Opinion
2 CA-CV 2022-0133-FC
05-16-2024
In re the Marriage of Lolita Erick, Petitioner/Appellee/Cross-Appellant, and Lawrence Erick, Respondent/Appellant/Cross-Appellee.
Adam C. Rieth P.L.L.C., Mesa By Adam C. Rieth Counsel for Petitioner/Appellee/Cross-Appellant R.J. Peters &Associates P.C., Phoenix By Rich J. Peters Counsel for Respondent/Appellant/ Cross-Appellee
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pinal County No. S1100DO202101149 The Honorable Karen F. Palmer, Judge
Adam C. Rieth P.L.L.C., Mesa By Adam C. Rieth Counsel for Petitioner/Appellee/Cross-Appellant
R.J. Peters &Associates P.C., Phoenix By Rich J. Peters Counsel for Respondent/Appellant/ Cross-Appellee
Judge Eckerstrom authored the decision of the Court, in which Presiding Judge Brearcliffe and Judge Kelly concurred.
MEMORANDUM DECISION
ECKERSTROM, JUDGE
¶1 Lawrence Erick appeals from the trial court's decree dissolving his marriage to Lolita Erick. He challenges the court's apportionment of property and debts. Lolita cross-appeals, challenging the amount of attorney fees and costs awarded to her below. For the reasons that follow, we affirm.
Factual and Procedural Background
¶2 The parties married on February 14, 2016. At the time, Lawrence-who was sixty-three years old-had been employed as a pilot for Delta Air Lines for over thirty-two years. In October 2018, he retired.
¶3 Lolita filed for divorce in July 2021. Lawrence was served on August 2, 2021. Lolita sought temporary orders. In October 2021, after a hearing, the trial court ordered Lawrence to pay monthly spousal maintenance until ordered otherwise. It reserved jurisdiction over the issue of attorney fees and costs pending final disposition.
¶4 In May 2022, the trial court held an evidentiary hearing at which both parties testified and presented documentary evidence. In June 2022, after "consider[ing] the evidence, including the demeanor of the witnesses, review[ing] the exhibits as well as the case history, and consider[ing] the parties' arguments," the court issued an under-advisement ruling dissolving the marriage and dividing property and debts. Finding the total value of community property to be $747,414.59, it ordered Lawrence to pay Lolita an equalization payment of $372,947.11 by September 23, 2022, after which she would no longer be entitled to spousal maintenance. The court scheduled a review hearing for late September 2022 to determine whether the equalization payment had been paid as ordered and, if so, to terminate the temporary spousal maintenance order. The court again reserved jurisdiction over the issue of attorney fees and costs until after the review hearing.
In its decree, the trial court rejected Lawrence's claim that the parties had signed a premarital agreement, as well as Lolita's request for ongoing spousal maintenance. These aspects of the court's ruling have not been challenged on appeal or cross-appeal.
¶5 In July 2022, Lawrence timely filed a motion for relief under Rule 83, Ariz. R. Fam. Law P., requesting that the trial court "vacate, modify, and add to certain portions" of the decree. Later that month, the court filed an order denying the motion with regard to most issues and directing Lolita to file a response, if any, regarding others. She filed her response in August 2022. The following week, she filed a petition for an order to show cause as to Lawrence's nonpayment of spousal maintenance, as well as a motion for attorney fees. At the end of August 2022, the trial court denied the remainder of Lawrence's motion and affirmed the orders and the decree of dissolution entered in June. Lawrence timely filed his notice of appeal in early September.
¶6 In October 2022, Lolita amended her enforcement petition to reflect that Lawrence had failed to make the equalization payment as ordered. In February 2023, after a hearing, the trial court found him in contempt for willfully failing to comply with the decree's equalization payment order. It entered judgment against him in the amount of $372,947.11, the full amount of the ordered equalization payment, plus interest. It ordered him to pay $2,310 per month effective March 2023, to be credited against the judgment, and terminated temporary spousal maintenance. The court then granted Lolita's request for attorney fees and costs. It found such an award to be appropriate under A.R.S. § 25-324(A) due to the "substantial disparity of financial resources between the parties" and Lawrence's unreasonable behavior in litigation: failing to comply with the ordered equalization payment, choosing to liquidate accounts, and spending "approximately $780,000 on things he does not even recall rather than paying the equalization." It further found that he had "knowingly presented a false claim" by either misrepresenting facts in his Rule 83 motion or testifying falsely at the contempt hearing, warranting an award of fees and costs under A.R.S. § 25-415(A)(1). However, the court noted that Lolita's failure to update the factual allegations in her October 2022 amended enforcement petition, after she learned that spousal maintenance had by then been overpaid-although "an oversight"-would need to be "fairly weighed" in the determination of fees and costs.
