in 2007 for lack of prosecution. Husband and Wife 12
remained married for ten more years, continuing to work together, but living apart 13
until 2017, when Husband reopened the divorce case and filed a counterpetition for 14
dissolution of marriage. 15
{4} During the marriage, AJAC was a highly successful construction business that 16
earned a sizeable income. The parties acquired substantial real property during the 17
marriage, including two homes in New Mexico and a condominium in Arizona. 18
{5} In 2002, with the assistance of legal counsel, the parties created three trusts: a 19
Family Revocable Trust, and two identical irrevocable Qualified Personal 203
Residential Trusts (QPRTs). Husband and Wife put the Corona home, their marital 1
residence, into the QPRTs—the Audrey June Autrey Irrevocable Trust, and the Clint 2
A. Autrey Irrevocable Trust. 3
{6} The district court was asked to address the characterization and distribution of 4
these assets, to address Wife’s claim for interim support, and to consider whether 5
gambling losses during the marriage paid with community property must be 6
reimbursed to the community. 7
{7} Following a three-day trial, where more than two hundred exhibits were 8
admitted into evidence, both parties filed extensive proposed findings of fact and 9
conclusions of law. After considering both filings, the district court entered 141 10
findings of fact and 56 conclusions of law, along with a final decree of dissolution 11
of marriage. 12
{8} Additional facts concerning each of the contested issues are detailed below to 13
the extent necessary to our decision. 14
DISCUSSION 15
{9} We note at the outset that in our review of the district court’s findings of fact, 16
we do not reweigh the evidence but instead decide whether each challenged finding 17
was supported by substantial evidence, indulging every reasonable inference in favor 18
of the district court’s disposition. Wisznia v. N.M. Hum. Servs. Dep’t, 1998-NMSC- 19
011, ¶ 10, 125 N.M. 140, 958 P.2d 98. The testimony of a single witness, if found 204
credible by the district court, is sufficient to constitute substantial evidence 1
supporting a finding. State v. Hamilton, 2000-NMCA-063, ¶ 20, 129 N.M. 321, 6 2
P.3d 1043. “As a reviewing court we do not sit as a trier of fact; the district court is 3
in the best position to resolve questions of fact and to evaluate the credibility of 4
witnesses.” State v. Urioste, 2002-NMSC-023, ¶ 6, 132 N.M. 592, 52 P.3d 964. 5
“[W]hen there is a conflict in the testimony, we defer to the trier of fact.” 6
Buckingham v. Ryan, 1998-NMCA-012, ¶ 10, 124 N.M. 498, 953 P.2d 33. 7
I. The District Court Did Not Err in Determining That AJAC Was 8
Community Property and Not Wife’s Separate Property 9
{10} Wife argues that the district court erred by designating the parties’ business, 10
AJAC, as community property. Wife makes two arguments in support of her claim 11
that AJAC is her separate property. First, although Wife admits that the business was 12
started after the parties’ marriage, Wife claims that it was funded solely with her 13
separate property and retained its status as her separate property throughout the 14
marriage. Wife next argues that, even if AJAC was funded with community 15
property, Husband knowingly and intentionally waived his community interest in 16
the business. 17
A. Wife Failed to Rebut the Presumption That Property Acquired During 18
Marriage Is Community Property 19
{11} The status of property acquired during a marriage is determined at the time 20
the property is acquired and by the manner of its acquisition. Bayer v. Bayer, 1990- 215
NMCA-106, ¶ 12, 110 N.M. 782, 800 P.2d 216. Property acquired by either or both 1
spouses during their marriage is presumptively community property. NMSA 1978, 2
§ 40-3-12(A) (1973). The party seeking to establish such property as separate—in 3
this case, Wife—has the burden of rebutting that presumption by a preponderance 4
of the evidence. Hodges v. Hodges, 1984-NMSC-031, ¶ 6, 101 N.M. 67, 678 P.2d 5
695. The presumption can be rebutted by a showing that property acquired during 6
marriage was acquired with a spouse’s separate funds, as Wife attempted to show in 7
the district court. See NMSA 1978, § 40-3-8(A)(4) (1990) (noting that property 8
acquired by either spouse by gift is separate property). Such property generally 9
retains its status as separate property even if the other spouse later contributes funds 10
or labor to that property. Campbell v. Campbell, 1957-NMSC-001, ¶ 80, 62 N.M. 11
330, 310 P.2d 266. 12
{12} Wife relies on these principles of law, claiming that because Husband did not 13
specifically refute her testimony that AJAC was started with a $2,000 gift to her 14
from her mother, the district court was required to find that AJAC was acquired with 15
Wife’s separate funds and remained her separate property throughout the marriage. 16
The district court found, however, that Wife’s testimony that AJAC was funded with 17
a $2,000 gift from her mother was not credible, that Wife generally was not a 18
credible witness, and the “vast majority of the evidence” supported AJAC being a 19
community asset built during the marriage. 206
{13} “It is for the [district] court to weigh the testimony [and] determine the 1
credibility of witnesses.” Lopez v. Adams, 1993-NMCA-150, ¶ 2, 116 N.M. 757, 867 2
P.2d 427. “If a finding is made against the party with the burden of proof, we can 3
affirm if it was rational for the [district] court to disbelieve the evidence offered by 4
that party.” Id. Our review of the record reveals evidence that supports the rationality 5
of the district court’s decision not to credit Wife’s testimony about having received 6
a $2,000 gift. Wife did not support her testimony with any documentation of the gift; 7
the $2,000 amount alleged was unlikely to have been sufficient to fund the launch 8
of a corporation engaged in heavy earth-moving; and undisputed evidence showed 9
that Husband was involved from the outset in every aspect of creating and running 10
the corporation. Even the name of the corporation reflected Husband’s ownership 11
interest. Husband testified AJAC stood for “A.J. and Clint,” a combination of Wife’s 12
and Husband’s names. Notably also, the district court finding that it was the parties’ 13
joint efforts, as joint owners and business partners, that made the business a success 14
for many years, is not challenged on appeal. Given the evidence before the district 15
court, we conclude that the district court did not err in refusing to credit Wife’s 16
unsupported and self-serving testimony that she started the business with a $2,000 17
gift. 187
B. Substantial Evidence Supports the District Court’s Findings That 1
Husband Did Not Intend to Waive His Community Property Interest in 2
AJAC and That There Was No Consideration for Such a Waiver 3
{14} Wife next claims that even if AJAC was funded with community property, as 4
the district court found, Husband waived his community interest in the corporation, 5
thereby transmuting AJAC into her separate property. Wife relies on incorporation 6
documents filed with the State of New Mexico at the start of the business that names 7
her as the sole shareholder of AJAC, together with shares of stock issued in her name 8
and, in particular, a statement in the incorporation documents signed by Husband, 9
waiving his community property rights. 10
{15} Although the district court acknowledged the terms of these incorporation 11
documents, it found that they were not sufficient to establish that Husband had 12
intentionally waived his entire ownership interest in the jointly founded and jointly 13
run company that was the couple’s life work, in light of Husband’s testimony that 14
he did not understand that these documents would allow Wife to claim sole 15
ownership of the company, and that, even if he did intend to give up his interest, 16
there was no consideration for his waiver, as required by New Mexico law. 17
{16} The district court was correct that a waiver of a community property interest 18
is effective only if the spouse signing the document understood that the spouse was 19
