Opinion
No. 1 CA-CV 17-0370 FC
03-29-2018
In re the Matter of: ESTEVAN RIVERA, Petitioner/Appellant, v. BRANDICE BRUCE, Respondent/Appellee.
COUNSEL Cynthia D. Starkey, PLLC, Phoenix By Cynthia D. Starkey Counsel for Petitioner/Appellant Law Office of Kent Lee, PC, Glendale By Kent D. Lee Counsel for Respondent/Appellee
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. FC 2016-007748
The Honorable Katherine M. Cooper, Judge
VACATED IN PART; REMANDED
COUNSEL Cynthia D. Starkey, PLLC, Phoenix
By Cynthia D. Starkey
Counsel for Petitioner/Appellant Law Office of Kent Lee, PC, Glendale
By Kent D. Lee
Counsel for Respondent/Appellee
MEMORANDUM DECISION
Presiding Judge Michael J. Brown delivered the decision of the Court, in which Judge Maria Elena Cruz and Judge David D. Weinzweig joined. BROWN, Judge:
¶1 Estevan Rivera ("Husband") appeals from the superior court's decree of dissolution of his marriage to Brandice Bruce ("Wife"), challenging only the superior court's division of real property. For the following reasons, we conclude the court erred as a matter of law when it determined the residence is community property and therefore we remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Husband and Wife married in 2007. In 2011, the parties decided to purchase a house. As part of the transaction, Wife signed a disclaimer deed which provided in part as follows:
2. The property above described is the sole and separate property of [Husband] having been purchased with separate funds of [Husband].
3. [Wife] has no present right, title, interest, claim or lien of any kind or nature whatsoever in, to or against said property. This instrument shall also constitute a waiver, by [Wife], in favor of any mortgagee, deed of trust beneficiary or deed of trust trustee of any right to file a declaration or claim of homestead affecting the above described property.
4. This instrument is executed not for the purpose of making a gift to [Husband], but solely for the purpose of clearly showing of record that the undersigned has and claims no interest in and to said property, the undersigned expecting third persons to rely on this disclaimer.
NOW, THEREFORE, in consideration of the premises, [Wife] does hereby disclaim, remise, release and quitclaim unto [Husband] and to the heirs and assigns of [Husband] forever,
all right, title, interest, claim and demand which [Wife] might appear to have in and to the above described property.The disclaimer deed, along with a special warranty deed conveying the house to Husband as his sole and separate property, were then recorded.
¶3 Husband filed a pro per petition for dissolution of marriage in September 2016. Although his petition listed the house as community property, he filed an amended petition listing the house as his separate property. In Wife's response to the amended petition, she alleged that the property was deeded to Husband "only to secure an advantageous interest rate" and that she executed a "quit-claim deed" to Husband to satisfy a mortgage company requirement. In Wife's list of witnesses and exhibits, and in her pretrial statement, she listed the "disclaimer deed" as an exhibit. Two days before trial, Wife submitted a trial memorandum, asserting the disclaimer deed, which she again called a "quit claim" deed, was not a postnuptial agreement and that Husband bore the burden of proving the enforceability of her alleged waiver of interest in the house.
¶4 After a two-hour trial, the superior court determined the house was community property because it was acquired during marriage and both parties contributed earnings toward the purchase and to household expenses. The court found there was no express written postnuptial agreement designating the house as Husband's separate property. And it refused to find the "quit-claim deed" was an implied postnuptial agreement because Husband failed to carry his heightened burden under In re Estate of Harber, 104 Ariz. 79 (1969), to enforce a postnuptial agreement. The court then ordered that the house be sold, with the proceeds to be divided equally between the parties.
¶5 Husband retained an attorney and filed a "motion to amend the judgment, or alternatively for a new trial," under Arizona Rule of Family Law Procedure ("ARFLP") 83. Husband argued the court erred in finding that the house is community property and that Wife misled the court into thinking she had executed a quit claim deed rather than a disclaimer deed. Husband also cited pertinent case law holding that a disclaimer deed must be given its full force and effect when a married couple acquires property and one of them executes a disclaimer deed. Wife's response did not address the authorities Husband cited; instead, she argued the principle of finality and that Husband had not previously disclosed the case law he was relying on in the motion.
¶6 The superior court denied Husband's motions and this timely appeal followed. Husband then requested a stay of the sale of the house pending resolution of this appeal, which this court granted.
DISCUSSION
¶7 Husband argues that because Wife signed a disclaimer deed, she has no community interest in the house. We agree.
¶8 The characterization of property as separate or community is a question of law we review de novo. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4 (App. 2007). It is presumed that property acquired during a marriage is community property. In re Marriage of Pownall, 197 Ariz. 577, 582, ¶ 16 (App. 2000). "[T]he spouse seeking to overcome the presumption has the burden of establishing the separate character of the property by clear and convincing evidence." Schickner v. Schickner, 237 Ariz. 194, 199, ¶ 22 (App. 2015). Spouses may convey their community or separate property to one another using a written instrument, which must be accompanied by contemporaneous conduct indicating an intent to convey the property. Bender v. Bender, 123 Ariz. 90, 93 (App. 1979). A disclaimer deed rebuts the presumption that property acquired during the marriage is community property, and is a binding contract that must be enforced in the absence of fraud and mistake. Bell-Kilbourn, 216 Ariz. at 523-24, ¶¶ 7, 11. When a disclaimer deed is introduced as evidence, one need not "show contemporaneous conduct to demonstrate the parties' intent that" one spouse own the house as his or her separate property, unless "the spouse claiming an interest in the property had a community or sole property interest before the transaction at issue." Id.