¶7 Lolita filed her application for attorney fees and supporting affidavit at the end of February 2023, requesting an award of $20,377.80. In March 2023, the trial court awarded her $1,646.95 plus interest and entered final judgment. In so doing, it noted that Lolita had requested fees and costs from time periods not related to the enforcement action, and that she had included certain "incorrect information" in her petition and amended petition for enforcement.
¶8 Lolita timely filed a motion under Rule 83 for additional findings and alteration or amendment of the judgment for attorney fees and costs. She argued that the award should not be limited to her petition for enforcement, urging the trial court to rule on the twice-reserved issue of her entitlement to attorney fees and costs incurred throughout the divorce action.
In April 2023, Lolita requested a stay of this appeal to allow the trial court to rule on her motion. In May, we granted the motion, temporarily staying the appeal.
¶9 In May 2023, the trial court granted Lolita's motion and struck the section regarding attorney fees and costs from its March 2023 judgment. Providing additional findings, the court again concluded that an award of fees and costs was warranted under both § 25-324(A) and § 25-415(A)(1). It then entered a new final judgment, awarding Lolita a total of $5,892.30 plus interest. She then timely filed her notice of cross-appeal.
In June 2023, we vacated the stay and revested jurisdiction in this court.
¶10 We have jurisdiction over both Lawrence's appeal and Lolita's cross-appeal pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1). See also Ariz. R. Civ. App. P. 9(a), (e)(1)(C).
Claims on Appeal
¶11 Lawrence challenges multiple aspects of the dissolution decree. He contends the trial court erred in finding certain financial accounts to be community property subject to equalization, rather than deeming them his sole and separate property. He also challenges factors affecting the equalization order amount, specifically, the court's allocation of certain debts to him and the valuation of two vehicles awarded to him. Lawrence broadly challenges the court's allocation of community property as "unfair," contending it is "not an equitable result" for Lolita to be awarded "over $370,000 after a 5-year marriage."
¶12 "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, we review de novo the legal question whether property is community or separate. See Hammett v. Hammett, 247 Ariz. 556, ¶ 13 (App. 2019). We then review a trial court's division of assets for an abuse of discretion, id., deferring to its factual findings unless clearly erroneous, Danielson v. Evans, 201 Ariz. 401, ¶ 13 (App. 2001); see also In re Estate of Zaritsky, 198 Ariz. 599, ¶ 5 (App. 2000) ("We will not set aside the probate court's findings of fact unless clearly erroneous, giving due regard to the opportunity of the court to judge the credibility of witnesses.").
¶13 A trial 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, ¶ 7 (App. 2010). We will not disturb such a determination absent a clear abuse of that discretion. Id. Such an abuse exists "when the record, viewed in the light most favorable to upholding the trial court's decision, is devoid of competent evidence to support the decision." State ex rel. Dep't of Econ. Sec. v. Burton, 205 Ariz. 27, ¶ 14 (App. 2003); see also Kohler v. Kohler, 211 Ariz. 106, ¶ 2 (App. 2005) (appeals court will sustain trial court's apportionment of community property if evidence, viewed in light most favorable to upholding ruling, "reasonably supports it"). "We will defer to the trial court's determination of witnesses' credibility and the weight to give conflicting evidence." Gutierrez v. Gutierrez, 193 Ariz. 343, ¶ 13 (App. 1998).
(a) Division of Bank Accounts
¶14 The trial court addressed a number of financial, investment, and retirement accounts. It found that four accounts in Lawrence's name were community in nature, subject to equalization:
• A TD Ameritrade investment account containing approximately $396,672;
• A Nationwide annuity with a surrender value of approximately $111,015;
• A Chase checking account containing approximately $20,755; and
• A Desert Financial Credit Union checking account containing approximately $5,105.
On appeal, Lawrence challenges the court's characterization of these four accounts as community property. He asserts that the court should have set aside each as his sole and separate property.