giving up a significant community interest and intended to make that gift to the other 20
spouse. See Gabriele v. Gabriele, 2018-NMCA-042, ¶ 21, 421 P.3d 828 (holding 218
that clear and convincing evidence of a spouse’s intent to transmute community 1
property to the sole and separate property of the other spouse is required to overcome 2
the presumption that property acquired during the marriage is community property). 3
{17} Wife argues that the signed incorporation documents show, on their face, that 4
Husband understood he was giving up his ownership interest and that he intended to 5
do so. Wife’s argument minimizes Husband’s testimony to the contrary. Husband 6
testified that he signed the waiver to allow the company to qualify for a preference 7
for women-owned companies in the award of government contracts and did not 8
understand that Wife could subsequently claim that he had given up his community 9
interest in the company. The testimony of a single witness constitutes substantial 10
evidence if it is credited by the district court, as was Husband’s testimony here. See 11
State v. Soliz, 1969-NMCA-043, ¶ 8, 80 N.M. 297, 454 P.2d 779. We, therefore, 12
reject Wife’s claim that there is insufficient evidence in the record to support the 13
district court’s finding that Husband did not intend to give up his community interest 14
in AJAC. 15
{18} We agree as well with the district court’s conclusion of law that, to be 16
enforceable in a divorce proceeding, a contract between spouses where one of them 17
gives up a right to claim a community interest in an asset, effectively transmuting 18
the property into the separate property of the other spouse, must be supported by 19
consideration. See Gilmore v. Gilmore, 2010-NMCA-013, ¶ 27, 147 N.M. 625, 227 209
P.3d 115. Wife agrees that consideration is required and argues that Husband’s 1
consideration for giving her his interest in AJAC was his compensation for his duties 2
as an officer and employee of AJAC. Such compensation, however, appears to have 3
been consideration for work performed, not for his waiver of his community 4
property interest. Moreover, the Court has held that the promise of at-will 5
employment does not place any actual constraints on an employer’s future conduct, 6
and is, accordingly, an illusory promise that cannot serve as consideration. Piano v. 7
Premier Distrib. Co., 2005-NMCA-018, ¶¶ 8, 19, 137 N.M. 57, 107 P.3d 11 (holding 8
that an arbitration agreement entered into by an employee in exchange for the 9
“illusory promise” of continued at-will employment lacked consideration). Thus, to 10
the extent that Wife argues that Husband’s at-will employment at the company that 11
he cofounded was consideration for his forfeiture of all ownership rights in that 12
company, we are not persuaded. We will, therefore, not disturb the district court’s 13
conclusion that Wife failed to rebut the presumption that AJAC was community 14
property. 15
II. The District Court’s Findings Rejecting Wife’s Claim That AJAC Was 16
in Debt to Macchu Picchu, a Company Owned by Wife’s Father, for Both 17
Rent and Loan Repayment Were Supported by Substantial Evidence 18
{19} We next address Wife’s arguments regarding debts allegedly owed by AJAC 19
to Macchu Picchu, a company owned by Wife’s father, Steven DeYapp. Macchu 20
Picchu owned the building where AJAC’s offices were located. Wife claimed at trial 2110
that AJAC owed Macchu Picchu substantial back rent, together with amounts due 1
on a promissory note on a loan obtained by Macchu Picchu for the benefit of AJAC. 2
Wife argues on appeal that, having determined that AJAC is community property, 3
the district court was required to treat back-rent owed by AJAC and AJAC’s debt on 4
the promissory note as community debt. Wife seeks reversal of the district court’s 5
conclusion that, if AJAC has any debt for rent or on the promissory note, those 6
amounts are Wife’s separate debt. 7
{20} Wife’s argument is based on a misunderstanding of the district court’s 8
decision. The district court treated the amounts allegedly owed to Macchu Picchu as 9
Wife’s separate debt because the evidence failed to show either that these amounts 10
were actually owed by AJAC, or that, if they were owed, they were legitimate debts 11
that benefited the corporation, as opposed to gifts or personal loans from Wife’s 12
father, Steve DeYapp, to Wife. 13
{21} The only evidence in the record showing these were actual debts was the 14
testimony of Wife and Wife’s father, Mr. DeYapp. Although Wife alleged that 15
AJAC rented office space from Macchu Picchu for many years, Wife did not 16
introduce into evidence either a rental agreement entered into by AJAC or 17
documents verifying the rent paid, or the amount still unpaid. Mr. DeYapp gave 18
conflicting testimony at trial as to whether AJAC owed any rent to Macchu Picchu 19
and was unfamiliar with rental documents and unsure of the amount allegedly owed 2011
by AJAC each month. Mr. DeYapp also testified that he never expected AJAC to 1
pay rent and that he would not charge AJAC rent if his daughter was experiencing 2
financial difficulty. His testimony is sufficient to support the district court’s finding 3
that AJAC did not owe Macchu Picchu money for unpaid rent and that, if any money 4
was owed, there was no evidence of benefit to the company rather than to Wife 5
personally. We, therefore, find no error in the district court’s characterization of 6
rental debt, if any, as the separate debt of Wife. 7
{22} With regard to the promissory note, Mr. DeYapp testified that Macchu Picchu 8
had taken out a loan on the building AJAC occupied and lent the money to AJAC, 9
entering into a promissory note with AJAC, signed by Mr. DeYapp and Wife, 10
requiring AJAC to repay Macchu Picchu. The court found that there was no evidence 11
of payments having been made by AJAC on the promissory note, though such 12
payments had been due monthly since 2018. To the extent debt was actually owed, 13
the district court again concluded that there was no evidence that this was a 14
legitimate debt which benefited the corporation, as opposed to a gift or a loan from 15
Wife’s father, Mr. DeYapp, to Wife. 16
{23} The district court was permitted to resolve the conflict in Mr. DeYapp’s 17
testimony concerning the existence of rental debt and to find Wife’s and Mr. 18
DeYapp’s self-serving testimony that AJAC was required to make the payments on 19
Macchu Picchu’s debt not credible. Wife had the burden to establish the existence 2012
of these debts. The district court, therefore, did not err in refusing to include these 1
alleged, but unproven, debts in its list of community debt subject to division. We 2
again find no basis for reversal. 3
III. The District Court Acted Within Its Discretion With Regard to Interim 4
Support 5
{24} We next address Wife’s arguments regarding interim support. On appeal, 6
Wife claims that it was undisputed that she was entitled to at least $128,360 in 7
interim support and that the district court’s decision to deny her those funds was 8
without support in the record. 9
{25} The district court findings were based on the court’s review of twenty-six 10
interim worksheets Wife prepared and introduced into evidence. The district court 11
reviewed the worksheets and found that Wife’s calculation of her expenses during 12
the course of the litigation, and her list of the community debts she had allegedly 13
paid, were “not credible and lacked supporting evidence regarding payments of the 14
community bills.” The district court found, and this Court agrees, that the documents 15
entered into evidence to support her request are “a series of bills without any 16
evidence as to where the funds came from to pay the bills.” Importantly, the district 17
court found that the exhibits introduced by Wife did not reveal whether Wife was 18
seeking repayment twice for payment of community debts: once as interim support, 19
and again by listing the same debts as divisible community debt. The court 20
concluded that if Wife had indeed used community credit cards to charge these 2113
