Terry v. Terry

2025 UT App 117

THE UTAH COURT OF APPEALS

CRAIG LEWIS TERRY,
Appellee,
v.
JAIME LYNETTE TERRY,
Appellant.

Opinion
No. 20231107-CA
Filed July 25, 2025

Third District Court, Salt Lake Department
The Honorable Laura Scott
No. 214903971

Emily Adams and Mikayla Irvin,
Attorneys for Appellant
Jennifer L. Falk and S. Spencer Brown,
Attorneys for Appellee

JUDGE JOHN D. LUTHY authored this Opinion, in which
JUDGES DAVID N. MORTENSEN and RYAN D. TENNEY concurred.

LUTHY, Judge:

¶1 Jaime Lynette Terry and her then husband, Craig Lewis
Terry, received a joint settlement of $2,700,000 for personal injury
claims arising from a motorcycle accident. When Craig 1 later
petitioned for divorce, a substantial amount of the settlement
proceeds remained unspent. In distributing the parties’ assets in
the divorce, the district court ruled that the remaining settlement
proceeds were separate property. It then divided those proceeds

1. Because the parties share a surname, we refer to them by their
given names, with no disrespect intended by the apparent
informality.
Terry v. Terry

based on what it believed each party’s noneconomic damages
would have been in a trial of their personal injury claims. The
resulting distribution allocated $369,125.87 to Jaime as her
separate portion of the remaining settlement proceeds and
$1,925,847.13 to Craig as his separate portion of the remaining
settlement proceeds.

¶2 Jaime appeals, contending that the settlement proceeds
were commingled and, thus, that they became marital property
and were subject to equitable division. Jaime’s argument is well
taken. Accordingly, we reverse the district court’s determination
that the remaining settlement proceeds were separate property,
vacate the court’s distribution of those proceeds, and remand this
matter for further proceedings consistent with this opinion.

BACKGROUND

The Accident

¶3 Craig and Jaime were married in 2019. Two years into their
marriage, they were both seriously injured when they were struck
by a car while riding Craig’s motorcycle. Craig fractured his left
femur (in multiple locations), tibia, fibula, and calcaneus. He also
broke his pelvis and sacrum. Ultimately, his left leg had to be
amputated from the knee down. Jaime fractured her neck, pelvis,
fibula, and all the bones in her left foot, leaving that foot
permanently “deformed.”

The Settlement

¶4 Craig and Jaime hired an attorney to represent them as
they sought compensation from their own insurer and the other
driver’s insurer. The attorney “did not delineate” Craig’s and
Jaime’s injuries to the insurance companies but “made [claims] for
. . . policy limits on behalf of both of his clients.” Ultimately, Craig

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Terry v. Terry

and Jaime settled their claims for all applicable policy limits and
received five checks, each made out to Craig, Jaime, and their
attorney’s law firm, for a total of $2,700,000. After Craig’s and
Jaime’s already-incurred medical expenses and attorney fees were
deducted, the remaining settlement proceeds—$1,894,000—were
deposited into their joint bank account.

¶5 Craig and Jaime later met with Craig’s financial advisor
and then with Jaime’s financial advisor to determine the best way
to invest the remaining settlement proceeds. But the couple could
not agree on an investment strategy, and, after some argument,
Jaime withdrew approximately half of the remaining proceeds—
$947,000—from the joint account and directed Craig to do the
same, which he did.

The Divorce Proceedings

¶6 A few months later, Craig petitioned for divorce, and a trial
was held to decide the distribution of Craig and Jaime’s assets.
Prior to trial, the district court observed that there were two
possible approaches it could take to divide the remaining
settlement proceeds. One approach, the court said, might be for it
to “act as if [it was] the fact finder in an underlying personal injury
case” and allocate the proceeds based on “the evidence regarding
the accident, the nature of the injuries, [and] the economic and
noneconomic damages.” The other possibility the court identified
was for it to determine that the “parties [had] commingled the
settlement proceeds” by “not tak[ing] appropriate steps to
allocate” them. In that event, the court explained, the division
would “simply [be] a 50/50 split or something that looks more like
what we would do with any account that has [marital] funds in
it.” At trial, the court heard testimony from Craig, Craig’s doctor,
a retired insurance adjustor who had been designated as an expert
witness by Craig, and Jaime.

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Terry v. Terry

The Property Distribution

¶7 Before delivering its oral ruling following trial, the district
court stated that it was “truly unfortunate” that it did not have the
type of “underlying documentation” that “attorneys typically
[provide]” regarding how to “treat[] each party separately” when
it comes to dividing personal injury settlement proceeds. The
court similarly noted that the insurance companies involved in
the personal injury matter had also “not divide[d] [the] proceeds
between the parties” even though “that’s what they typically do.”

