Opinion
No. 1 CA-CV 18-0173 FC
06-18-2019
In re the Marriage of: PHILLIP WILSON, Petitioner/Appellee, v. AMELIA R. RODRIGUEZ, Respondent/Appellant.
APPEARANCES Phillip Wilson, Mesa Petitioner/Appellee Amelia R. Rodriguez, Tempe Respondent/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. FC2005-093497
The Honorable Stephen M. Hopkins, Judge
AFFIRMED IN PART; VACATED AND REMANDED IN PART
APPEARANCES Phillip Wilson, Mesa
Petitioner/Appellee Amelia R. Rodriguez, Tempe
Respondent/Appellant
MEMORANDUM DECISION
Judge James B. Morse Jr. delivered the decision of the Court, in which Presiding Judge Jennifer B. Campbell and Judge Maria Elena Cruz joined. MORSE, Judge:
¶1 Amelia R. Rodriguez ("Mother") challenges the family court's judgment against Phillip Wilson ("Father") for his portion of the parties' consolidated student loan debt. We affirm the court's denial of civil contempt, but finding no basis in the record for the court's decision to impose all accrued interest on Mother, we vacate and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶2 The parties dissolved their marriage by consent decree in 2005. The family court entered a modified order in 2007 addressing child custody, child support, parenting time, property, and community debt. Relevant to this appeal, the court found that the parties had consolidated their student loan debt and ordered Mother to make an equalization payment to Father in the amount of 35% of their consolidated student loan. The parties sought reconsideration of this order and, pursuant to "the agreement of the parties," the court ordered that both parties "obtain alternate financing of the student loans such that Mother is solely liable for 35% of said loans and Father solely and separately liable for 65% of said loans, in accordance with the distribution of the student loan debt as stated in the Decree of Dissolution."
¶3 Neither party obtained financing for their share of the consolidated student loan. Approximately ten years later, Mother petitioned the court to enforce the modified order. Mother alleged Father had only made "sporadic and irregular payments" in the intervening years and that the outstanding balance had increased to more than $80,000. She also requested the court hold Father in civil contempt. Father responded that Mother had "obtained more student loans and consolidated those loans under her name only such that [Father] cannot tell what percentage of the debt belongs to whom."
¶4 Following an evidentiary hearing, the family court found neither party had obtained alternate financing as required by the 2007 order. The court determined that Father owed $29,470.17 by subtracting $6,734.83 of payments made from $36,205.00—the amount Father owed when the loans were consolidated—and entered judgment against him in that amount. It declined to allocate any accrued interest to Father, stating that it "lack[ed] information to calculate accrued interest" and that "[n]either party . . . provided the detailed calculation necessary to track interest based upon each payment made over time." The court also cited the unclean hands doctrine, concluding "[i]f Mother had complied [with the 2007 order] interest would not have accrued on the principal balance." Finally, the court declined to hold Father in contempt, concluding it could not enforce a monetary award through civil contempt.
¶5 Mother appealed the judgment. We have jurisdiction pursuant to Arizona Revised Statutes section 12-2101(A)(2).
DISCUSSION
¶6 Mother contends the family court should have ordered Father to "pay his portion of the interest for the parties' student loans." The court may, but is not required to, attempt an equitable allocation of debts. Styers v. Superior Court, 161 Ariz. 477, 479 (App. 1989); see also Cadwell v. Cadwell, 126 Ariz. 460, 462 (App. 1980) ("[J]urisdiction to allocate indebtedness inheres in and is implicit in the power to make disposition of property."). We review the allocation for an abuse of discretion. See In re Marriage of Flower, 223 Ariz. 531, 535, ¶ 14 (App. 2010) ("In determining an equitable division, the family court has broad discretion in the specific allocation of individual assets and liabilities."). An abuse of discretion exists when the record, viewed in the light most favorable to upholding the court's decision, lacks any competent supporting evidence. Little v. Little, 193 Ariz. 518, 520, ¶ 5 (1999).