interim costs, “requiring Husband to pay Wife interim [support] while also assuming 1
half of the current . . . debt [on those cards] would be inequitable.” The district court 2
also found that Wife had taken advances on the parties’ community funds to support 3
herself during the pendency of the case, without clearly accounting for those funds 4
and had imputed income to Husband, but not to herself. 5
{26} Wife does not argue that the court’s findings are without support in the record. 6
Instead, she points to Husband’s agreement that, under the court’s temporary interim 7
order, he would owe her approximately $128,000 in interim support and asks that 8
this Court to enforce the interim order. That order, however, reserved authority to 9
make a decision about interim support following a full hearing on the division of the 10
parties’ assets and debts. The district court, therefore, was not bound to implement 11
the terms of that order and was free to consider the evidence of the parties’ 12
circumstances and the availability of community property for division. “Whether to 13
order spousal support, how much to order, and the duration of the order are within 14
the sound discretion of the district court.” Rabie v. Ogaki, 1993-NMCA-096, ¶ 5, 15
116 N.M. 143, 860 P.2d 785. Wife has not shown that the district court’s reasons for 16
denying interim spousal support were either unreasonable or without support in the 17
evidence. We see no abuse of discretion in the district court’s decision to deny Wife 18
retrospective interim support given both the accounting issues raised by Wife’s 19
exhibits and Wife’s substantial income during the separation, which was to continue 2014
after the decree was entered. The district court did not abuse its discretion in 1
choosing to equitably divide the parties’ community debts and assets, rather than 2
awarding Wife interim support. We will, therefore, not disturb the district court’s 3
decision. 4
IV. The District Court’s Conclusion That Wife Failed to Demonstrate That 5
the Community Was Entitled to Reimbursement for Husband’s 6
Gambling Losses Incurred During the Marriage Is Supported by 7
Substantial Evidence in the Record 8
{27} We next address Wife’s argument that the district court erred in not requiring 9
Husband to reimburse the community for Husband’s gambling losses, which he 10
incurred and paid with community funds during the marriage. Wife’s argument 11
assumes that she need only establish that the gambling losses were Husband’s 12
separate debt to support her claim that reimbursement of the community is required. 13
We do not agree. 14
{28} Although Wife challenges what she claims is the district court’s finding that 15
Husband’s gambling losses were a community debt, the district court makes no such 16
finding. The district court, instead, correctly concluded that even assuming the 17
gambling losses were a separate debt, as provided by NMSA 1978, Section 40-3-9.1 18
(1997), whether the losses must be repaid to the community upon divorce depends 19
on whether there was some special circumstance, such as breach of fiduciary duty to 20
Wife by Husband or violation of a court order, so that the expenditure constituted 21
waste of community assets. Otherwise, community funds once spent are not 2215
available assets subject to distribution in a divorce proceeding. Irwin v. Irwin, 1996- 1
NMCA-007, ¶ 13, 121 N.M. 266, 910 P.2d 342 (“[O]nce community personal 2
property or earnings are expended, . . . there is no community asset to be shared or 3
managed, and the spouse making the expenditure has no duty to reimburse the 4
community absent some special circumstance such as violation of a court order or 5
breach of a fiduciary duty to the other spouse.”). 6
{29} In the context of a gift by one spouse of substantial community property to a 7
third party, without the knowledge or consent of the other spouse and in 8
contemplation of divorce, our Supreme Court adopted the following rule to guide 9
when repayment to the community is required: 10
(1) [E]ach spouse has the power to manage and dispose of the 11
community’s personal property; 12
(2) subject to a fiduciary duty to the other spouse; and 13
(3) absent intervening equities, a gift of substantial community property 14
to a third person without the other spouse’s consent may be revoked 15
and set aside for the benefit of the aggrieved spouse. 16
Roselli v. Rio Cmtys. Serv. Station, Inc., 1990-NMSC-018, ¶ 23, 109 N.M. 509, 787 17
P.2d 428. Payment to a creditor by one spouse of a separate debt with community 18
property is subject to the same rules. See Fernandez v. Fernandez, 1991-NMCA- 19
001, ¶¶ 11-12, 111 N.M. 442, 806 P.2d 582 (relying on Roselli to require a spouse 20
to repay money paid to a creditor with community property without the consent of 2116
the other spouse and in violation of the fiduciary duty owed by one spouse to 1
another). 2
{30} The question on appeal, therefore, is whether the district court’s conclusion 3
that there was no waste of community property occasioned by payment during the 4
marriage of Husband’s gambling losses is supported by substantial evidence. Wife 5
relies on the amount paid over the years (allegedly $240,000), and on her own 6
testimony that “she was not aware of [Husband] writing checks from AJAC to pay 7
for his gambling debts” to claim that the district court’s decision was without support 8
in the record. 9
{31} We conclude that substantial evidence supports the district court’s conclusion 10
that Wife failed to establish that Husband used community funds to pay for his 11
gambling losses without her agreement, or that the amount of Husband’s losses was 12
$240,000, rather than being offset by gains. The record shows that Husband agreed 13
in his testimony that he went on several gambling trips during the years he and Wife 14
were married and were living together. He testified that Wife accompanied him on 15
those trips and also gambled. Husband testified that while they sometimes incurred 16
substantial losses, they also won substantial amounts, which offset those losses. 17
Husband testified that Wife at one point told him that a safe deposit box they jointly 18
controlled contained over $600,000 in cash from gambling wins. Wife did not 19
contradict this testimony. It was undisputed that the losses were paid with checks by 2017
AJAC, the parties’ joint business. In sum, although the record is uncontroverted that 1
gambling occurred during the marriage, Wife put forward no evidence other than her 2
own testimony as to the amount of the net losses, that those losses were solely 3
attributable to Husband’s gambling and not Wife’s gambling as well, and that she 4
was unaware that the losses were paid by AJAC with community funds. We again 5
defer to the district court’s finding that Wife’s testimony was not credible, and 6
therefore agree with the district court that there was no evidence in the record that 7
established the essential elements of a breach of fiduciary duty, a lack of consent by 8
Wife, or even the amount of the separate debt, necessary to establish a right to 9
reimbursement. 10
V. The District Court Erred in Finding That the Corona Home Was in a 11
Revocable Trust and in Characterizing It as Community Property 12
{32} We note at the outset that the evidence of the terms of the various trusts created 13
by the parties was entirely documentary. Where evidence is entirely documentary, 14
the appellate court “is in as good a position as the trial court to determine the facts 15
and draw its own conclusions.” Flemma v. Halliburton Energy Servs., Inc., 2013- 16
NMSC-022, ¶ 13, 303 P.3d 814 (internal quotation marks and citation omitted). We 17
therefore review the questions concerning the disposition of the parties’ QPRTs and 18
the Autrey Revocable Trust de novo. 19
{33} In 2002, with the assistance of legal counsel, Husband and Wife established 20
three trusts: the Autrey Revocable Trust, the Audrey J. Autrey Qualified Personal 2118
Residence Trust, and the Clint A. Autrey Qualified Personal Residence Trust. 1
Husband and Wife transferred each of their interests in the Corona home, then the 2
