April 25, 2017- Gary M. Ross v. Stephanie Negron-Ross, No. 33,418

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: ___________
Filing Date: April 25, 2017
NO. 33,418
GARY M. ROSS,
Petitioner-Appellee,
v.
STEPHANIE NEGRON-ROSS,
Respondent-Appellant.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Alisa A. Hadfield, District Judge
L. Helen Bennett, P.C.
L. Helen Bennett
Albuquerque, NM
for Appellee
Stephanie Negron
Ocean Park, PR
Pro Se Appellant

OPINION
GARCIA, Judge.
{1} 	This case arises from a question of first impression regarding whether a marital
community estate is entitled to an equitable lien on a spouse’s sole and separate
property when community funds have contributed to the equity in the property but the
property has diminished in value due to declining market conditions. We hold that the
community’s contributions to the sole and separate property create the right to a
community lien even when the property decreased in value. We adopt the formula
utilized by the Arizona Court of Appeals in Valento v. Valento, as the method for
calculating the community lien in this case and as an extension of the principles set
forth in our prior case law. See 240 P.3d 1239, 1243-45 (Ariz. Ct. App. 2010). As a
result, we reverse the district court on this issue. On remand, we leave it to the
discretion of the district court to determine the proper apportionment of this
community lien. We further hold that the district court did not abuse its discretion in
determining that (1) substantial evidence existed regarding Wife’s breach of her
fiduciary duty to Husband through the embezzlement of funds from his dental
practice, and (2) the parties were required to pay their own attorney fees.
BACKGROUND
{2} 	This appeal comes before this Court following the dissolution of marriage and

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division of property owned by the parties. Gary M. Ross (Husband) and Stephanie
Negron-Ross (Wife) were married on September 11, 2010. At the time they were
married, both parties owned assets of significant value. Husband, age fifty-eight at the
time of the marriage, was a dentist and owned a private dental practice. Husband also
owned several rental properties held by a limited liability corporation, the commercial
property where his practice resides, and his personal residence in Albuquerque, New
Mexico (the Spring Creek residence). Husband purchased the Spring Creek residence
in 2004 for $799,000. Husband paid $160,000 as a down payment on the Spring Creek
residence. The Spring Creek residence subsequently depreciated in value and was
appraised at $700,000 at trial. Additionally, the Spring Creek residence was subject
to two mortgages totaling $559,131 at the time of trial.
{3} 	Prior to the marriage, Wife, age fifty-four at the time of the marriage, worked
in marketing for seventeen years and owned her own business for twelve years. Wife
testified that she donated real property in Puerto Rico to her daughters in September
2009. However, she continued to make mortgage payments and receive rent from the
property. The district court characterized the donation as “alleged” and found that
Wife’s testimony was not credible. During the marriage, Wife worked at Husband’s
dental practice earning a gross monthly income of $5,000. The district court found that
during the marriage, “Wife breached her fiduciary duty and embezzled money and

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stole property from Husband’s dental practice [in] the sum of $48,341.” Husband was
subsequently reimbursed through insurance for those losses.
{4} 	The parties separated on September 9, 2012, after less than two years of
marriage, and Husband filed for a petition for dissolution of marriage on October 26,
2012. A minute order, filed on February 22, 2013, set an interim division of income
and expenses. At the time the interim order was entered, Husband’s monthly income
was found to be $9,026 and Wife’s monthly income was found to be $2,860. The
district court entered a partial divorce decree dissolving the parties’ marriage on June
21, 2013. Following several days of trial, the district court entered a final decree and
judgment (final judgment) on October 4, 2013.
{5} 	The district court’s final judgment included factual findings and rulings
regarding the distribution of the parties’ property including the real estate, bank
accounts, and other assets. We only address those findings and rulings that are
relevant to this appeal. With regard to the Spring Creek residence, the district court
found that “[a]fter deducting the mortgage debt and Husband’s sole and separate down
payment the Spring Creek residence has a negative value” and that “the expenditures
on the Spring Creek residence during the marriage” did not increase its value.
Husband was awarded the Spring Creek residence as his sole and separate property,
and the district court found “no community lien” to have been created against this