¶9 The superior court erroneously applied the heightened burden to enforce postnuptial agreements under In re Estate of Harber, 104 Ariz. 79. "[D]isclaimer deeds . . . are not analyzed as postnuptial agreements." Austin v. Austin, 237 Ariz. 201, 207, ¶ 18 (App. 2015). Instead, as noted above, a disclaimer deed rebuts the community-property presumption and is an enforceable, binding contract absent fraud and mistake. Bell-Kilbourn, 216 Ariz. at 523-24, ¶¶ 7, 11.
¶10 Here, the disclaimer deed was admitted at trial; therefore, Husband rebutted the presumption that the House was community property. Husband was not required to provide corroborating evidence of contemporaneous conduct because Wife did not have a community or sole property interest before the transaction at issue. Wife's subjective motivation to obtain financing for the house is immaterial. See Bell-Kilbourn, 216 Ariz. at 524, ¶ 10 ("Although the parties indisputably elected to have Wife purchase the property in order to obtain financing, the reason for this election does not alter the character of the property established as Wife's separate property at the time of acquisition.").
¶11 Wife counters that Husband waived this argument by not raising it in the superior court. Specifically, Wife argues that Husband did not disclose authoritative cases on which he now relies, failed to raise the argument in his pretrial statement, and testified at trial about a "quitclaim deed."
¶12 Waiver does not apply, however, because Husband raised the argument in the superior court. As confirmed by Wife's trial memorandum, Husband argued the house was separate property. His amended petition for dissolution listed the house as his separate property. Husband's pretrial statement listed the characterization of the house as a contested issue, proposed that the court determine the house to be his separate property based on the deed, and listed the deed as a proposed exhibit, noting "[p]roof of sole ownership of property @ [the house]." Even if Husband referred to the disclaimer deed as a quit claim deed at trial, as Wife asserts, the disclaimer deed was offered and admitted into evidence and clearly speaks for itself. Moreover, Wife's separate pretrial statement listed the "disclaimer deed" as an exhibit.
¶13 What is more, Husband alerted the court to controlling cases in his motion to amend, but Wife ignored them in her response. Thus, we are not inclined to reward Wife's failure to acknowledge the binding and dispositive reported decisions that directly address the legal consequences of signing a disclaimer deed.
¶14 Wife further asserts that "Husband's appeal should be denied because the disclaimer deed was induced by fraud, mistake and/or misrepresentation." Husband counters that Wife waived these defenses by not raising them in the superior court.
¶15 Wife does not contest Husband's waiver argument. Her pretrial statement did not include an argument that the disclaimer deed was induced by fraud, mistake, or misrepresentation. See ARFLP 76(C)(1)(i) ("Each pretrial statement shall contain . . . detailed and concise statements of contested issues of fact and law by each party . . . ."); Leathers v. Leathers, 216 Ariz. 374, 378, ¶ 19 (App. 2007) ("The pretrial statement controls the subsequent course of the litigation.") (internal quotation omitted). Additionally, "[a] party waives all defenses and objections not presented either by motion or in that party's answer or response." ARFLP 32(F). Fraud and mistake must be pleaded affirmatively, and fraud must be pleaded with particularity. Bender, 123 Ariz. at 94. Although Wife contends her proposed resolution statement, response to Husband's amended petition, separate pretrial statement, and trial memorandum "clearly reflect allegations of misconduct and fraud/mistake concerning the disclaimer deed," she does not inform us with any specificity as to how she properly raised these affirmative defenses. Nor did Wife raise the defense in response to Husband's motion to amend, where he emphasized the disclaimer deed argument. Thus, Wife has waived any argument that she properly asserted misconduct, fraud, or mistake in the superior court.
¶16 Wife asserts nonetheless that the affirmative defenses were properly before the superior court because the court "found evidence from extrinsic evidence of the parties at trial that the disclaimer deed is void for fraud and/or mistake." Nothing in the court's ruling, however, indicates that it found the disclaimer deed void for misconduct, fraud, or mistake.
¶17 Wife, however, may be entitled to an equitable lien against the house's equity. "[A]ny community funds expended to pay the mortgage or enhance the value of the house entitled the community to a share of any equity attributable to those efforts." Bell-Kilbourn, 216 Ariz. at 524, ¶ 12. Although Husband argues waiver, we decline to apply it here. The superior court found that after purchase of the house, both parties "contributed to payment of household bills and expenses." Wife is entitled to establish that the funds she contributed enhanced the value of the house during the marriage. Accordingly, we remand for a determination of whether the community has an equitable lien against the house and calculation of the amount thereof.
¶18 Both parties request attorneys' fees and costs on appeal. We summarily reject Wife's request because she does not cite supporting authority. ARCAP 21(a)(2). Husband requests fees and costs pursuant to Arizona Revised Statutes sections 25-324(A), 12-349(A)(1), (3), and ARCAP 25. In our discretion, we deny Husband's request for attorneys' fees. As the prevailing party on appeal, Husband is entitled to reimbursement for taxable costs upon compliance with ARCAP 21.
Notwithstanding our decision to deny Father's request for attorneys' fees, we note our concerns about Wife's counsel's lack of candor toward the superior court. See Ariz. R. Sup. Ct. 42, ER 3.3(a)(1)-(2) ("A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; [or] (2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel . . . ."). Counsel misled the court in Wife's separate pretrial statement and trial memorandum by (1) misrepresenting that Wife executed a "quit-claim" deed when counsel knew she signed a "disclaimer deed" and used the proper title in disclosing her trial exhibits, and (2) failing to cite or acknowledge controlling adverse authority on the significance of disclaimer deeds to whether the house was separate or community property. Even after Husband cited the controlling case law in his post-trial motion, Wife's counsel did not acknowledge or address the cases cited. --------
CONCLUSION
¶19 Based on the foregoing, we vacate the superior court's real property division and remand for proceedings consistent with this decision.