Opinion
No. 1 CA-CV 18-0051 FC
01-24-2019
In re the Marriage of: EDWARD F. CONNELL, III, Petitioner/Appellee, v. LAURA H. CONNELL, Respondent/Appellant.
COUNSEL Laura H. Connell, Scottsdale Respondent/Appellant Wilkins Law Firm, PLLC, Phoenix By Amy M. Wilkins Counsel for Petitioner/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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. FN2016-094026
The Honorable Stephen M. Hopkins, Judge
AFFIRMED
COUNSEL Laura H. Connell, Scottsdale
Respondent/Appellant Wilkins Law Firm, PLLC, Phoenix
By Amy M. Wilkins
Counsel for Petitioner/Appellee
MEMORANDUM DECISION
Judge David D. Weinzweig delivered the decision of the Court, in which Presiding Judge Kenton D. Jones and Judge Peter B. Swann joined. WEINZWEIG, Judge:
¶1 Laura Connell ("Wife") appeals from the superior court's dissolution decree ending her marriage to Edward Connell ("Husband"). She contests the court's characterization and division of debts and assets, and the denial of her requests for spousal maintenance and attorneys' fees. We find no error and therefore affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Husband and Wife were married in September 2010. No children were born of the marriage. Husband filed for divorce in September 2016. Wife promptly sought a temporary order for spousal maintenance pending the dissolution. The superior court denied the request after hearing argument and evidence, finding her ineligible for spousal maintenance. Wife renewed her request for temporary spousal maintenance at several points before trial, but each motion was denied.
¶3 The court held a trial in November 2017 and entered a decree of dissolution in December 2017. As relevant to this appeal, the decree provided for an equal division of community debts and assets, and denied Wife's requests for spousal maintenance, reimbursement and attorneys' fees. Wife timely appealed. We have jurisdiction pursuant A.R.S. § 12-2101(A)(1).
DISCUSSION
I. Debt and Asset Division
¶4 Wife raises several challenges to the superior court's division of debts and assets. The superior court is required by statute to equitably divide the parties' community property. A.R.S. § 25-318(A). We review the division of community property for an abuse of discretion. Boncoskey v. Boncoskey, 216 Ariz. 448, 451, ¶ 13 (App. 2007). An abuse of discretion occurs when there is no evidence to support the court's decision, Little v. Little, 193 Ariz. 518, 520, ¶ 5 (1999), or when the court makes an error of law in reaching a discretionary decision, Boyle v. Boyle, 231 Ariz. 63, 65, ¶ 8 (App. 2012).
A. Mortgage Refinance
¶5 Wife first contends the community should have been allotted one-half of the marginal increased debt she incurred by refinancing the mortgage on her separate property during the marriage. Wife purchased a Scottsdale home prior to the marriage, which remained her sole and separate property during and after the marriage. She refinanced the home loan during the marriage, increasing the outstanding loan balance by $125,003.08. Wife claimed the community should be responsible for this increased debt. The superior court rejected the argument "as inconsistent with Arizona law" and instead allocated the debt as her separate obligation. Wife claims error.
¶6 We presume that debts incurred during marriage are community obligations unless the party seeking to overcome this presumption provides clear and convincing evidence to the contrary. In re Marriage of Flower, 223 Ariz. 531, 537, ¶ 24 (App. 2010). The court found that Husband defeated the presumption here because Wife refinanced the debt on her separate residence to benefit her separate property, rather than to benefit the community. See Donato v. Fishburn, 90 Ariz. 210, 214-15 (1961) (debt attributed to community if spouse intended to benefit the community, regardless of whether any financial benefit was realized).
¶7 We find no abuse of discretion. The record amply demonstrates that Wife refinanced the mortgage on her sole and separate residence to avoid foreclosure and preserve her ownership interest, and not to benefit the community. Wife needed to refinance the debt because of her untimely mortgage payments before and during the marriage. She has always identified the Scottsdale residence as her sole and separate property and refused to transfer title to Husband and Wife as co-owners when she sought to modify the loan. Additionally, Husband did not sign the loan documents.
Wife missed 17 payments before marriage, totaling $78,403, and 10 payments between the marriage and refinancing, totaling $46,600.
¶8 Wife's arguments do not establish an abuse of discretion because the record contains substantial evidence to demonstrate Wife refinanced the loan solely for her benefit, even if the preservation of Wife's ownership interest also meant that Husband need not move to another home, even if Husband helped the transaction with a letter and even if Husband made payments on the modified loan. See In re Estate of Pouser, 193 Ariz. 574, 580, ¶ 18 (1999) (finding of intent upheld if substantial evidence supports it even though conflicting evidence exists). The evidence reflected that Wife refinanced the mortgage to keep her sole and separate property and avoid possible foreclosure.
B. Reimbursement for Husband's Separate Obligations
¶9 Wife next contends the superior court erred by not ordering Husband to reimburse either her sole and separate property or the community for paying Husband's sole and separate debts—namely, his spousal maintenance and child support payments to a former spouse. The court denied reimbursement on legal and factual grounds.
