Court of Appeals hears argument on whether $2.7 million injury settlement was commingled in Terry divorce

The Utah Court of Appeals heard argument in Terry v. Terry over whether a $2,700,000 personal-injury settlement paid to spouses Jamie and Craig Terry should have been treated as separate property or as commingled marital property subject to an equal (or nearly equal) split.

Appellant counsel Mikayla Irvin told the court the district court erred by treating $1,894,000 of the settlement as Jamie’s separate pain-and-suffering award and then awarding Jamie only 16% of the overall $2.7 million. Irvin argued the settlement checks were paid jointly, deposited into the parties’ joint account, and that the record shows multiple indicia of intent and intertwining that support treating the funds as commingled marital property.

The central legal question presented at argument was twofold: (1) whether the funds were commingled under the Court of Appeals’ framework from Thorup v. Thorup (either by intent to make separate funds joint or by inextricable intertwining), and (2) the standard of appellate review — whether classification as separate or marital property is reviewed for abuse of discretion or de novo. Irvin relied on Thorup and related family-law decisions, arguing that the parties’ joint counsel, joint releases, the five checks payable jointly to the parties and counsel, the deposit into a joint account, the subsequent joint financial planning, and Craig’s prior petition language stating the funds had been “equally divided” together show intent or, at minimum, untraceable intertwining.

Opposing counsel Spencer Brown defended the district court’s approach, telling the panel the trial judge reasonably concluded the settlement primarily compensated pain and suffering and then, acting as factfinder, apportioned the pain-and-suffering portion based on the relative severity of the parties’ injuries. Brown emphasized the difficulty of retroactively allocating a negotiated settlement that did not include a special-verdict-style breakdown and urged deference to the district court’s factual findings and discretionary allocation.

Arguing through many of the court’s questions, Irvin acknowledged that even if commingling were not found, the allocation itself (84/16) was inequitable given the district court’s own findings that the spouses’ day-to-day limitations and suffering were “nearly equal.” Irvin pointed to evidence the insurer considered the parties’ past medical bills and severe injuries when reaching a policy-limit settlement, and argued the absence of insurer documentation allocating amounts to specific categories meant Craig failed to prove the award was solely separate property.

Judges on the panel repeatedly questioned both counsel about the appropriate standard of review and the remedial consequences if the court found commingling; in particular, whether a remand that acknowledges commingling would simply return the parties to the same 84/16 allocation if the district court again exercised its equitable authority. Irvin asked the court to reverse classification and instruct an equal or nearly equal split; Brown argued that the district court had to be given deference and that its factual findings supported the allocation.

No decision was announced from the bench. The panel took the matter under advisement and said an opinion would follow.

If the court ultimately finds the settlement commingled, the case will then require the appellate court or the district court on remand to determine whether any exceptional circumstances justify an allocation departing from the default equal split. The parties and the district court focused argument on whether the evidence supported the district court’s allocation or whether the commingling analysis required reversal.

Ending: The court thanked counsel and took the case under advisement; no opinion was issued at argument.