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residential property. Based upon several enumerated factors, the district court also
ruled that “[e]ach party shall pay their own attorney fees[.]”
{6} 	On appeal, Wife contests three of the district court’s findings of fact or legal
rulings: (1) that the Spring Creek residence was not subject to a community lien, (2)
that Wife breached her fiduciary duty to Husband by embezzling a significant amount
of money from his dental practice, and (3) that each party pay their own attorney fees.
DISCUSSION
I. 	The Community is Entitled to 	a Lien on Separate Property That
Depreciates in Value When Community Funds Were Used to Pay the
Mortgage That Benefitted the Separate Property
{7} 	Wife argues that the district court erred in declaring that no community property
lien was created against Husband’s separate property assets. Whether the district court
erred in finding no community lien on the Spring Creek residence is a question of law
that we review de novo. See NMSA 1978, § 40-3-8(A), (B) (1990) (defining separate
and community property); Styka v. Styka, 1999-NMCA-002, ¶ 8, 126 N.M. 515, 972
P.2d 16 (“[W]e review questions of law de novo.”).
{8} 	“In New Mexico, property takes its status as community or separate property
at the time and by the manner of its acquisition.” Zemke v. Zemke, 1993-NMCA-067,
¶ 18, 116 N.M. 114, 860 P.2d 756 (internal quotation marks and citation omitted).
“[A]ll property brought to . . . marriage by either spouse or acquired during marriage

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by gift, bequest, devise or descent, together with its rents, issues and profits[,]” is
separate property. Portillo v. Shappie, 1981-NMSC-119, ¶ 12, 97 N.M. 59, 636 P.2d
878. All property “acquired by either or both spouses during marriage, which is not
separate property,” as well as its rents, issues, and profits, is community property. Id.
However, “[a]pportionment is appropriate when separate property is enhanced through
community efforts [(funds),] or when an asset is acquired with both separate and
community funds.” Trego v. Scott, 1998-NMCA-080, ¶ 5, 125 N.M. 323, 961 P.2d
168. “The [district] court must apportion the value enhanced by community funds
between the separate and community estates.” Id. ¶ 13. The community is, therefore,
entitled to a lien against the separate property of a spouse for the contributions made
by the community that enhanced the value of the property during the marriage. See
Jurado v. Jurado, 1995-NMCA-014, ¶ 10, 119 N.M. 522, 892 P.2d 969.
{9} 	Previously, this Court has stated that it is the “increase in the value of the
[separate property] asset that is apportioned among separate and community interests.”
Id. As such, this Court has adopted different formulas to calculate the apportionment,
all of which assume an appreciation in the property’s value, and incorporate varying
factors depending on the pertinent facts. See id. ¶ 11 (“Any increase in the value of
separate property is presumed to be separate unless it is rebutted by direct and positive
evidence that the increase was due to community funds or labor.”). However, our prior

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case law fails to adequately address the community’s interest, if any, in separate
property that has depreciated in value due to market conditions that are present during
the marriage.
{10} 	In Valento, the Arizona court addressed a residential mortgage payment issue
that is substantially similar to the one being disputed by the parties in the present case.
240 P.3d at 1242-45.The Arizona court reasoned that when a separate property
residence depreciates but positive equity remains in the asset, the court should
recognize a community lien in an amount “equal to the reduction [of the] principal
indebtedness attributable to the community contribution.” Id. at 1244. By making
community contributions toward principal that does create an increase in equity, “the
presence of [any] positive equity means that the owner-spouse can actually realize the
benefit conferred by the community.” Id. “If the community contributions were not
recognized in the form of a lien, the owner-spouse would receive a windfall from the
community.” Id. However, in the event that the property has negative equity, “[i]t
would be illogical . . . to hold that the community should receive the full benefit of its
contributions to principal when a portion of the equity it created can no longer be
realized.” Id. The Arizona court therefore applied the following formula when the
value of a separate property asset has decreased during the marriage but positive
equity remains in the property and the community has paid contributions toward the

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principal indebtedness against that property:
C-[C/B x D]; where D = depreciation in value of the property during the
marriage, B = value on the date of the marriage, and C = community
contributions to principal or market value.
Id. The application of this Arizona formula is a logical extension of New Mexico case
law to calculate a community lien when community funds are used to enhance the
equity in an owner-spouse’s separate property even where other factors have caused
the value of the property to decrease during the term of the marriage.
{11} 	In the present case, the community—through its contribution to pay the
principal mortgage against the Spring Creek residence—is entitled to a lien against
Husband’s remaining equity in the Spring Creek residence even though the residence
declined in value during the marriage. It is undisputed by the parties that Husband
purchased the Spring Creek residence prior to his marriage to Wife, the residence is
his sole and separate property, and the residence declined in value during the parties’
marriage. Additionally, Husband does not dispute that community funds contributed
to the payment of the mortgage. Applying principles and the formula now adopted
from Valento, the district court must determine the value of the community lien that
exists against the Spring Creek residence.
{12} 	Husband argues that the district court’s finding of no community lien on the
Spring Creek residence remains equitable under the circumstances of this case. He