¶10 The court rejected Wife's claim for reimbursement of her sole and separate property on factual grounds. We only reverse the court's factual findings if clearly erroneous or unsupported by any credible evidence. Valento v. Valento, 225 Ariz. 477, 481, ¶ 11 (App. 2010). The record includes credible evidence to support the court's finding. Wife did not establish she spent her separate retirement funds on Husband's spousal and child maintenance obligations. Her financial expert was unable to corroborate the payments at trial.
¶11 The court then rejected Wife's claim for reimbursement of the community on legal and factual grounds because Wife knew the community assets were being used to meet Husband's sole and separate obligations. The court articulated and applied the proper legal standard. The community might be entitled to an equitable lien on Husband's sole and separate property if he used community assets to meet his sole and separate debts without Wife's knowledge. Potthoff v. Potthoff, 128 Ariz. 557, 562 (App. 1981) ("If the husband satisfied [a] separate obligation with community funds, then, at most, the community might acquire a claim for reimbursement for such payment in the nature of an equitable lien on the property."); Lawson v. Ridgeway, 72 Ariz. 253, 261 (1951). Meanwhile, the record includes credible evidence to support the court's factual finding that Wife knew about the payments because she did not argue otherwise, and she controlled all payments and financial affairs during the marriage. Valento, 225 Ariz. at 481.
C. Credit Card Debt and Vehicles
¶12 Wife challenges the superior court's division of community credit card debt and vehicles. To begin, we note that Wife's discrete challenges to the allocation of particular debts or assets neglect to account for the court's overall distribution of assets, which might actually favor Wife in some instances. Nor does she address how the overall distribution is substantially unequal. Miller v. Miller, 140 Ariz. 520, 522 (App. 1984) (property division "must result in substantial equality"); In re Marriage of Flower, 223 Ariz. at 537, ¶ 24 ("Division of property upon dissolution should . . . take into consideration the overall marital estate.").
¶13 Nonetheless, we find no abuse of discretion. In re Marriage of Inboden, 223 Ariz. 542, 544, ¶ 7 (App. 2010) ("The family court has broad discretion in determining what allocation of property and debt is equitable under the circumstances."). The superior court must divide community property "equitably, though not necessarily in kind, without regard to marital misconduct." A.R.S. § 25-318(A). In general, a division of community property is equitable if substantially equal. Toth v. Toth, 190 Ariz. 218, 221 (1997).
¶14 The superior court equally divided the community credit card debt between the parties and ordered that Husband receive credit for $4,804.51 in debt payments from his separate funds. Wife argues the credit was error because Husband's payments "were mostly [toward] interest" and thus did not reduce the outstanding principal. She claims that she, too, made interest-only payments on credit cards but did not receive similar treatment. Neither argument, however, demonstrates that the court abused its broad discretion in determining what is equitable under the circumstances. In addition, Wife never presented evidence of her interest-only payments in the superior court.
¶15 Wife also challenges the division and valuation of two vehicles acquired during the marriage. The court awarded one vehicle to each spouse. Wife asserts the court allowed different valuation sources for each vehicle (Blue Book versus free market sale), causing a higher valuation for her vehicle.
¶16 "The valuation of assets is a factual determination that must be based on the facts and circumstances of each case." Kelsey v. Kelsey, 186 Ariz. 49, 51 (App. 1996). "We will uphold the court's factual findings unless clearly erroneous or unsupported by any credible evidence." Valento, 225 Ariz. at 481, ¶ 11. We find no error because the valuations are based on substantial evidence. The court found that encumbrances on Husband's vehicle might exceed its value and thus ordered the vehicle be sold on the open market to determine and equally share any net proceeds or losses.
II. Spousal Maintenance
¶17 Wife argues the superior court erred in finding she did not qualify for spousal maintenance under A.R.S. § 25-319(A). Spousal maintenance may be awarded when a spouse meets any of four criteria under A.R.S. § 25-319(A), including:
(1) lacks sufficient property to provide for the spouse's reasonable needs; (2) is unable to be self-sufficient through appropriate employment or lacks earning capacity in the labor market adequate to be self-sufficient; (3) contributed to the educational opportunities of the other spouse; or (4) had a marriage of long duration and is of an age that may preclude the possibility of gaining employment adequate to be self-sufficient.Boyle, 231 Ariz. at 65, ¶ 9.
The legislature amended A.R.S. § 25-319(A) to include an additional factor. See H.B. 2031, 53d Leg., 2d Reg. Sess. (Ariz. 2018). The dissolution proceedings in this case preceded the amendment. As such, we refer to the statute's prior version.
¶18 Wife requested an award of spousal maintenance of at least $4,000 per month for a minimum of two to three years and asserted she qualified under the first, second and fourth bases of the statute. The superior court concluded that Wife was not eligible for spousal maintenance under those provisions.
¶19 We review spousal maintenance determinations for abuse of discretion. Leathers v. Leathers, 216 Ariz. 374, 376, ¶ 9 (App. 2007). We view the evidence in the light most favorable to the non-appealing party and will affirm if any reasonable evidence supports the court's order. Gutierrez v. Gutierrez, 193 Ariz. 343, 348, ¶ 14 (App. 1998).
