Opinion
1 CA-CV 22-0657 FC
06-27-2023
In re the Matter of: RAJENDRA CHALASANI, Petitioner/Appellant, v. HARINI BOLLEMPALLI, Respondent/Appellee.
Lazenby Law Firm PLLC, Glendale By Christopher R. Lazenby Counsel for Petitioner/Appellant Berkshire Law Office, PLLC, Tempe By Keith Berkshire, Kristi Reardon Counsel for Respondent/Appellee
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. FC2021-000072 The Honorable James N. Drake, Judge
Lazenby Law Firm PLLC, Glendale By Christopher R. Lazenby Counsel for Petitioner/Appellant
Berkshire Law Office, PLLC, Tempe By Keith Berkshire, Kristi Reardon Counsel for Respondent/Appellee
Judge Michael J. Brown delivered the decision of the Court, in which Presiding Judge Paul J. McMurdie and Judge Michael S. Catlett joined.
MEMORANDUM DECISION
Brown, Judge
¶1 Rajendra Chalasani ("Father") appeals the superior court's decree dissolving his marriage with Harini Bollempalli ("Mother"). He argues the court erred in ordering an equal distribution of his interest in Arizona Kidney Disease and Hypertension Center ("AKDHC") and by unequally dividing community debts. Because Father has not shown the court abused its discretion, we affirm.
BACKGROUND
¶2 Father and Mother married in 2013 and have one minor child together. Father started working as a nephrologist at AKDHC in Arizona shortly before the parties' marriage. He became a partner in 2018, earning a base salary of around $420,000, plus bonuses. Mother, a board-certified internal medicine doctor, has lived in Texas since 2017 where, after completing her residency, she has been pursuing fellowships to become a cardiologist. In January 2021, Father petitioned to dissolve the marriage.
¶3 To prepare for trial, Mother hired forensic accountant Susannah Sabnekar to evaluate Father's interest in AKDHC. Based on "limited production of financial information" from Father and AKDHC, Sabnekar used an alternative method to calculate a value for his interest. She determined that Father's "excess earnings" for 2021 were $488,000, which after capitalization, resulted in a minority discounted value of $900,000. Mother requested a 50% interest based on that valuation, or $450,000. Father did not hire an expert, conduct his own valuation, or proffer any valuation figure. Instead, in the parties' joint pretrial statement, Father asserted he did not have "a marketable or transferrable [sic] interest in AKDHC" and thus Mother should not be awarded any value for that interest.
¶4 At the subsequent trial, Sabnekar offered more details on how she calculated the value of Father's interest based on his 2021 earnings:
[T]he next step in a valuation would be that I would find reasonable compensation; medical practice[s] almost always have goodwill. And the goodwill is evidenced by taking the difference between the actual earnings of the physician and reasonable compensation assessment. As set forth in my report, I stated that the reasonable compensation was about [$]269,000 through the sources that I relied upon, which would mean his practice has-his practice has $488,000 in goodwill.
¶5 In its dissolution decree, the superior court first noted that AKDHC's conduct "resulted in the willful obfuscation of information that could have led to a more detailed valuation." The court then accepted Sabnekar's valuation, finding that Father's interest in AKDHC was $898,310.40 and awarding Mother a 50% share. Addressing community debts, the court allocated Father the balances of a Discover credit card ($218.93), a Chase credit card ($5,340.27), and the Insperity 401(k) loan ($48,498.66). The court allocated a Citi credit card balance ($9,970.83) equally between Father and Mother. Explaining that it had also evaluated Father's "two withdrawals from the Wells Fargo Checking account totaling $86,000 to pay the IRS," the court found those payments were a "valid community expense not subject to division or reimbursement."
¶6 Father moved to amend, asserting in part the court erred by allocating his interest in AKDHC equally. He argued for the first time that Sabnekar should have based her valuation on Father's 2020 income, which meant the value of his AKDHC interest "would be $468,000 and not $900,000." Father also argued the court erred by failing to allocate community debts equally, including his tax payments for the 2020 tax year.