¶7 As noted above, the court chose to credit all of Father's payments toward his 65 percent share of the balance measured from when the loans were originally consolidated and impose all interest accrued on the entire outstanding amount since that time on Mother. We see no competent record evidence to support this decision. According to Mother's accounting, which Father does not challenge, Mother's payments toward the student loans since 2007 are over twice the amount of Father's payments, and Father has not made any payments since 2015. The court stated that "[i]f Mother had complied [with the 2007 order] interest would not have accrued on the principal balance." However, this is not accurate because Mother was not obligated to pay off Father's debt, and interest would have continued accruing on his portion of the student loan regardless of whether Mother paid off or refinanced her portion of the debt.
The court apparently believed that the total outstanding loan balance as of the March 2007 order was $55,700, but that order makes clear that this was the loan amount when the parties consolidated the debt, not when the court made its order.
Mother stated that according to her calculations, since 2007, she has made $16,747 in payments while Father has made only $6,734 in payments. In Father's answering brief, he says that according to Mother's payment figures, the correct totals should be $17,976 from Mother and $7,957 from Father.
¶8 To reach its decision, the superior court relied on the doctrine of unclean hands, essentially making Mother responsible for interest on Father's portion of the loan because Mother had not complied with the court's orders. The court's reliance on this doctrine was an abuse of discretion. For the doctrine of unclean hands to apply, there must be evidence that the party asking for relief, in this case Mother, acted with "bad faith," "unconscionable conduct," or "morally reprehensible intent." See Ezell v. Quon, 224 Ariz. 532, 538, ¶ 26 (App. 2010); Weiner v. Romley, 94 Ariz. 40, 42 (1963); King v. Uhlmann, 103 Ariz. 136, 144 (1968). There is no such evidence in the record before us. Instead, the record shows that both parties attempted to refinance, or at least discussed refinancing, their loan. When they found that refinancing would be extremely difficult or impossible, they instead left the loan in place and began making payments. In 2015, Father stopped making payments and Mother continued for months. Nothing in these facts shows the requisite ill intent or bad actions on Mother's part that is necessary for a finding of unclean hands.
¶9 Father contends that Mother has unclean hands because of her "continuous inconsistencies and lack of transparenc[ies]." Father points to three disbursements made to the account that total $20,500, as well as a $23,546.36 payment. At the hearing, neither party knew the source of this account activity. Father goes on to argue that Mother did not provide him "detailed account history and information." But he testified that Mother sent him an email with loan information, and he did not verify whether the information was accurate. In sum, Father speculates about wrongful conduct by Mother, but presents no evidence to support this speculation. Thus, the record does not support a conclusion that Mother has unclean hands.
¶10 Because the superior court erred in apportioning the current loan balance between Mother and Father, we remand for further proceedings. On remand, the court should equitably apportion both the balance that existed in 2007 and all the accrued interest. It must also consider what each party has paid since 2007.
We are not suggesting that the court order one party to make a lump-sum payment to the other while remaining liable under the loan, or that the parties re-engage in efforts to obtain separate financing. Per both parties' testimony these proposed solutions have proven unworkable. The solution may be to establish a payment plan with a neutral third party to monitor compliance. Whatever resolution the court and parties arrive at, however, there is no basis to allocate all of the accrued interest to a single party. --------
¶11 Finally, we briefly address Mother's contention that the court should have held Father in civil contempt. The court correctly concluded that it cannot enforce a monetary award that forms part of a property settlement through civil contempt. See Proffit v. Proffit, 105 Ariz. 222, 224 (1969) ("[W]here, as here, the object of the court's order is a sum of money, such an order may not be enforced by contempt proceedings."); see also Danielson v. Evans, 201 Ariz. 401, 411, ¶ 37 (App. 2001) ("[P]ayment of one spouse's debt to the other, which is part of a property settlement, may not be enforced by contempt.") (quoting Charles Marshall Smith & Irwin Cantor, Arizona Practice, Marriage Dissolution Practice § 273, at 282 (1988)). Therefore, we affirm that portion of the court's judgment.
CONCLUSION
¶12 For the foregoing reasons, we affirm in part, and vacate and remand in part for further proceedings consistent with this decision. Mother may recover her taxable costs upon compliance with Arizona Rule of Civil Appellate Procedure 21.