¶20 We find no abuse of discretion in the court's conclusion that Wife had sufficient property to provide for her reasonable needs. The court received reasonable evidence that supports the court's findings that Wife did not qualify under the first basis because she had "sufficient property apportioned to her to meet her reasonable needs," including a home valued at approximately $1.5 million "with roughly $500,000.00 in equity," and her continued ownership of a Cadillac CTS. The court also found that retirement accounts, assets and debts had been divided equally between the parties since marriage, the parties had little debt after recent bankruptcies and neither bore "significant financial obligations" regarding repayment of the community going forward.
¶21 Wife cites no evidence refuting these findings, but instead argues the court should not have considered her separate Scottsdale residence in determining whether she has sufficient property because that residence did not produce income. But the law directs otherwise. In determining whether a spouse has "sufficient property" for purposes of spousal maintenance, the superior court accounts for both "property presently producing income" and "property capable of producing income or otherwise transformed in order to provide for the reasonable needs of the spouse." Deatherage v. Deatherage, 140 Ariz. 317, 320 (1984) (emphasis added).
¶22 The court found that Wife did not qualify under the second basis because she could be self-sufficient through appropriate employment. Wife argued that she suffered a concussion during the marriage, which diminished her earning capacity. The court rejected her argument based on testimony from Wife's doctor, her vocational expert, and Husband and Wife. Wife produced no medical records to substantiate that a concussion caused her symptoms and Husband pointed to Wife's pre-concussion history of similar chronic fatigue symptoms, which was also indicated in a doctor's report. Wife's MRI was normal and showed no evidence of traumatic brain injury. Nor did Wife prove "an inability to earn income" based on an injury or medical condition. Indeed, Wife continued to work after the alleged injury and the court found no medical evidence that her subjective, temporary medical complaints "will continue in perpetuity." The court's finding is thus supported by reasonable evidence.
Wife initially sought to demonstrate that she sustained her injury in a domestic violence incident with Husband. The court concluded, however, that the cause of Wife's vocational limits was irrelevant to the analysis under this factor. It further ruled that evidence of domestic violence was improper because, by statute, spousal maintenance determinations are made "without regard to marital misconduct." A.R.S. § 25-319(B). Wife does not specifically challenge these rulings on appeal, and we find no error.
¶23 And last, the record includes reasonable evidence to support the court's finding that Wife did not qualify under the fourth basis. Husband and Wife were married for a "relatively short duration" of six years. We recognize no bright-line standard to determine a lengthy marriage. Rather, the superior court has broad discretion in assessing the particular facts of each case and we find no clear abuse of discretion in the court's finding. See Deatherage, 140 Ariz. at 319. The court further found that "Wife is 50 years old and as such her age alone will not preclude her the possibility of gaining employment." The evidence at trial also indicated that Wife had worked and continued to work as a mortgage broker both during and after the marriage. We find no abuse of discretion.
Because the superior court determined that Wife was not entitled to a spousal maintenance award under A.R.S. § 25-319(A), it did not address the amount and duration of an award under A.R.S. § 25-319(B). --------
III. Attorneys' Fees
¶24 Wife argues the superior court erred by failing to award her attorneys' fees. The court may award attorneys' fees to a party in dissolution proceedings "after considering the financial resources of both parties and the reasonableness of the positions each party has taken throughout the proceedings." A.R.S. § 25-324(A). We review an award of attorneys' fees for an abuse of discretion. Magee v. Magee, 206 Ariz. 589, 590, ¶ 6 (App. 2004).
¶25 We find no abuse of discretion. Wife argues that the disparity in income is great, with Husband making substantially more money than Wife. A disparity in financial resources alone, however, does not mandate an award of fees. Myrick v. Maloney, 235 Ariz. 491, 494, ¶ 9 (App. 2014). Wife also asserts Husband acted unreasonably by proposing improper terms in a settlement agreement and misrepresenting his income in an affidavit. But the court must consider the reasonable positions of each party when assessing fees under A.R.S. § 25-342(A), and it found "that Wife has acted unreasonably in these proceedings" for specific reasons that Wife does not address on appeal. On this record, we cannot say the court abused its discretion.
¶26 Both parties request an award of costs and attorneys' fees incurred on appeal pursuant to A.R.S. § 25-324. In our discretion, we deny both requests. As the prevailing party on appeal, Husband is entitled to his taxable costs upon compliance with ARCAP 21.
IV. Stipulated Corrections to Dissolution Decree
¶27 Wife requests two corrections to the dissolution decree, including that the martial community was terminated on September 23, 2016, and the valuation her Cadillac CTS at $7,785. The parties stipulated to these points before trial and Husband does not contest them. Therefore, we direct the superior court clerk to modify the dissolution decree as follows. First, the second sentence on page 5, subsection (C), should read: "By operation of law, the marital community is deemed to have terminated on September 23, 2016." Second, under "Vehicles" on page 7, the order should reflect that one-half of the value of Wife's 2008 Cadillac CTS is $3,892.50, not $7,785.
CONCLUSION
¶28 We affirm the dissolution decree as modified in ¶ 27 of this decision.