¶15 "Property acquired by either spouse during marriage is presumed to be community property, and the spouse seeking to overcome the presumption has the burden of establishing the separate character of the property by clear and convincing evidence." Cockrill v. Cockrill, 124 Ariz. 50, 52 (1979). This presumption is "strong" regarding "all earnings." Id. That includes pension- and 401k-related assets earned or accrued during a marriage. See Johnson v. Johnson, 131 Ariz. 38, 41 (1981) ("well settled in Arizona and elsewhere that pension rights, whether vested or non-vested, are community property insofar as the rights were acquired during marriage" and "subject to equitable division upon divorce"); Walker v. Walker, 256 Ariz. 264, ¶ 12 (App. 2023) ("retirement plans such as a 401(k)" may be community property subject to division upon dissolution). Moreover, where separate and community property have been commingled in an account, the entire fund is presumed to be community in nature unless the party claiming otherwise explicitly traces and proves the separate nature of certain funds by clear and satisfactory evidence. Cooper v. Cooper, 130 Ariz. 257, 259-60 (1981).
¶16 As the trial court repeatedly explained in its July 2022 order denying the account-related aspects of his Rule 83 motion, Lawrence acknowledged during trial that he worked for Delta during the marriage. Indeed, he testified that, from the wedding in February 2016 until his retirement in October 2018, he was "making substantial money" that was being deposited into the Chase checking account-one of the four accounts he claims should nevertheless be treated as his separate property. In particular, he testified that he earned over $400,000 in 2016, over $380,000 in 2017, and over $371,000 in 2018 before he retired in October of that year.
¶17 Lawrence made various claims-which he repeats on appeal-that the four accounts in question contained only assets he earned prior to the marriage or Social Security benefits not subject to allocation.
In its July 2022 order denying the account-related aspects of Lawrence's Rule 83 motion, the trial court explained with regard to the Desert Financial Credit Union account that, because Lawrence had worked during the marriage and "[t]here was no evidence that his Social Security payments were related to a disability," it had deemed community in nature the "funds received from Social Security prior to termination of the community." Even if this conclusion reflects an error of law, see Kelly v.
But, as the trial court correctly found in its May 2023 ruling granting Lolita's Rule 83 motion, Lawrence failed to provide adequate documentation to substantiate those claims. See Cockrill, 124 Ariz. at 52. Rather, he presented only incomplete account records, none of which established the existence or balances of the four accounts on the date of the parties' marriage in February 2016 or comprehensively established the source of the funds contained in those accounts on the date the community ended in August 2021. He provided adequate documentation for other accounts, which the trial court set aside as his sole and separate property or, recognizing some premarital value, ordered a qualified domestic relations order to establish and divide the community's interest.
¶18 Having failed to present sufficient documentation to corroborate his claims regarding the nature of the funds contained in the four challenged accounts, Lawrence presented only his own testimony on the topic. The credibility of that testimony was a question for the trial court. See Estate of Zaritsky, 198 Ariz. 599, ¶ 5; Gutierrez, 193 Ariz. 343, ¶ 13. And, as the court explained in its May 2023 ruling, although Lawrence "wished for [the court] to rely solely on his testimony," his purported recollection was "clear on matters that benefitted him, but . . . poor on any facts that did not benefit him."
¶19 On this record, the trial court did not err in concluding that Lawrence had failed to carry his burden of establishing by clear and convincing evidence the allegedly separate character of the four accounts or of certain funds contained therein. See Cockrill, 124 Ariz. at 52; see also Cooper, 130 Ariz. at 260 (party failed to sustain "burden of demonstrating which portion of the monies in the account retained their separate character"). And, the court's equal division of the balances of those accounts was within its broad discretion to determine an equitable allocation of community assets. See Hammett, 247 Ariz. 556, ¶ 13; Marriage of Inboden, 223 Ariz. 542, ¶ 7.
(b) Debts Related to 2017 Plane Crash
¶20 The parties disagreed regarding the sole or community nature of certain airplanes. As the trial court found, "the purchase, sale, and flying of these various planes are [Lawrence]'s hobby and for his love of Kelly, 198 Ariz. 307, ¶ 5 (2000) (social security benefits not transferrable or assignable under federal law, and thus not divided by state courts at divorce), we "may affirm the trial court's ruling if it is correct for any reason apparent in the record," Forszt v. Rodriguez, 212 Ariz. 263, ¶ 9 (App. 2006). planes/flying." He provided no documentation regarding the purchase or sale of the planes or their value, despite Lolita's repeated requests in discovery for the production of such information.