family residence, into their respective QPRTs. 3
{34} The parties’ QPRTs are, by their terms, irrevocable trusts. A QPRT is a type 4
of trust authorized by federal tax law as a way to transfer a residence to family 5
members, usually to the children, without paying gift or estate tax. See 26 U.S.C. 6
§ 2702(a)(3)(A)(ii); 26 C.F.R. § 25.2702-5(a)(1) (2022). Husband and Wife each 7
testified that they formed the QPRTs with the intent of ensuring that their home was 8
protected for their son, Phoenix. 9
{35} For the first ten years of the trusts’ existence, Husband and Wife, according 10
to the terms of the trusts, had the right “to use and occupy the residence as a personal 11
residence” and the right to receive any income from the trusts. Upon the expiration 12
of the original period of ten years, the beneficial interest in the Corona home was 13
transferred to the parties’ only child, to be managed in a fiduciary capacity by the 14
trustees. During Phoenix’s minority, the home could be used by Husband and Wife 15
for Phoenix’s benefit and for their incidental benefit as his caretakers as well. When, 16
however, Phoenix attained the age of majority, the Corona home was required to be 17
held by the trustees for his sole benefit. Distributions of property, or earnings from 18
rent or other use of the home are to be made to meet Phoenix’s needs, at the 19
discretion of the trustees. Husband was the trustee of his trust and Wife the trustee 2019
of her trust. The assets of the trusts need not be distributed in whole until Phoenix’s 1
death, in the discretion of the trustees based on Phoenix’s needs. 2
{36} The trusts were created in 2002; the initial ten-year period expired in 2012 3
when Phoenix was eleven years old. Wife continued to live in the home while 4
Phoenix remained a minor, a use permitted by the trust documents. Phoenix attained 5
the age of majority in July 2019, after the divorce hearing, but before judgment was 6
entered. 7
{37} The parties introduced into evidence both the Autrey Revocable Trust and the 8
two QPRTs. The documents were authenticated by Vickie Wilcox, the attorney who 9
drafted the trusts. Ms. Wilcox testified that the Corona home had been transferred to 10
the parties’ QPRTs, and the district court admitted the deeds showing the transfer to 11
the trusts into evidence. Ms. Wilcox did not testify as an expert, and the district court 12
relied on its own review of the trust documents. 13
{38} Following trial, the district court adopted verbatim Husband’s proposed 14
findings as to the Corona home. The court found that the Corona home was “[t]he 15
only asset in the trust identified in Exhibit 31,” the Autrey Revocable Trust. The 16
court further found that “[n]either party testified that the Autrey Revocable Trust 17
could not be revoked.” Relying on these findings, the district court held that the 18
Corona home is community property, and distributed the Corona home to Wife. The 19
court also revoked all of the parties’ trusts in its final decree. 2020
{39} We agree with Wife that the district court’s finding that the Corona home was 1
held in the revocable Autrey Trust is not supported by substantial evidence in the 2
record. The district court’s finding appears to be a mistake. The testimony of Ms. 3
Wilcox and the documents in evidence conclusively establish that the Corona home 4
is an asset of the parties’ irrevocable QPRTs, and not of the Autrey Revocable Trust. 5
The court’s findings are therefore not supported by substantial evidence in the record 6
and “may not be sustained on appeal.” Hertz v. Hertz, 1983-NMSC-004, ¶ 23, 99 7
N.M. 320, 657 P.2d 1169. 8
{40} Husband invites us to affirm the district court’s decision that the Corona home 9
is community property under the “right for any reason” doctrine. See State v. 10
Gallegos, 2007-NMSC-007, ¶ 26, 141 N.M. 185, 152 P.3d 828 (“[W]e will affirm 11
the trial court’s decision if it was right for any reason so long as it is not unfair to the 12
appellant for us to do so.”). Husband urges this Court to conclude that it would be 13
inequitable to not revoke the QPRTs because the gift and estate tax benefits are no 14
longer useful to Husband and Wife given their changed financial circumstances, and 15
by revoking the QPRTs, more property would be available to the community. 16
{41} We decline Husband’s invitation to decide this issue under our “right for any 17
reason doctrine.” Husband’s argument that the district court in a divorce case can 18
exercise its equitable powers to divide property held in an irrevocable trust has been 19
rejected by this Court in Vanderlugt v. Vanderlugt, 2018-NMCA-073, ¶ 21, 429 P.3d 2021
1269. Vanderlugt holds that although property held in a revocable trust is considered 1
marital property subject to division because the settlor spouse can revoke the trust 2
and thus continues to own the property, the same cannot be said for an irrevocable 3
trust. Id. ¶¶ 15-16. The equitable interest in the trust property belongs to the 4
beneficiary of an irrevocable trust and cannot be modified by the settlor. 5
{42} In this case, at the time of the divorce, the full equitable interest in the Corona 6
home had vested in Phoenix. Although Husband and Wife retained some control of 7
the property as trustee of their respective QPRT, this is not an ownership interest: 8
they are bound by fiduciary duty to protect and use the trust assets solely for the 9
benefit of Phoenix. There is, therefore, no beneficial community interest to divide. 10
See id. ¶ 16. 11
{43} To the extent Husband is arguing that the district court had the authority to 12
revoke the QPRTs, even if Husband and Wife do not, we do not agree. Our Supreme 13
Court held in Oldham v. Oldham that revocation of an irrevocable trust can be 14
accomplished only pursuant to the provisions of the Uniform Trust Code (UTC). 15
2011-NMSC-007, ¶ 15, 149 N.M. 215, 247 P.3d 736 (“Revocation of wills and trusts 16
is governed by mandatory statutes. We must honor legislative intent that wills and 17
trusts be revoked in strict accordance with the statutory methods and formalities 18
established by the . . . UTC.”). Pursuant to the UTC, revocation of an irrevocable 19
trust cannot be accomplished without the agreement of the beneficiary, together with 2022
other specific conditions. See NMSA 1978, §§ 46A-4-410 (2003), -411 (2007). 1
Phoenix, the beneficiary of the trust, was not joined in this proceeding, and 2
revocation of the trust was, therefore, not permissible under the UTC. It was 3
therefore error for the district court to revoke the QPRTs. 4
{44} Our decision is without prejudice to any claim that Husband may assert to 5
seek modification or termination of the QPRTs in a proceeding where all parties are 6
joined. We express no opinion on the merits of such a challenge. 7
CONCLUSION 8
{45} We reverse solely with respect to Wife’s claim of error regarding the treatment 9
of the Corona home as community property and the revocation by the court of the 10
irrevocable QPRTs. In all other respects, we affirm. We remand to the district court 11
to address, in the exercise of its discretion, the change in the value of the couple’s 12
community assets required by the restoration of the Corona home to the irrevocable 13
QPRTs. 14
{46} IT IS SO ORDERED. 15
_________________________________ 16
JANE B. YOHALEM, Judge 1723 WE CONCUR: 1 _________________________________ 2 J. MILES HANISEE, Chief Judge 3 _________________________________ 4 JACQUELINE R. MEDINA, Judge 5
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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Court of Appeals of New Mexico Filed 4/5/2022 9:45 AM
Filing Date: April 5, 2022
No. A-1-CA-38534
Mark Reynolds
AUDREY JUNE AUTREY,
Petitioner/Counterrespondent-Appellant,
CLINT A. AUTREY,
Respondent/Counterpetitioner-Appellee.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Jane C. Levy, District Judge
Michael Danoff & Associates, P.C. Michael L. Danoff Brett J. Danoff Albuquerque, NM
for Appellant
Cortez & Hoskovec Michelle Cortez
Albuquerque, NM
L. Helen Bennett Albuquerque, NM
for Appellee
1 2 3 4 5 6 7 V.
