Court of Appeals hears dispute over whether $2.7 million injury settlement became marital property

The Utah Court of Appeals heard oral argument in Terry v. Terry (case no. 20231107) over whether a $2.7 million personal-injury settlement became marital property after checks were deposited into a joint account.

Mikayla Irvin and Emily Adams appeared for the appellant, James Terry; Spencer Brown and Jennifer Falk argued for the respondent and related parties. The district court had found that $1,894,000 of the settlement accounted solely for pain and suffering and was separate property, and it ultimately awarded Jamie Terry about 16% of the $2.7 million. Irvin told the panel that the district court “got it wrong” and that the funds were commingled, entitling Jamie to an equal or nearly equal split.

The appellant argued that commingling occurred in two recognized ways: (1) a spouse contributes separate property to the marital estate with intent that it become joint property, and (2) separate property becomes inextricably intertwined and untraceable in the marital estate. Counsel pointed to six principal facts they said supported commingling: the parties used the same attorney and release documents; five settlement checks were issued jointly to the parties and counsel and were deposited by counsel into a joint marital account; both parties sought joint financial advice and made joint investments with portions of the funds; Jamie withdrew half the funds without objection; and Craig’s initial pleadings described the funds as already “equally divided.” Irvin argued that Craig did not carry the burden to show the insurers intended the award to be purely for pain and suffering and that, because that showing was lacking, the settlement proceeds were treated as marital property when deposited and used for joint purposes.

Spencer Brown, arguing for the respondent, told the court the district court did not abuse its discretion and correctly applied the jury-instruction framework for apportioning pain-and-suffering damages when no jury verdict allocated the award between the spouses. Brown said the court properly considered the Muji factors (injury severity, pain and suffering, life expectancy, and future limitations) and that the district court’s detailed factual findings — including Craig’s amputation — warranted heavy deference on appeal. Brown also argued that the record supported the district court’s factual conclusion that a substantial portion of the settlement compensated pain and suffering rather than past wage loss or future medical costs.

Judges on the panel pressed both counsel about a controlling standard of review. Appellant counsel relied on Thorup v. Thorup and related authority that classify commingling determinations as reviewed for abuse of discretion; the panel probed whether Thorup resolved internal inconsistency in the court’s prior case law. Counsel for both sides acknowledged confusion in precedent and offered that, under either standard (abuse of discretion or de novo/correctness for mixed questions), the district court’s resolution should be examined. Counsel for the appellant requested reversal of the district court’s allocation and a remand for an equal or near-equal split; counsel for the respondent urged deference and affirmed that the court retained equitable authority to make allocations on remand.

No ruling was made from the bench. The court thanked counsel, took the matter under advisement and said it would issue an opinion.

Why it matters: The court’s decision will affect how insurers’ settlement checks that resolve joint claims are treated in divorce proceedings when no explicit allocation accompanies a settlement. The case implicates how lower courts apply commingling doctrine and how appellate courts review factual findings about allocation of damages.