Can Utah courts impose constructive trusts on property titled in corporate entities during divorce? Goggin v. Goggin Explained

In Goggin v. Goggin, the Utah Supreme Court addressed whether a district court could impose a constructive trust on property titled in corporate entities during divorce proceedings, providing important guidance for practitioners handling complex marital property disputes involving business entities.

Background and Facts

Tamara and Dennis Goggin divorced after ten years of marriage. During the marriage, they purchased property (the Riverbend Property) for their home and equestrian business, with Dennis listed as the buyer but the property titled in his corporation, Construct Tech. Both spouses contributed significantly to developing the property, building their home, and creating equestrian facilities. When they separated, Dennis’s girlfriend began operating a competing equestrian business using the same facilities. Tamara sued seeking various forms of equitable relief, including imposition of a constructive trust and declaration that the property was part of the marital estate.

Key Legal Issues

The court addressed three primary issues: (1) whether a constructive trust could be imposed on property titled in corporate entities, (2) whether an alleged express oral agreement between the spouses was enforceable, and (3) whether the district court had authority to declare the property part of the marital estate.

Court’s Analysis and Holding

The court affirmed the district court’s imposition of a constructive trust, finding clear and convincing evidence that the corporate entities were Dennis’s alter egos and that Tamara’s contributions to developing the property caused it to lose its premarital character. The court applied the established test requiring: (1) a wrongful act, (2) unjust enrichment, and (3) specific property traceable to the wrongful behavior. However, the court reversed the finding of an enforceable express oral agreement, holding that the purported agreement lacked sufficient specificity of essential terms to be enforceable as a contract.

Practice Implications

This decision provides valuable guidance for practitioners handling marital property disputes involving corporate entities. Courts will look beyond formal title when clear and convincing evidence shows that corporations are merely alter egos and that the non-titled spouse contributed to the property’s development. However, practitioners should be cautious about relying on oral agreements between spouses unless they contain sufficiently definite terms regarding essential provisions such as ownership percentages, timing, and specific obligations.