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contends that the district court could have balanced other factors against Wife’s
community property claims, including its findings that “the community substantially
depleted Husband’s separate property investment accounts” and that “Wife breached
[her] fiduciary duty.” However, our holding and adoption of the principles from
Valento is exclusively an issue of law, and we will not intervene to address how the
district court should apply its continuing equitable discretion to apportion the
community lien that was created. See Gomez v. Gomez, 1995-NMCA-049, ¶¶ 2, 5, 119
N.M. 755, 895 P.2d 277 (recognizing that legal error is addressed first, especially
where its resolution would be determinative on the district court’s remaining
decisions), superseded by statute on other grounds as stated in Erickson v. Erickson,
1999-NMCA-056, ¶ 25, 127 N.M. 140, 978 P.2d 347. On remand, the district court
must still address how to apportion the community lien that was created in order to
achieve substantial justice. See Dorbin v. Dorbin, 1986-NMCA-114, ¶ 15, 105 N.M.
263, 731 P.2d 959 (“At divorce, the asset is apportioned between separate and
community interests in a manner which achieves substantial justice.”). The district
court is given broad discretion to consider all relevant factors when making this
equitable division of community property. See Scott, 1998-NMCA-080, ¶ 22 (noting
that the district court has broad discretion when it exercises its power to divide
community property equally between the parties). We therefore remand this matter to

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the district court to calculate the community lien against the Spring Creek residence
and to make a proper apportionment of this lien as it deems appropriate.
II. 	The 	District 	Court’s 	Remaining 	Findings 	and 	Conclusions 	Were
Supported by Substantial Evidence and Were Not an Abuse of Discretion
{13} 	Wife makes two additional arguments on appeal. First, she argues that “[t]he
district court erred in finding that [she] breach[ed] her fiduciary duty to [H]usband and
embezzled a significant amount of funds from [H]usband’s dental practice.” Second,
Wife contends that the district court erred in not requiring Husband to pay her attorney
fees. The district court made several consecutive findings relating to these arguments:
83. 	Husband earns significantly more income than Wife[;]
84. 	Both parties have assets with significant value[;]
85. 	Husband prevailed at trial[;]
86. 	Wife breached her fiduciary duty to Husband and embezzled a
significant amount of funds from Husband’s dental practice[; and]
87. 	Balancing the competing factors enumerated in paragraphs 83
to 86, each party shall pay their own attorney fees.
A. 	The District Court’s Determination That Wife Breached Her Fiduciary
Duty and Embezzled Money From Husband’s Dental Practice Was
Supported by Substantial Evidence and Was Not an Abuse of Discretion
{14} 	Wife argues that the district court’s finding eighty-six— that she “breached her
fiduciary duty to Husband and embezzled a significant amount of funds from
Husband’s dental practice”—was an abuse of discretion, not in accordance with the

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law and not supported by substantial evidence. However, Wife does not address the
numerous findings and conclusions entered by the district court that were also related
to its determination regarding the issues of embezzlement and breach of fiduciary
duty, specifically, findings sixty-seven, sixty-eight, and eighty, as well as conclusions
of law. See Rhoades v. Rhoades, 2004-NMCA-020, ¶ 5, 135 N.M. 122, 85 P.3d 246
(“Unchallenged findings of fact are conclusive on appeal.”). Furthermore, Wife has
failed to indicate what remedy or result she is seeking if we only reverse finding
eighty-six. See Morris v. Merchant, 1967-NMSC-026, ¶ 24, 77 N.M. 411, 423 P.2d
606 (recognizing that our appellate courts “will not correct errors which, even if
corrected, will not change the result”). Because Wife does not develop any of her
other arguments and only directs this Court to finding eighty-six, we are left with just
one remaining argument—that finding eighty-six was not supported by substantial
evidence. See Clayton v. Trotter, 1990-NMCA-078, ¶¶ 16-17, 110 N.M. 369, 796 P.2d
262 (stating that the appellate court will review the arguments of self-represented
litigants to the best of its ability, but cannot respond to unintelligible arguments); see
also Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110
P.3d 1076 (stating that an appellate court need not review an undeveloped argument).
We, therefore, limit our review to the issue of whether the district court’s finding
eighty-six, that Wife breached her fiduciary duty to Husband and embezzled a