¶8 The court then explained that because both parties’ past
medical expenses stemming from the accident had already been
paid, and because the court had been given “no information at
trial as to . . . the cost of the [parties’] future medical[] [expenses]”
and no “testimony from which [it] could determine that any
portion of [the] settlement . . . was intended for . . . future
medical[] [expenses],” it deemed the remaining settlement
proceeds to be “pain-and-suffering damages.” And it noted that
“the case law is clear that pain-and-suffering damages [are]
separate property.” Thus, the court ruled, the remaining
settlement proceeds were separate property.

¶9 Having made that determination, the court still had to
determine how much of the remaining settlement proceeds was
Craig’s separate property and how much was Jaime’s separate
property. Essentially employing the first alternative approach to
property division it had identified prior to trial—namely, that of
sitting as a hypothetical factfinder in a hypothetical trial of the
underlying personal injury case—the court then set about placing
a value on Craig’s pain and suffering as a result of the accident
and a value on Jaime’s pain and suffering as a result of the
accident. As a guide, the court looked to the following factors
given in the Model Utah Jury Instructions for factfinders to
consider when awarding noneconomic damages to personal
injury plaintiffs:

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Terry v. Terry

(1) the nature and extent of [the plaintiff’s] injuries;
(2) the [plaintiff’s] pain and suffering, both mental
and physical; (3) the extent to which [the plaintiff]
has been prevented from pursuing [his or her]
ordinary affairs; (4) the degree and character of any
disfigurement; (5) the extent to which [the plaintiff]
has been limited in the enjoyment of life; and
(6) whether the consequences of [the] injuries are
likely to continue and for how long.

Model Utah Jury Instructions 2d CV2004,
https://legacy.utcourts.gov/muji/?cat=1&subcat=20 [https://perm
a.cc/3GVB-W8WA]. After weighing each of these factors (and
expressly disagreeing with the values proposed by Craig’s expert
insurance adjuster), the court independently assigned a value of
$3,000,000 to the noneconomic damages component of Craig’s
personal injury claim and a value of $575,000 to the noneconomic
damages component of Jaime’s personal injury claim, for a total
of $3,575,000 in noneconomic damages from the underlying
personal injury case.

¶10 Recognizing that the total settlement amount—
$2,700,000—came to 75.5% 2 of the total value of the parties’
noneconomic damages as determined by the court, the court then
calculated 75.5% of the $3,000,000 it had assigned to Craig’s
noneconomic damages and 75.5% of the $575,000 it had assigned
to Jaime’s noneconomic damages. This resulted in a “base award
of $2,265,734.27 for Craig” and a “base award of $434,265.73 for
Jaime.” From there, the court calculated that Craig’s base award
was 83.92% of the total settlement amount and Jaime’s base award

2. In performing its calculations, the district court used precise
percentages without rounding to the nearest tenth or hundredth
of a percent. In its decree, however, the court recited rounded
percentages. For ease of reading, we also recite the rounded
percentages that appear in the decree.

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Terry v. Terry

was 16.08% of the total settlement amount. Then the court
determined that “each party should be responsible for those
percentages of the $405,000 in attorney[] fees” they had paid to
their attorney. After calculating, on that basis, the respective
dollar amounts of attorney fees that each party was responsible
for and subtracting those amounts from the parties’ base awards,
the court arrived at a “net award to Jaime of $369,125.87” as her
separate portion of the total settlement proceeds and a “net award
to Craig of $1,925,847.13” as his separate portion of the total
settlement proceeds. The court then ordered Jaime to pay Craig
$577,874.13, which was the difference between the $947,000 she
had withdrawn from the parties’ joint account and the $369,125.87
to which she was entitled under the court’s property distribution.
Jaime now appeals.

ISSUE AND STANDARD OF REVIEW

¶11 Jaime challenges the district court’s determination that the
remaining settlement proceeds were separate property. We
recently “acknowledged that this court has inconsistently
articulated the standard of review to be applied when reviewing
a trial court’s determination that property is marital or separate.”
Krajeski v. Krajeski, 2025 UT App 19, ¶ 14 n.5, 565 P.3d 544 (cleaned
up), cert. denied, July 2, 2025 (No. 20250403). “Some opinions have
treated the determination of the district court in this regard
deferentially, reviewing it for an abuse of discretion, while others
embrace [an] older correctness standard.” Id. (cleaned up). Here,
the parties both assert, without analysis, that an abuse of
discretion standard should apply. We do not attempt to resolve
the “nuanced question” of which standard of review should
apply, because we conclude that the district court’s decision does
not withstand scrutiny under a correctness standard or an abuse
of discretion standard. Id. “[W]e [again] leave open the prospect
of more definitively deciding this [standard of review] question

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Terry v. Terry

in some future case in which it is briefed by the parties and
material to our appellate decision.” Id. 3

ANALYSIS

¶12 Jaime contends that the settlement proceeds were
commingled and, thus, became marital property because “Jaime
and Craig’s actions manifested an intent that the proceeds be
marital [property].” She points specifically to the parties’ actions
in “hir[ing] a joint attorney, fil[ing] joint claims, negotiat[ing] joint
settlements, [and] deposit[ing] the settlement proceeds into a joint
account” as manifesting their intent to treat the settlement
proceeds as marital property. While we do not necessarily deduce
from Craig and Jaime’s actions a specific intent to commingle the
remaining settlement proceeds, we agree that their actions
nevertheless resulted in a commingling of the proceeds due to the
proceeds being inextricably and untraceably intertwined.