8 9
10 11 12 13 14 15 16 17 18 19 20 21 22
OPINION 1
YOHALEM, Judge. 2
{1} In this divorce proceeding, Audrey June Autrey (Wife) appeals the district 3
court’s characterization of assets and debts as separate or community property and 4
the division of marital assets and debts between her and Clint A. Autrey (Husband). 5
Wife contends that twenty-eighty of the district court’s findings of fact are without 6
supporting evidence in the record, and, that as a result, the district court erred in 7
concluding that (1) the business started by the couple during the marriage, AJAC 8
Enterprises, Inc. (AJAC), is community property, rather than the separate property 9
of Wife; (2) the rent allegedly charged and a loan allegedly made to AJAC by Wife’s 10
father and the company owned by him are Wife’s separate debts; (3) Wife is not 11
entitled to interim support; (4) Wife is not entitled to reimbursement for the 12
gambling losses she alleged Husband incurred during the marriage and paid with 13
community funds; and (5) the parties’ Albuquerque residence (the Corona home) is 14
an asset of a revocable trust and is therefore divisible marital property. With the 15
exception of the court’s finding that the Corona home was held in a revocable trust, 16
and the court’s conclusion that the home was, therefore, marital property, we hold 17
that the district court’s findings of fact are supported by substantial evidence and 18
that the court correctly applied the law to its findings. With regard to the Corona 19
home, we find that the Corona home was held in an irrevocable trust for the benefit 20
2
of the parties’ son, and was therefore not marital property. We affirm on all issues 1
with the exception of the court’s treatment of the Corona home as community 2
property and remand for further proceedings consistent with this opinion. 3
BACKGROUND 4
{2} The parties were married on April 6, 1991. Their one child, Phoenix Autrey, 5
was a minor at the time of trial, but turned eighteen in July 2019, just before the 6
judgment was entered. Phoenix was not separately represented in the district court 7
proceedings characterizing and dividing the parties’ property. The district court 8
determined it had jurisdiction over Phoenix at the time of trial, but not as of July 9
2019 when Phoenix reached the age of majority. 10
{3} The parties separated in 2006. Wife petitioned for legal separation in 2006, 11
but that petition was dismissed in 2007 for lack of prosecution. Husband and Wife 12
remained married for ten more years, continuing to work together, but living apart 13
until 2017, when Husband reopened the divorce case and filed a counterpetition for 14
dissolution of marriage. 15
{4} During the marriage, AJAC was a highly successful construction business that 16
earned a sizeable income. The parties acquired substantial real property during the 17
marriage, including two homes in New Mexico and a condominium in Arizona. 18
{5} In 2002, with the assistance of legal counsel, the parties created three trusts: a 19
Family Revocable Trust, and two identical irrevocable Qualified Personal 20
3
Residential Trusts (QPRTs). Husband and Wife put the Corona home, their marital 1
residence, into the QPRTs—the Audrey June Autrey Irrevocable Trust, and the Clint 2
A. Autrey Irrevocable Trust. 3
{6} The district court was asked to address the characterization and distribution of 4
these assets, to address Wife’s claim for interim support, and to consider whether 5
gambling losses during the marriage paid with community property must be 6
reimbursed to the community. 7
{7} Following a three-day trial, where more than two hundred exhibits were 8
admitted into evidence, both parties filed extensive proposed findings of fact and 9
conclusions of law. After considering both filings, the district court entered 141 10
findings of fact and 56 conclusions of law, along with a final decree of dissolution 11
of marriage. 12
{8} Additional facts concerning each of the contested issues are detailed below to 13
the extent necessary to our decision. 14
DISCUSSION 15
{9} We note at the outset that in our review of the district court’s findings of fact, 16
we do not reweigh the evidence but instead decide whether each challenged finding 17
was supported by substantial evidence, indulging every reasonable inference in favor 18
of the district court’s disposition. Wisznia v. N.M. Hum. Servs. Dep’t, 1998-NMSC- 19
011, ¶ 10, 125 N.M. 140, 958 P.2d 98. The testimony of a single witness, if found 20
4
credible by the district court, is sufficient to constitute substantial evidence 1
supporting a finding. State v. Hamilton, 2000-NMCA-063, ¶ 20, 129 N.M. 321, 6 2
P.3d 1043. “As a reviewing court we do not sit as a trier of fact; the district court is 3
in the best position to resolve questions of fact and to evaluate the credibility of 4
witnesses.” State v. Urioste, 2002-NMSC-023, ¶ 6, 132 N.M. 592, 52 P.3d 964. 5
“[W]hen there is a conflict in the testimony, we defer to the trier of fact.” 6
Buckingham v. Ryan, 1998-NMCA-012, ¶ 10, 124 N.M. 498, 953 P.2d 33. 7
I. The District Court Did Not Err in Determining That AJAC Was 8
Community Property and Not Wife’s Separate Property 9
{10} Wife argues that the district court erred by designating the parties’ business, 10
AJAC, as community property. Wife makes two arguments in support of her claim 11
that AJAC is her separate property. First, although Wife admits that the business was 12
started after the parties’ marriage, Wife claims that it was funded solely with her 13
separate property and retained its status as her separate property throughout the 14
marriage. Wife next argues that, even if AJAC was funded with community 15
property, Husband knowingly and intentionally waived his community interest in 16
the business. 17
A. Wife Failed to Rebut the Presumption That Property Acquired During 18
Marriage Is Community Property 19
{11} The status of property acquired during a marriage is determined at the time 20
the property is acquired and by the manner of its acquisition. Bayer v. Bayer, 1990- 21
5
NMCA-106, ¶ 12, 110 N.M. 782, 800 P.2d 216. Property acquired by either or both 1
spouses during their marriage is presumptively community property. NMSA 1978, 2
§ 40-3-12(A) (1973). The party seeking to establish such property as separate—in 3
this case, Wife—has the burden of rebutting that presumption by a preponderance 4
of the evidence. Hodges v. Hodges, 1984-NMSC-031, ¶ 6, 101 N.M. 67, 678 P.2d 5
695. The presumption can be rebutted by a showing that property acquired during 6
marriage was acquired with a spouse’s separate funds, as Wife attempted to show in 7
the district court. See NMSA 1978, § 40-3-8(A)(4) (1990) (noting that property 8
acquired by either spouse by gift is separate property). Such property generally 9
retains its status as separate property even if the other spouse later contributes funds 10
or labor to that property. Campbell v. Campbell, 1957-NMSC-001, ¶ 80, 62 N.M. 11
330, 310 P.2d 266. 12
{12} Wife relies on these principles of law, claiming that because Husband did not 13
specifically refute her testimony that AJAC was started with a $2,000 gift to her 14
from her mother, the district court was required to find that AJAC was acquired with 15
Wife’s separate funds and remained her separate property throughout the marriage. 16
The district court found, however, that Wife’s testimony that AJAC was funded with 17
a $2,000 gift from her mother was not credible, that Wife generally was not a 18
credible witness, and the “vast majority of the evidence” supported AJAC being a 19
community asset built during the marriage. 20
6
{13} “It is for the [district] court to weigh the testimony [and] determine the 1
credibility of witnesses.” Lopez v. Adams, 1993-NMCA-150, ¶ 2, 116 N.M. 757, 867 2
P.2d 427. “If a finding is made against the party with the burden of proof, we can 3
affirm if it was rational for the [district] court to disbelieve the evidence offered by 4
that party.” Id. Our review of the record reveals evidence that supports the rationality 5
of the district court’s decision not to credit Wife’s testimony about having received 6
a $2,000 gift. Wife did not support her testimony with any documentation of the gift; 7
the $2,000 amount alleged was unlikely to have been sufficient to fund the launch 8
of a corporation engaged in heavy earth-moving; and undisputed evidence showed 9
that Husband was involved from the outset in every aspect of creating and running 10
the corporation. Even the name of the corporation reflected Husband’s ownership 11
