Opinion
2 CA-CV 2022-0137-FC
03-22-2024
In re the Marriage of Jeffrey R. Brucker, Petitioner/Appellee, and Kimberly J. Brucker, Respondent/Appellant.
Tiffany & Bosco P.A., Phoenix By Kelly L. Mendoza Counsel for Petitioner/Appellee Lincoln & Wenk PLLC, Goodyear By Russell F. Wenk Counsel for Respondent/Appellant
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. NOT FOR PUBLICATION See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).
Appeal from the Superior Court in Maricopa County No. FC2020002787 The Honorable Max H. Covil, Judge
Tiffany & Bosco P.A., Phoenix By Kelly L. Mendoza Counsel for Petitioner/Appellee
Lincoln & Wenk PLLC, Goodyear By Russell F. Wenk Counsel for Respondent/Appellant
Judge Kelly authored the decision of the Court, in which Presiding Judge Brearcliffe and Judge Gard concurred.
MEMORANDUM DECISION
KELLY, Judge
¶1 Kimberly Brucker appeals from the trial court's decree of dissolution characterizing certain real property as Jeffrey Brucker's sole and separate property. For the following reasons, we affirm.
Facts and Procedural Background
¶2 "We view the facts in the light most favorable to upholding the family court's decree." Bowser v. Nguyen, 249 Ariz. 454, ¶ 8 (App. 2020). The parties were married in July 2000. In 2002, Jeffrey inherited a 1/6 interest in his grandparents' estate, consisting of bank accounts, valuables and realty interests, including three specific parcels of land containing farmland and a farmhouse, referred to collectively throughout the proceedings as the Farm. Jeffrey and the other beneficiaries of the estate each took part in selecting items or taking money out of that inheritance.
¶3 Jeffrey sought to acquire sole possession of the Farm from the estate for its appraised value pursuant to the terms of the will. Jeffrey agreed to pay the estate for the other beneficiaries' interests at the same time he received his other inherited assets. On December 31, 2003, the estate transferred full ownership of the Farm to Jeffrey, in his name only, through an executor's deed. Kimberly never signed a disclaimer deed or any other waiver of community interest or acknowledgement that the Farm was Jeffrey's separate property.
¶4 In February 2004, the parties jointly took out a mortgage from Civista Bank for $212,000 ("Civista loan"), secured by the Farm, to fulfill Jeffrey's financial agreement to the estate. Three months later, Jeffrey paid off $81,704.66 of the Civista loan from his inherited funds. He made two more payments in 2005 and 2006, totaling $23,815.40, also from his inheritance. Thereafter, Civista loan payments were made regularly with money provided by the Farm's rental income, and the loan was predominantly paid from the Farm's separate bank account. Farm income that had been deposited into the parties' community bank account would often be withdrawn to pay any remaining deficiency on the loan. However, the amount withdrawn from the joint account never exceeded the amount of rental income that was initially deposited.
¶5 In May 2020, Jeffrey filed a petition for dissolution of marriage. During the proceedings, the parties disputed whether the Farm should be characterized as community or separate property, and the trial court scheduled a June 2021 evidentiary hearing to address the issue. Following the hearing, the court concluded that Jeffrey had established by clear and convincing evidence that the Farm was his separate property. In June 2022, the court issued a final decree of dissolution of marriage and incorporated its August 2021 ruling into the decree to become a final appealable order.
¶6 Kimberly timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
Discussion
¶7 On appeal, Kimberly argues the trial court erred by characterizing the Farm as Jeffrey's sole and separate property. "We view all the evidence and reasonable conclusions therefrom in the light most favorable to supporting the trial court's decision regarding the nature of the property as either community or separate." Hatcher v. Hatcher, 188 Ariz. 154, 157 (App. 1996). However, the characterization of property as community or separate is a legal determination that we review de novo. Hammett v. Hammett, 247 Ariz. 556, ¶ 13 (App. 2019).
¶8 Community property comprises "[a]ll property acquired by either husband or wife during the marriage . . . except for property that is . . . [a]cquired by gift, devise or descent." A.R.S. § 25-211(A)(1). Separate property includes "[a] spouse's real and personal property that is owned by that spouse before marriage and that is acquired by that spouse during the marriage by gift, devise or descent, and the increase, rents, issues and profits of that property." A.R.S. § 25-213(A). "There is a strong legal presumption that all property acquired during marriage is community property." Carroll v. Lee, 148 Ariz. 10, 16 (1986); see also Sommerfeld v. Sommerfeld, 121 Ariz. 575, 577 (1979). To rebut that presumption, the spouse asserting the property was acquired by gift, devise or descent, and is, therefore, separate property, "has the burden of establishing the separate character of the property by clear and convincing evidence." Cockrill v. Cockrill, 124 Ariz. 50, 52 (1979). Furthermore, a property's characterization is "established at the time of its acquisition," and remains fixed unless altered by an agreement or by "operation of law," Bender v. Bender, 123 Ariz. 90, 92 (App. 1979), which occurs when "the identity of the property as separate or community is lost." Potthoff v. Potthoff, 128 Ariz. 557, 562 (App. 1981).