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significant amount of funds from Husband’s dental practice, was supported by
substantial evidence.
{15} 	In our review of the challenged finding, we view the evidence “in the light most
favorable 	to 	the 	findings 	and 	judgment 	entered 	[by 	the 	district 	court].”
Jurado,1995-NMCA-014, ¶ 8. “If substantial evidence exists, then the conclusion of
law must be upheld absent an abuse of discretion. This Court indulges in all
reasonable inferences that can be drawn from the evidence in support of the
judgment.” Id. (citations omitted).
{16} 	Substantial evidence was presented by Husband regarding monies taken from
his dental practice, including exhibits and expert testimony. Although Wife challenged
the truthfulness and credibility of this evidence, she does not otherwise substantively
dispute its content or the inferences and conclusions that it supported. See id. (“This
Court indulges in all reasonable inferences that can be drawn from the evidence in
support of the judgment.”). The district court also accepted the credibility of
Husband’s testimony and evidence but did not find Wife’s testimony to be credible.
As a result, we determine that substantial evidence was presented to support the
district court’s finding eighty-six. We affirm the district court’s ruling on this issue.
B. 	The District Court’s Determination That Each Party Pay His or Her Own
Attorney Fees Was Not an Abuse of Discretion
{17} 	“We review a [district] court’s decision whether to award attorney fees in a

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marital dissolution and property division case for abuse of discretion.” Muse v. Muse,
2009-NMCA-003, ¶ 71, 145 N.M. 451, 200 P.3d 104. When reasons both supporting
and detracting from a decision exist, there is no abuse of discretion. Talley v. Talley,
1993-NMCA-003, ¶ 12, 115 N.M. 89, 847 P.2d 323.
{18} 	Rule 1-127 NMRA governs the award of attorney fees in domestic relations
cases. In such cases, “the district court is to consider a number of factors including
disparity of the parties’ resources, prior settlement offers, the total amount of fees and
costs expended by each party, and the success on the merits.” Weddington v.
Weddington, 2004-NMCA-034, ¶ 27, 135 N.M. 198, 86 P.3d 623. No single factor is
dispositive. See id. ¶ 28 (holding that “disparity is only one factor to be considered
and disparity cannot support reversal where the other factors weigh in favor of the
award of attorney fees”). Wife’s breach of fiduciary duty and embezzlement of
monies, a separate issue that Husband prevailed upon in the district court, is only
modestly relevant to the above factors. As such, even though we affirm that finding
eighty-six was supported by substantial evidence, it is not a significant consideration
in determining whether Wife was entitled to an award of attorney fees. We, therefore,
focus primarily on the district court’s other three findings in determining whether the
court erred when it ruled that each party should pay their own attorney fees.
{19} 	The remaining three findings by the district court are set forth in paragraphs

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eighty-three through eighty-five. We recognize that the district court did not enter any
findings regarding prior settlement offers or the total amount of fees and costs
expended by either party. The district court instead looked to the disparity of the
parties’ resources and each party’s success on the merits. The finding by the district
court that Husband earns significantly more than Wife is a finding in her favor for an
award of attorney fees, but the court’s finding that Husband prevailed at trial weighs
against her. The district court’s finding that both parties have assets of significant
value also factors into any determination regarding the disparity of the parties’
resources and further supports the determination that each party has the financial
ability to pay his or her own attorney fees. See Allen v. Allen, 1982-NMSC-118, ¶¶ 16-
18, 98 N.M. 652, 651 P.2d 1296 (noting that when neither party is economically
oppressed, the district court acts within its discretion to require each party to pay its
own attorney fees). As these factors can be balanced out neutrally and support the
district court’s decision to require each party to pay their own attorney fees, we
conclude that the district court did not abuse its discretion. See Talley, 1993-NMCA-
003, ¶ 12.
CONCLUSION
{20} 	We reverse the district court’s failure to recognize the existence of a community
lien and to calculate the community lien against the Spring Creek residence. We

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remand this matter to the district court for further proceedings in order to address the
community 	lien 	against 	the 	Spring 	Creek 	residence 	and 	to 	make 	a 	proper
apportionment of this lien as it deems appropriate. We uphold the district court’s
remaining rulings, including the requirement that each party pay his or her own
attorney fees.
{21} 	IT IS SO ORDERED.
__________________________________
TIMOTHY L. GARCIA, Judge
WE CONCUR:
___________________________________
JAMES J. WECHSLER, Judge
___________________________________
M. MONICA ZAMORA, Judge