¶13 “In addressing the distribution of property between
divorcing spouses, the trial court must first determine whether
the assets in dispute are marital or separate property.” Keyes v.
Keyes, 2015 UT App 114, ¶ 28, 351 P.3d 90. “The presumption is
that marital property will be divided equally while separate
property will not be divided at all.” Krajeski v. Krajeski, 2025 UT
App 19, ¶ 18, 565 P.3d 544 (cleaned up), cert. denied, July 2, 2025
(No. 20250403). But “separate property is not absolutely insulated

3. As a second issue, Jaime also argues that, even if the remaining
settlement proceeds were the parties’ separate property, “the
district court erred in its calculations” when dividing the separate
property and that it ultimately arrived at a distribution of the
separate property that “was inequitable.” Because we determine
that all of the settlement proceeds are marital property, we need
not address Jaime’s arguments regarding the court’s division of
the remaining proceeds when viewing them as separate property.

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Terry v. Terry

from division upon divorce.” Id. ¶ 19. “In some situations, . . .
property that begins as one spouse’s separate property can lose its
separate identity and become part of the marital estate.” Thorup v.
Thorup, 2024 UT App 93, ¶ 23, 554 P.3d 329. “Our case law has
identified three such situations: (1) where separate property has
been commingled into the marital estate; (2) where the other
spouse has by his or her efforts or expense contributed to the
enhancement, maintenance, or protection of that property,
thereby acquiring an equitable interest in it; and (3) in
extraordinary situations when equity so demands.” Id. (cleaned
up). This case implicates the commingling situation.

¶14 “With regard to commingling, one rather obvious situation
in which commingling occurs is where one spouse has
contributed all or part of the property to the marital estate with
the intent that it become joint property.” Id. ¶ 24 (cleaned up).
Thus, “[c]ourts look to a party’s actions as a manifestation of a
spouse’s intent to contribute separate property to the marital
estate.” Dahl v. Dahl, 2015 UT 79, ¶ 143, 459 P.3d 276. Moreover,
“even short of an outright intended contribution, property that
started out as separate property may be considered commingled
if it becomes inextricably and untraceably intertwined with
marital assets.” Thorup, 2024 UT App 93, ¶ 24. “Quite important
to any commingling analysis, then, is whether the property in
question has retained its separate character.” Id. (cleaned up).

¶15 Here, the property at issue is proceeds received in
settlement of Craig’s and Jaime’s personal injury claims.
“[C]ompensation for a personal injury can be either separate
property or marital property, depending on the nature of the
damages.” Andersen v. Andersen, 2016 UT App 182, ¶ 20, 379 P.3d
933. “Specifically, amounts received as compensation for pain,
suffering, disfigurement, disability, or other personal debilitation
are generally found to be the personal property of the injured
spouse in divorce actions.” Id. (cleaned up). “But money realized
as compensation for lost wages and medical expenses, which

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diminish the marital estate, are considered to be marital
property.” Id. (cleaned up).

¶16 If the value of Craig’s and Jaime’s personal injury claims
had been tried to a factfinder, that factfinder—either judge or
jury—would have determined the amount of damages Craig and
Jaime each suffered under each applicable category of damages.
It would have then compiled those amounts and arrived at a total
amount of damages suffered by Craig and a total amount of
damages suffered by Jaime. By special verdict form (in the case of
a jury) or detailed findings (in the case of a judge), the factfinder
might also have indicated the amount of damages it assessed for
each plaintiff under each component category of damages.
However, none of that happened here. Instead, Craig and Jaime
chose to negotiate a settlement of their claims with the insurance
companies providing coverage for the accident.