¶9 Kimberly asserts that because the Farm was acquired during the parties' marriage, it carries the strong presumption of community property. She further argues that the "parties applied for and obtained a joint loan in the amount of $212,000 to purchase the Farm from the estate," which negates Jeffrey's contention that the Farm was intended to be his separate property. She contends that because the Farm is properly characterized as community property, any resulting rents are also community funds. Kimberly maintains the trial court erroneously relied on the absence of her name from the title in characterizing the Farm as Jeffrey's separate property.
¶10 Jeffrey acknowledges that the parties jointly took out a loan during the marriage, which was secured by the Farm. He contends, however, that before the Civista loan originated, Jeffrey had already acquired the Farm through inheritance and, under Arizona law, its character was established at the time of acquisition. Additionally, he argues that because no community funds were ever used to pay the Civista balance, it did not change the characterization of the property from separate to community.
¶11 A property is acquired at "the time at which the right to obtain title occurs," not at the "time when legal title actually is conveyed." Potthoff, 128 Ariz. at 561. "[T]he status of title, as community or separate, is determined by the status of the initial interest that matures into the full title." Brucklier v. Brucklier, 253 Ariz. 579, ¶ 16 (App. 2022). Moreover, when a spouse takes sole title to property, and funds the purchase mainly with that spouse's separate property, those facts may rebut § 25-211(A)'s presumption against community property. Id. n.3. Furthermore, a mortgage on separate property, signed by both spouses, "standing alone," does not change the separate character of a property, Bourne v. Lord, 19 Ariz.App. 228, 231 (1973), unless community funds were paid towards the mortgage, Horton v. Horton, 35 Ariz. 378, 381 (1929). If community funds are spent on separate property, the community has a right to reimbursement for the community funds expended. Bourne, 19 Ariz.App. at 231.
¶12 Kimberly argues that the Farm was "acquired through a mortgage taken out jointly by the parties." But this is an incomplete history and omits critical facts from the record. Jeffrey first acquired his interest in the Farm through his inheritance in 2002. Then, Jeffrey acquired his undivided interest in the specific Farm parcels from the estate in December 2003 when title was transferred to him through an executor's deed. Because Jeffrey's initial partial interest later "matur[ed]" to full ownership, the Farm's character was determined by the status of that initial interest, which, as the product of inheritance, was Jeffrey's separate property under § 25-213(A). Brucklier, 253 Ariz. 579, ¶¶ 16, 19.
¶13 Jeffrey received both his initial interest and subsequent full title from the estate, prior to origination of the mortgage. The context of the Farm's acquisition therefore provides clear and convincing evidence that he acquired it through devise, as the result of his inheritance and subsequent agreement with his grandparents' estate. Accordingly, the property possessed an "inherently separate" character at the time of acquisition, Nace v. Nace, 104 Ariz. 20, 23 (1968), and constituted Jeffrey's separate property at that time. See Bender, 123 Ariz. at 92-93; see also § 25-213(A).
¶14 The Civista loan, taken out seven weeks after the deed was transferred to Jeffrey, did not, standing alone, change the status of the Farm from separate to community property. See Bourne, 19 Ariz.App. at 231. Kimberly concedes that Jeffrey used his separate inheritance to initially pay off nearly half of the loan, including an $81,704.66 payment three months after its origination. And although Kimberly asserts that, if the Farm "is determined to be community, the resulting rents would also be community," she does not otherwise contend that any community funds went toward paying off the Civista loan. Nor does she argue that the community is entitled to reimbursement or that the Farm is subject to a community lien. Her position on appeal remains as it was during the trial court proceedings, that the Farm should be characterized as community property. However, viewing the facts "in the light most favorable to supporting" the trial court's characterization of property, the record here supports the court's conclusion that Jeffrey proved by clear and convincing evidence that he acquired the Farm as his separate property sufficient to rebut § 25-211(A)'s community presumption, and that no community funds were used to pay off the subsequent mortgage. Hatcher, 188 Ariz. at 157. Accordingly, the court did not err in concluding that the Farm is Jeffrey's separate property.
Attorney Fees
¶15 Both parties request an award of attorney fees pursuant to A.R.S. § 25-324. In our discretion, after considering the relative financial resources of the parties and the reasonableness of their positions on appeal, we deny the requests. See A.R.S. § 25-324(A). Because Jeffrey is the prevailing party, he is entitled to his taxable costs upon his compliance with Rule 21, Ariz. R. Civ. App. P.
Disposition
¶16 We affirm the trial court's characterization of the Farm as Jeffrey's separate property.