¶7 As relevant here, the court denied Father's arguments raised in the motion to amend, finding he "brought no evidence of any kind related to the valuation of AKDHC" and thus the court declined to "revisit the attendant findings or orders." The court also refused to change the debt allocation, "believing it to be fair under the circumstances." Father timely appealed and we have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶8 We review the division of property and debts in a dissolution proceeding for an abuse of discretion. Hefner v. Hefner, 248 Ariz. 54, 57, ¶ 6 (App. 2019). Father did not request findings of fact or conclusions of law under Arizona Rule of Family Law Procedure ("Rule") 82(a). Thus, we presume the superior court "found every controverted fact necessary to sustain the judgment, and, if there is reasonable evidence to support such finding, we must sustain the judgment." Bender v. Bender, 123 Ariz. 90, 92 (App. 1979). We also defer to the court's determinations of witness credibility and the weight given to conflicting evidence. Gutierrez v. Gutierrez, 193 Ariz. 343, 347, ¶ 13 (App. 1998).
¶9 Community property must be divided "equitably, though not necessarily in kind, without regard to marital misconduct." A.R.S. § 25-318(A). The superior court has broad discretion in determining what allocation of property and debt is equitable under the circumstances. In re Marriage of Inboden, 223 Ariz. 542, 544, ¶ 7 (App. 2010). "In considering the equities, courts might reach different conclusions without abusing their discretion." Id. We review the superior court's "determination of the value of a business in a divorce proceeding for an abuse of discretion." Schickner v. Schickner, 237 Ariz. 194, 197, ¶ 13 (App. 2015).
A. Allocation of AKDHC Interest
¶10 Father argues the superior court abused its discretion by equally allocating his interest in AKDHC. He asserts the court did not properly consider the evidence when it found that an "equal division of community property" was appropriate because "this case does not present a unique set of facts or circumstances."
¶11 Father's argument on this issue is unclear. Mother's brief seems to construe it as pressing the same position he advanced in the joint pretrial statement and at trial-that Mother should receive nothing because the interest is not transferable. But Father does not plainly state whether he is maintaining that position, or if he is now agreeing that Mother should receive some compensation for the AKDHC interest, but remand is necessary based on Toth v. Toth, 190 Ariz. 218 (1997). In any event, Father has failed to establish any error.
¶12 Father contends the court "overlooked" the following: (1) he completed his education and training and had obtained employment with AKDHC before the marriage; (2) he and Mother have lived apart for "half of the time he has worked for AKDHC"; (3) he has been supporting her while she has pursued further education and training programs; (4) her "only contribution or sacrifice" to help Father further his career "was limiting her applications for her own residency program" to Arizona; and (5) he helped Mother obtain her green card and citizenship after marriage. Father also asserts that Mother did not financially support him or the community because she was "busy obtaining citizenship" and furthering her education. Thus, in Father's view, Mother contributed nothing toward his interest in AKDHC and made only "minimal contribution" toward his progress on the partnership track at AKDHC. These contentions, which Father raised for the first time in his motion to amend, lack support in the law.
¶13 First, in making repeated assertions that the superior court failed to consider or overlooked various pieces of evidence, Father fails to acknowledge that because he did not request findings of fact under Rule 82(a), we presume the court considered all the evidence necessary to sustain its rulings. See Bender, 123 Ariz. at 92.
¶14 Second, we reject Father's attempt to distinguish this case from Mitchell v. Mitchell, 152 Ariz. 317 (1987), which the superior court relied on in rejecting Father's claim for a zero-dollar valuation of his interest in AKDHC. In Mitchell, our supreme court upheld the trial judge's decision to treat the husband's goodwill from his accounting business partnership as a community asset. Id. at 319, 321. The court reasoned in part that because a spouse's professional practice "will continue after dissolution of the marriage, with the same goodwill as it had during the marriage," refusing to consider that goodwill "as a community asset does not comport with Arizona's statutory equitable distribution scheme." Id. at 321. The court also explained that under community property principles, a nonpartner spouse (based on his or her position as a spouse) is entitled to compensation for contributing to the goodwill of the business interest the same "as if it were represented by the increased value of stock in a family business." Id. at 320 (citation omitted).
¶15 Father argues that unlike the couple in Mitchell, who were married during the husband's education and long work history, see id. at 318-19, he and Mother were not married during his education or at the start of his employment with AKDHC and had lived separately for half the time he worked there. But nothing in Mitchell supports Father's argument that Mother needed to make a certain type of contribution in helping him achieve partnership status with AKDHC. See Mitchell, 152 Ariz. at 320. It is enough that the parties worked together during their eight-year marriage as spouses to care and provide for their child, increase their employment and career opportunities, and mutually benefit the community through each spouse's contributions, pecuniary or otherwise.