interest. Husband testified AJAC stood for “A.J. and Clint,” a combination of Wife’s 12
and Husband’s names. Notably also, the district court finding that it was the parties’ 13
joint efforts, as joint owners and business partners, that made the business a success 14
for many years, is not challenged on appeal. Given the evidence before the district 15
court, we conclude that the district court did not err in refusing to credit Wife’s 16
unsupported and self-serving testimony that she started the business with a $2,000 17
gift. 18
7
B. Substantial Evidence Supports the District Court’s Findings That 1
Husband Did Not Intend to Waive His Community Property Interest in 2
AJAC and That There Was No Consideration for Such a Waiver 3
{14} Wife next claims that even if AJAC was funded with community property, as 4
the district court found, Husband waived his community interest in the corporation, 5
thereby transmuting AJAC into her separate property. Wife relies on incorporation 6
documents filed with the State of New Mexico at the start of the business that names 7
her as the sole shareholder of AJAC, together with shares of stock issued in her name 8
and, in particular, a statement in the incorporation documents signed by Husband, 9
waiving his community property rights. 10
{15} Although the district court acknowledged the terms of these incorporation 11
documents, it found that they were not sufficient to establish that Husband had 12
intentionally waived his entire ownership interest in the jointly founded and jointly 13
run company that was the couple’s life work, in light of Husband’s testimony that 14
he did not understand that these documents would allow Wife to claim sole 15
ownership of the company, and that, even if he did intend to give up his interest, 16
there was no consideration for his waiver, as required by New Mexico law. 17
{16} The district court was correct that a waiver of a community property interest 18
is effective only if the spouse signing the document understood that the spouse was 19
giving up a significant community interest and intended to make that gift to the other 20
spouse. See Gabriele v. Gabriele, 2018-NMCA-042, ¶ 21, 421 P.3d 828 (holding 21
8
that clear and convincing evidence of a spouse’s intent to transmute community 1
property to the sole and separate property of the other spouse is required to overcome 2
the presumption that property acquired during the marriage is community property). 3
{17} Wife argues that the signed incorporation documents show, on their face, that 4
Husband understood he was giving up his ownership interest and that he intended to 5
do so. Wife’s argument minimizes Husband’s testimony to the contrary. Husband 6
testified that he signed the waiver to allow the company to qualify for a preference 7
for women-owned companies in the award of government contracts and did not 8
understand that Wife could subsequently claim that he had given up his community 9
interest in the company. The testimony of a single witness constitutes substantial 10
evidence if it is credited by the district court, as was Husband’s testimony here. See 11
State v. Soliz, 1969-NMCA-043, ¶ 8, 80 N.M. 297, 454 P.2d 779. We, therefore, 12
reject Wife’s claim that there is insufficient evidence in the record to support the 13
district court’s finding that Husband did not intend to give up his community interest 14
in AJAC. 15
{18} We agree as well with the district court’s conclusion of law that, to be 16
enforceable in a divorce proceeding, a contract between spouses where one of them 17
gives up a right to claim a community interest in an asset, effectively transmuting 18
the property into the separate property of the other spouse, must be supported by 19
consideration. See Gilmore v. Gilmore, 2010-NMCA-013, ¶ 27, 147 N.M. 625, 227 20
9
P.3d 115. Wife agrees that consideration is required and argues that Husband’s 1
consideration for giving her his interest in AJAC was his compensation for his duties 2
as an officer and employee of AJAC. Such compensation, however, appears to have 3
been consideration for work performed, not for his waiver of his community 4
property interest. Moreover, the Court has held that the promise of at-will 5
employment does not place any actual constraints on an employer’s future conduct, 6
and is, accordingly, an illusory promise that cannot serve as consideration. Piano v. 7
Premier Distrib. Co., 2005-NMCA-018, ¶¶ 8, 19, 137 N.M. 57, 107 P.3d 11 (holding 8
that an arbitration agreement entered into by an employee in exchange for the 9
“illusory promise” of continued at-will employment lacked consideration). Thus, to 10
the extent that Wife argues that Husband’s at-will employment at the company that 11
he cofounded was consideration for his forfeiture of all ownership rights in that 12
company, we are not persuaded. We will, therefore, not disturb the district court’s 13
conclusion that Wife failed to rebut the presumption that AJAC was community 14
property. 15
II. The District Court’s Findings Rejecting Wife’s Claim That AJAC Was 16
in Debt to Macchu Picchu, a Company Owned by Wife’s Father, for Both 17
Rent and Loan Repayment Were Supported by Substantial Evidence 18
{19} We next address Wife’s arguments regarding debts allegedly owed by AJAC 19
to Macchu Picchu, a company owned by Wife’s father, Steven DeYapp. Macchu 20
Picchu owned the building where AJAC’s offices were located. Wife claimed at trial 21
10
that AJAC owed Macchu Picchu substantial back rent, together with amounts due 1
on a promissory note on a loan obtained by Macchu Picchu for the benefit of AJAC. 2
Wife argues on appeal that, having determined that AJAC is community property, 3
the district court was required to treat back-rent owed by AJAC and AJAC’s debt on 4
the promissory note as community debt. Wife seeks reversal of the district court’s 5
conclusion that, if AJAC has any debt for rent or on the promissory note, those 6
amounts are Wife’s separate debt. 7
{20} Wife’s argument is based on a misunderstanding of the district court’s 8
decision. The district court treated the amounts allegedly owed to Macchu Picchu as 9
Wife’s separate debt because the evidence failed to show either that these amounts 10
were actually owed by AJAC, or that, if they were owed, they were legitimate debts 11
that benefited the corporation, as opposed to gifts or personal loans from Wife’s 12
father, Steve DeYapp, to Wife. 13
{21} The only evidence in the record showing these were actual debts was the 14
testimony of Wife and Wife’s father, Mr. DeYapp. Although Wife alleged that 15
AJAC rented office space from Macchu Picchu for many years, Wife did not 16
introduce into evidence either a rental agreement entered into by AJAC or 17
documents verifying the rent paid, or the amount still unpaid. Mr. DeYapp gave 18
conflicting testimony at trial as to whether AJAC owed any rent to Macchu Picchu 19
and was unfamiliar with rental documents and unsure of the amount allegedly owed 20
11
by AJAC each month. Mr. DeYapp also testified that he never expected AJAC to 1
pay rent and that he would not charge AJAC rent if his daughter was experiencing 2
financial difficulty. His testimony is sufficient to support the district court’s finding 3
that AJAC did not owe Macchu Picchu money for unpaid rent and that, if any money 4
was owed, there was no evidence of benefit to the company rather than to Wife 5
personally. We, therefore, find no error in the district court’s characterization of 6
rental debt, if any, as the separate debt of Wife. 7
{22} With regard to the promissory note, Mr. DeYapp testified that Macchu Picchu 8
had taken out a loan on the building AJAC occupied and lent the money to AJAC, 9
entering into a promissory note with AJAC, signed by Mr. DeYapp and Wife, 10
requiring AJAC to repay Macchu Picchu. The court found that there was no evidence 11
of payments having been made by AJAC on the promissory note, though such 12
payments had been due monthly since 2018. To the extent debt was actually owed, 13
the district court again concluded that there was no evidence that this was a 14
legitimate debt which benefited the corporation, as opposed to a gift or a loan from 15
Wife’s father, Mr. DeYapp, to Wife. 16
{23} The district court was permitted to resolve the conflict in Mr. DeYapp’s 17
testimony concerning the existence of rental debt and to find Wife’s and Mr. 18
DeYapp’s self-serving testimony that AJAC was required to make the payments on 19
Macchu Picchu’s debt not credible. Wife had the burden to establish the existence 20
12
of these debts. The district court, therefore, did not err in refusing to include these 1