¶17 “[S]ettlement values . . . , by definition, implicate
compromise . . . .” Limone v. United States, 579 F.3d 79, 104 (1st Cir.
2009). And a compromise agreement is necessarily a reflection of
the intent of the settling parties, see Uintah Basin Med. Center v.
Hardy, 2002 UT 92, ¶ 20, 54 P.3d 1165 (stating that “the preeminent
goal of contractual interpretation” is “to give effect to the intent of
the parties”), not the result of an objective third-party
determination of the value of the compromised claim. Thus,
specific contours of a compromise agreement are generally
discernable only to the extent that the parties to the agreement
expressly delineate them. In a personal injury case, therefore,
without an expressed intent by the compromising parties, it is
impossible to know which categories of damages the settlement
proceeds are meant to compensate for and in what amounts. And
when a compromise involves multiple injured parties, the
uncertainty is multiplied—not only is it impossible to trace a
specific amount of settlement proceeds to a specific category of
damages, it is also impossible to trace a specific amount of
settlement proceeds to a specific claimant. Such is the case here.

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Terry v. Terry

¶18 Notwithstanding the district court’s laudable effort to
assign theoretically appropriate values to Craig’s and Jaime’s
respective noneconomic damages, such an effort is simply
ineffective to illuminate an intent—specifically, as to what and
whose potential damages awards were compromised and to what
extent—that the parties themselves never arrived at in the first
place. Jaime and Craig made no effort to establish, prior to the
divorce trial, what portion of the settlement proceeds reflected
which injury to which party. They filed one joint claim. They did
nothing to separate their injuries or claims as the claims were
settled. They received five checks—each made out jointly to
themselves and their attorney’s law firm. After the total was
reduced to pay their attorney fees and medical expenses, the
remaining proceeds were deposited in a joint account, and
together they consulted with financial advisors about how to
invest the total remaining proceeds. The result is that the
settlement proceeds were “inextricably and untraceably
intertwined,” Thorup, 2024 UT App 93, ¶ 24, with no post-hoc way
to deduce how much of the proceeds Craig and Jaime intended to
go to each of them. Unlike the prototypical case where separate
property loses its separate character, the property here—proceeds
of a settlement—never achieved its character as separate in the first
place. For a time, Craig and Jaime each possessed individual
claims against a tortfeasor and a first-party insurance policy.
Those claims were not commingled, and our law recognizes the
noneconomic damages portion of those claims as separate
property. But the parties chose to settle all of the claims
collectively by receiving payments that were commingled from
their inception.

¶19 As already noted, under Utah law, when one spouse’s
separate property is inextricably and untraceably intertwined
with marital property, the initially separate property becomes
marital. See id. We similarly conclude that when each spouse
allows his or her otherwise separate property to be inextricably

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Terry v. Terry

and untraceably intertwined with the other spouse’s separate
property, the otherwise separate property likewise becomes
marital. See id. (“Quite important to any commingling analysis,
then, is whether the property in question has retained its separate
character.”(cleaned up)). Under the facts of this case, as the
parties’ individual claims were compromised and converted to
settlement proceeds, those proceeds did not obtain a separate
character but were instead inextricably and untraceably
intertwined from the moment they were disbursed. As a result,
the proceeds are all marital property.

¶20 Craig seeks to avoid this conclusion by pointing to Kimball
v. Kimball, 2009 UT App 233, 217 P.3d 733. In Kimball, we affirmed
the district court’s determination that a wife’s separate stock
proceeds that were temporarily deposited into the parties’ joint
accounts “regained” their “separate nature” when they were
“taken out of those joint accounts and deposited into [the wife’s]
individual account.” Id. ¶ 28. Craig argues that like the wife’s
separate stock proceeds in Kimball, the remaining settlement
proceeds here were not commingled because they “sat in the
parties’ joint account for only a few weeks before being
withdrawn entirely” and they “were traceable when deposited
and withdrawn.” Although Craig is correct that the remaining
settlement proceeds as a whole were traceable as settlement
proceeds when they were deposited and when they were
withdrawn, the portion of those proceeds that belonged to Craig
and the portion that belonged to Jaime had not been determined
and, thus, were not traceable either when the proceeds were
deposited or when they were withdrawn. This is in contrast to the
wife’s stock proceeds in Kimball, which were all traceable as her
separate proceeds at both the time of deposit and the time of
withdrawal from the joint account. See id. Accordingly, Kimball is
unpersuasive here.

¶21 For the foregoing reasons, we vacate the district court’s
division of the remaining settlement proceeds and remand this

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Terry v. Terry

matter for the court to distribute those proceeds as marital
property. Without expressing an opinion as to what that division
should be, we observe that it should be based on the ordinary
principles of marital property distribution, which include both
“the general presumption that marital property be divided
equally” and an acknowledgment that sometimes “exceptional
circumstances [may] overcome [that] general presumption.” Dahl
v. Dahl, 2015 UT 79, ¶ 121, 459 P.3d 276 (cleaned up).

CONCLUSION

¶22 The district court improperly determined that the
remaining settlement proceeds were separate rather than marital
property. We therefore reverse the district court’s determination
that the remaining settlement proceeds were separate property,
vacate its distribution of those proceeds, and remand the matter
for the court to distribute the remaining settlement proceeds as
marital property.

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