¶16 Third, we disagree with Father's assertion that his circumstance is similar to the husband's plight in Toth, who had purchased the marital home using his separate funds but filed for an annulment within one month of marrying. 190 Ariz. at 219. The superior court unequally divided the interest in the home in favor of husband. Id. Our supreme court upheld the ruling, explaining that an equitable division is not always an equal division, and the case involved a "rare" occasion where unique circumstances required an unequal division to achieve an equitable result. Id. at 221-22. Those unique circumstances included the marriage's short duration, allowing "no time for a marital relationship to develop, or for other equities to come into play." Id. at 221.
¶17 This case is not like Toth. Here, although the parties were not married during Father's education, they married the same year that Father began his employment at AKDHC. The marriage lasted eight years, and Mother contributed to the community by allowing Father to further his career with AKDHC and acquire an ownership interest. While Father was working at AKDHC, Mother contributed to his earnings the same as any spouse contributes to their partner's career and is "entitled to be recompensed for that contribution." See Mitchell, 152 Ariz. at 320 (citation omitted). Father has not shown that an unequal allocation based on Toth was necessary to achieve an equitable distribution.
¶18 Finally, Father argues he was not a "fully vested member" of AKDHC at the time of dissolution and because he had achieved only a 50.1% membership interest, Mother's share should be limited to a portion of that reduced interest. In the decree, the court noted that AKDHC failed to cooperate with Mother's valuation expert, which precluded a more detailed valuation. Father did not provide any controverting evidence or opinion about the valuation, except to argue that Mother should receive nothing for his business interest.
¶19 As Mother notes, Sabnekar's valuation relied on Father's actual income received from his medical practice and was adjusted downward using a capitalization rate and a minority discount; therefore, whatever portion of interest in AKDHC had vested is immaterial. And at trial, when Father's counsel asked Sabnekar if the valuation calculation was impacted by Father's percentage interest in AKDHC, she explained there was no impact because her valuation was based on his past income. Father has not shown the court abused its discretion in allocating his interest in AKDHC. Cf. Schickner, 237 Ariz. at 196, 201, ¶¶ 2, 30 (App. 2015) (explaining that any of the husband's distributions from his ophthalmology practice above reasonable compensation "are attributable to the community as profits derived from existing community assets and subject to equitable division").
B. Community Debts
¶20 Father argues the court erred by unequally dividing the Discover credit card, Insperity 401(k) loan, Chase credit card, and Citi credit card. He asserts that because the court had stated the case did "not present a unique set of facts and circumstances," allocating the debts unequally was unjustified. Mother counters that the court's allocation of community property and debts was substantially equal, and any deviation from a strictly equal division was within the court's discretion. Mother notes that the overall allocation of the marital estate, including debts, reflects that Father received 48.4% and Mother received 51.6%, which is "essentially equal . . . especially in an estate valued at over $1.5 million." Father does not dispute these points, as he did not file a reply brief. Father also contends the court did not explain or justify its division of the parties' debts, but again, Father did not request findings. We therefore presume the court considered all evidence relevant to achieving an equitable division of the marital estate; regardless, reasonable evidence supports the court's ruling. See Bender, 123 Ariz. at 92.
¶21 Father asserts the superior court "failed to address the division of the community tax obligation." He made two payments to the IRS totaling $86,000 before filing his petition for dissolution. The court addressed these payments in the decree, finding they were "valid community expense[s] not subject to division or reimbursement." He argues the court erred by failing to address the remaining portion of the 2020 tax liability, which he claims is an additional $89,250 he paid throughout 2021. But as Mother notes, Father failed to present sufficient "testimony or documentary evidence of what was actually owed by the community for tax year 2020." Although the parties filed separate tax returns for 2020, Father did not offer evidence of his 2020 tax return, and he testified the $89,250 was based on his estimates. Without proof of the tax owed to the IRS for the 2020 tax year, the court acted within its discretion in denying Father's request for reimbursement.
C. Attorneys' Fees and Costs
¶22 Mother requests attorneys' fees and costs incurred on appeal under A.R.S. § 25-324, given the "significant disparity in income and the unreasonableness of Father's positions." After consideration of those factors, in our discretion we award Mother her reasonable attorneys' fees, together with taxable costs, subject to compliance with ARCAP 21.
CONCLUSION
¶23 We affirm the decree of dissolution.