alleged, but unproven, debts in its list of community debt subject to division. We 2
again find no basis for reversal. 3
III. The District Court Acted Within Its Discretion With Regard to Interim 4
Support 5
{24} We next address Wife’s arguments regarding interim support. On appeal, 6
Wife claims that it was undisputed that she was entitled to at least $128,360 in 7
interim support and that the district court’s decision to deny her those funds was 8
without support in the record. 9
{25} The district court findings were based on the court’s review of twenty-six 10
interim worksheets Wife prepared and introduced into evidence. The district court 11
reviewed the worksheets and found that Wife’s calculation of her expenses during 12
the course of the litigation, and her list of the community debts she had allegedly 13
paid, were “not credible and lacked supporting evidence regarding payments of the 14
community bills.” The district court found, and this Court agrees, that the documents 15
entered into evidence to support her request are “a series of bills without any 16
evidence as to where the funds came from to pay the bills.” Importantly, the district 17
court found that the exhibits introduced by Wife did not reveal whether Wife was 18
seeking repayment twice for payment of community debts: once as interim support, 19
and again by listing the same debts as divisible community debt. The court 20
concluded that if Wife had indeed used community credit cards to charge these 21
13
interim costs, “requiring Husband to pay Wife interim [support] while also assuming 1
half of the current . . . debt [on those cards] would be inequitable.” The district court 2
also found that Wife had taken advances on the parties’ community funds to support 3
herself during the pendency of the case, without clearly accounting for those funds 4
and had imputed income to Husband, but not to herself. 5
{26} Wife does not argue that the court’s findings are without support in the record. 6
Instead, she points to Husband’s agreement that, under the court’s temporary interim 7
order, he would owe her approximately $128,000 in interim support and asks that 8
this Court to enforce the interim order. That order, however, reserved authority to 9
make a decision about interim support following a full hearing on the division of the 10
parties’ assets and debts. The district court, therefore, was not bound to implement 11
the terms of that order and was free to consider the evidence of the parties’ 12
circumstances and the availability of community property for division. “Whether to 13
order spousal support, how much to order, and the duration of the order are within 14
the sound discretion of the district court.” Rabie v. Ogaki, 1993-NMCA-096, ¶ 5, 15
116 N.M. 143, 860 P.2d 785. Wife has not shown that the district court’s reasons for 16
denying interim spousal support were either unreasonable or without support in the 17
evidence. We see no abuse of discretion in the district court’s decision to deny Wife 18
retrospective interim support given both the accounting issues raised by Wife’s 19
exhibits and Wife’s substantial income during the separation, which was to continue 20
14
after the decree was entered. The district court did not abuse its discretion in 1
choosing to equitably divide the parties’ community debts and assets, rather than 2
awarding Wife interim support. We will, therefore, not disturb the district court’s 3
decision. 4
IV. The District Court’s Conclusion That Wife Failed to Demonstrate That 5
the Community Was Entitled to Reimbursement for Husband’s 6
Gambling Losses Incurred During the Marriage Is Supported by 7
Substantial Evidence in the Record 8
{27} We next address Wife’s argument that the district court erred in not requiring 9
Husband to reimburse the community for Husband’s gambling losses, which he 10
incurred and paid with community funds during the marriage. Wife’s argument 11
assumes that she need only establish that the gambling losses were Husband’s 12
separate debt to support her claim that reimbursement of the community is required. 13
We do not agree. 14
{28} Although Wife challenges what she claims is the district court’s finding that 15
Husband’s gambling losses were a community debt, the district court makes no such 16
finding. The district court, instead, correctly concluded that even assuming the 17
gambling losses were a separate debt, as provided by NMSA 1978, Section 40-3-9.1 18
(1997), whether the losses must be repaid to the community upon divorce depends 19
on whether there was some special circumstance, such as breach of fiduciary duty to 20
Wife by Husband or violation of a court order, so that the expenditure constituted 21
waste of community assets. Otherwise, community funds once spent are not 22
15
available assets subject to distribution in a divorce proceeding. Irwin v. Irwin, 1996- 1
NMCA-007, ¶ 13, 121 N.M. 266, 910 P.2d 342 (“[O]nce community personal 2
property or earnings are expended, . . . there is no community asset to be shared or 3
managed, and the spouse making the expenditure has no duty to reimburse the 4
community absent some special circumstance such as violation of a court order or 5
breach of a fiduciary duty to the other spouse.”). 6
{29} In the context of a gift by one spouse of substantial community property to a 7
third party, without the knowledge or consent of the other spouse and in 8
contemplation of divorce, our Supreme Court adopted the following rule to guide 9
when repayment to the community is required: 10
(1) [E]ach spouse has the power to manage and dispose of the 11
community’s personal property; 12
(2) subject to a fiduciary duty to the other spouse; and 13
(3) absent intervening equities, a gift of substantial community property 14
to a third person without the other spouse’s consent may be revoked 15
and set aside for the benefit of the aggrieved spouse. 16
Roselli v. Rio Cmtys. Serv. Station, Inc., 1990-NMSC-018, ¶ 23, 109 N.M. 509, 787 17
P.2d 428. Payment to a creditor by one spouse of a separate debt with community 18
property is subject to the same rules. See Fernandez v. Fernandez, 1991-NMCA- 19
001, ¶¶ 11-12, 111 N.M. 442, 806 P.2d 582 (relying on Roselli to require a spouse 20
to repay money paid to a creditor with community property without the consent of 21
16
the other spouse and in violation of the fiduciary duty owed by one spouse to 1
another). 2
{30} The question on appeal, therefore, is whether the district court’s conclusion 3
that there was no waste of community property occasioned by payment during the 4
marriage of Husband’s gambling losses is supported by substantial evidence. Wife 5
relies on the amount paid over the years (allegedly $240,000), and on her own 6
testimony that “she was not aware of [Husband] writing checks from AJAC to pay 7
for his gambling debts” to claim that the district court’s decision was without support 8
in the record. 9
{31} We conclude that substantial evidence supports the district court’s conclusion 10
that Wife failed to establish that Husband used community funds to pay for his 11
gambling losses without her agreement, or that the amount of Husband’s losses was 12
$240,000, rather than being offset by gains. The record shows that Husband agreed 13
in his testimony that he went on several gambling trips during the years he and Wife 14
were married and were living together. He testified that Wife accompanied him on 15
those trips and also gambled. Husband testified that while they sometimes incurred 16
substantial losses, they also won substantial amounts, which offset those losses. 17
Husband testified that Wife at one point told him that a safe deposit box they jointly 18
controlled contained over $600,000 in cash from gambling wins. Wife did not 19
contradict this testimony. It was undisputed that the losses were paid with checks by 20
17
AJAC, the parties’ joint business. In sum, although the record is uncontroverted that 1
gambling occurred during the marriage, Wife put forward no evidence other than her 2
own testimony as to the amount of the net losses, that those losses were solely 3
attributable to Husband’s gambling and not Wife’s gambling as well, and that she 4
was unaware that the losses were paid by AJAC with community funds. We again 5
defer to the district court’s finding that Wife’s testimony was not credible, and 6
therefore agree with the district court that there was no evidence in the record that 7
established the essential elements of a breach of fiduciary duty, a lack of consent by 8
Wife, or even the amount of the separate debt, necessary to establish a right to 9
reimbursement. 10
V. The District Court Erred in Finding That the Corona Home Was in a 11
Revocable Trust and in Characterizing It as Community Property 12
{32} We note at the outset that the evidence of the terms of the various trusts created 13
by the parties was entirely documentary. Where evidence is entirely documentary, 14
the appellate court “is in as good a position as the trial court to determine the facts 15
and draw its own conclusions.” Flemma v. Halliburton Energy Servs., Inc., 2013- 16
NMSC-022, ¶ 13, 303 P.3d 814 (internal quotation marks and citation omitted). We 17
therefore review the questions concerning the disposition of the parties’ QPRTs and 18
the Autrey Revocable Trust de novo. 19
{33} In 2002, with the assistance of legal counsel, Husband and Wife established 20
three trusts: the Autrey Revocable Trust, the Audrey J. Autrey Qualified Personal 21
18
Residence Trust, and the Clint A. Autrey Qualified Personal Residence Trust. 1
Husband and Wife transferred each of their interests in the Corona home, then the 2
family residence, into their respective QPRTs. 3
{34} The parties’ QPRTs are, by their terms, irrevocable trusts. A QPRT is a type 4
of trust authorized by federal tax law as a way to transfer a residence to family 5
members, usually to the children, without paying gift or estate tax. See 26 U.S.C. 6
§ 2702(a)(3)(A)(ii); 26 C.F.R. § 25.2702-5(a)(1) (2022). Husband and Wife each 7
testified that they formed the QPRTs with the intent of ensuring that their home was 8
protected for their son, Phoenix. 9
{35} For the first ten years of the trusts’ existence, Husband and Wife, according 10
to the terms of the trusts, had the right “to use and occupy the residence as a personal 11
residence” and the right to receive any income from the trusts. Upon the expiration 12
of the original period of ten years, the beneficial interest in the Corona home was 13
transferred to the parties’ only child, to be managed in a fiduciary capacity by the 14
trustees. During Phoenix’s minority, the home could be used by Husband and Wife 15
for Phoenix’s benefit and for their incidental benefit as his caretakers as well. When, 16
however, Phoenix attained the age of majority, the Corona home was required to be 17
held by the trustees for his sole benefit. Distributions of property, or earnings from 18
rent or other use of the home are to be made to meet Phoenix’s needs, at the 19
discretion of the trustees. Husband was the trustee of his trust and Wife the trustee 20
19
of her trust. The assets of the trusts need not be distributed in whole until Phoenix’s 1
death, in the discretion of the trustees based on Phoenix’s needs. 2
{36} The trusts were created in 2002; the initial ten-year period expired in 2012 3
when Phoenix was eleven years old. Wife continued to live in the home while 4
Phoenix remained a minor, a use permitted by the trust documents. Phoenix attained 5
the age of majority in July 2019, after the divorce hearing, but before judgment was 6
entered. 7
{37} The parties introduced into evidence both the Autrey Revocable Trust and the 8
two QPRTs. The documents were authenticated by Vickie Wilcox, the attorney who 9
drafted the trusts. Ms. Wilcox testified that the Corona home had been transferred to 10
the parties’ QPRTs, and the district court admitted the deeds showing the transfer to 11
the trusts into evidence. Ms. Wilcox did not testify as an expert, and the district court 12
relied on its own review of the trust documents. 13
{38} Following trial, the district court adopted verbatim Husband’s proposed 14
findings as to the Corona home. The court found that the Corona home was “[t]he 15
only asset in the trust identified in Exhibit 31,” the Autrey Revocable Trust. The 16
court further found that “[n]either party testified that the Autrey Revocable Trust 17
could not be revoked.” Relying on these findings, the district court held that the 18
Corona home is community property, and distributed the Corona home to Wife. The 19
court also revoked all of the parties’ trusts in its final decree. 20
20
{39} We agree with Wife that the district court’s finding that the Corona home was 1
held in the revocable Autrey Trust is not supported by substantial evidence in the 2
record. The district court’s finding appears to be a mistake. The testimony of Ms. 3
Wilcox and the documents in evidence conclusively establish that the Corona home 4
is an asset of the parties’ irrevocable QPRTs, and not of the Autrey Revocable Trust. 5
The court’s findings are therefore not supported by substantial evidence in the record 6
and “may not be sustained on appeal.” Hertz v. Hertz, 1983-NMSC-004, ¶ 23, 99 7
N.M. 320, 657 P.2d 1169. 8
{40} Husband invites us to affirm the district court’s decision that the Corona home 9
is community property under the “right for any reason” doctrine. See State v. 10
Gallegos, 2007-NMSC-007, ¶ 26, 141 N.M. 185, 152 P.3d 828 (“[W]e will affirm 11
the trial court’s decision if it was right for any reason so long as it is not unfair to the 12
appellant for us to do so.”). Husband urges this Court to conclude that it would be 13
inequitable to not revoke the QPRTs because the gift and estate tax benefits are no 14
longer useful to Husband and Wife given their changed financial circumstances, and 15
by revoking the QPRTs, more property would be available to the community. 16
{41} We decline Husband’s invitation to decide this issue under our “right for any 17
reason doctrine.” Husband’s argument that the district court in a divorce case can 18
exercise its equitable powers to divide property held in an irrevocable trust has been 19
rejected by this Court in Vanderlugt v. Vanderlugt, 2018-NMCA-073, ¶ 21, 429 P.3d 20
21
1269. Vanderlugt holds that although property held in a revocable trust is considered 1
marital property subject to division because the settlor spouse can revoke the trust 2
and thus continues to own the property, the same cannot be said for an irrevocable 3
trust. Id. ¶¶ 15-16. The equitable interest in the trust property belongs to the 4
beneficiary of an irrevocable trust and cannot be modified by the settlor. 5
{42} In this case, at the time of the divorce, the full equitable interest in the Corona 6
home had vested in Phoenix. Although Husband and Wife retained some control of 7
the property as trustee of their respective QPRT, this is not an ownership interest: 8
they are bound by fiduciary duty to protect and use the trust assets solely for the 9
benefit of Phoenix. There is, therefore, no beneficial community interest to divide. 10
See id. ¶ 16. 11
{43} To the extent Husband is arguing that the district court had the authority to 12
revoke the QPRTs, even if Husband and Wife do not, we do not agree. Our Supreme 13
Court held in Oldham v. Oldham that revocation of an irrevocable trust can be 14
accomplished only pursuant to the provisions of the Uniform Trust Code (UTC). 15
2011-NMSC-007, ¶ 15, 149 N.M. 215, 247 P.3d 736 (“Revocation of wills and trusts 16
is governed by mandatory statutes. We must honor legislative intent that wills and 17
trusts be revoked in strict accordance with the statutory methods and formalities 18
established by the . . . UTC.”). Pursuant to the UTC, revocation of an irrevocable 19
trust cannot be accomplished without the agreement of the beneficiary, together with 20
22
other specific conditions. See NMSA 1978, §§ 46A-4-410 (2003), -411 (2007). 1
Phoenix, the beneficiary of the trust, was not joined in this proceeding, and 2
revocation of the trust was, therefore, not permissible under the UTC. It was 3
therefore error for the district court to revoke the QPRTs. 4
{44} Our decision is without prejudice to any claim that Husband may assert to 5
seek modification or termination of the QPRTs in a proceeding where all parties are 6
joined. We express no opinion on the merits of such a challenge. 7
CONCLUSION 8
{45} We reverse solely with respect to Wife’s claim of error regarding the treatment 9
of the Corona home as community property and the revocation by the court of the 10
irrevocable QPRTs. In all other respects, we affirm. We remand to the district court 11
to address, in the exercise of its discretion, the change in the value of the couple’s 12
community assets required by the restoration of the Corona home to the irrevocable 13
QPRTs. 14
{46} IT IS SO ORDERED. 15
_________________________________ 16
JANE B. YOHALEM, Judge 17
—
A
WE CONCUR:
2 MhMe—
J. MILES HANISEE, Chief Judge
ELINE R. MEDINA, Judge
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