¶21 The parties also disagreed regarding the sole or community nature of certain debts arising from Lawrence's crash of an airplane in Utah in 2017 and resulting civil lawsuits. Lolita was not present for or involved in the accident or named in the lawsuits that arose from it. Lawrence testified regarding his settlement with various parties, a still-pending action brought by an insurance company, and attorney fees he claimed to have incurred to date. However, as he conceded, he provided no documentation of a final judgment in Utah, any settlement payments already made, or money paid or still owed to any of the lawyers involved.
¶22 The trial court found it fair and equitable for Lawrence to be awarded "any planes, plane parts, and/or kit planes in his possession," while also being allocated "the financial liability for the Utah lawsuit(s) involving his 2017 plane crash without further offset/equalization." Lawrence challenges only the second part of this ruling. He asserts, incorrectly, that the court characterized the debt as his separate debt rather than community debt. And he contends the court erred in refusing to "divide all debts related to the 2017 plane crash equally between the parties."
¶23 "The superior court is not 'bound by any per se rule of equality,' but rather has 'discretion to decide what is equitable in each case.'" Meister v. Meister, 252 Ariz. 391, ¶ 13 (App. 2021) (quoting Toth v. Toth, 190 Ariz. 218, 221 (1997)). Here, as the trial court explained in its July 2022 order denying Lawrence's Rule 83 motion regarding this issue, it had "equitably allocated the debts of [his] hobby (e.g. judgments from civil suit) and the properties acquired in pursuit of that hobby (e.g. the value of the planes)" by ordering that Lawrence receive both "the entirety of the value of the planes and the entirety of the debts." Offsetting the property and debts related to one spouse's plane-related hobby was within the court's broad discretion. See Marriage of Inboden, 223 Ariz. 542, ¶ 7. This is particularly so given Lawrence's failure to submit any corroborating evidence to assist the court in more particularly calculating the respective values of the plane-related property and debts.
¶24 The parties agree that, had Lawrence not crashed the plane after purchasing it with community funds, it would have been a community asset subject to equitable allocation upon dissolution of the community. In such a scenario, the trial court's equitable allocation of plane-related community property would presumably have been quite different. But, given that undocumented plane-related assets were offset in this case by undocumented plane-related debts, the court acted within its discretion in allocating both to Lawrence.
(c) 2021 Toyota Tacoma
¶25 The parties purchased a 2021 Toyota Tacoma during the marriage. The trial court awarded it to Lawrence, subject to equalization. In so doing, the court used a value of $37,663. This value was taken from Kelly Blue Book information presented by Lolita and admitted as evidence with no objection from Lawrence.
¶26 As he did in his Rule 83 motion, Lawrence claims on appeal that the trial court erred in failing to account for a balance purportedly owed on the Tacoma in its equalization calculation. He contends the court should have deducted $22,000, the amount of related debt he alleges was listed on his August 2021 affidavit of financial information.
¶27 As an initial matter, even if the trial court could have interpreted the notation of a debt purportedly owing to "Toyota Finan" for "Truck" as relating to the 2021 Toyota Tacoma, the data provided on the August 2021 affidavit-regarding a debt involving monthly payments- was necessarily outdated by the time the court filed its decree in June 2022. Indeed, by the date of the evidentiary hearing in May 2022, Lawrence attempted to present Kelly Blue Book information for assorted vehicles, including the Tacoma, marked up with handwritten notes claiming a balance owed of only $16,000 on one of the vehicles, presumably the Tacoma.
¶28 Lolita objected to this marked-up exhibit, noting that no documentation had been produced or proffered to substantiate the handwritten notes, including that any balance was owed or what that balance currently was. The trial court sustained the objection but advised Lawrence's counsel that he could "ask him why [he] feel[s] that [Lolita's] Kelly Blue Book for [the] Tacoma is inaccurate." Lawrence's counsel never did so, only arguing vaguely, "he thinks that it's worth a little bit less than Counsel had suggested on his Toyota Tacoma report." As such, Lawrence never testified regarding any outstanding balance on the Tacoma.
¶29 In sum, Lawrence provided no testimony regarding a current outstanding balance on the Toyota Tacoma, much less any documentary evidence establishing such a balance. We therefore find no abuse of discretion in the trial court's use of the Kelly Blue Book value provided by Lolita. See Meister, 252 Ariz. 391, ¶ 12 (court's decision on value of community asset reviewed for abuse of discretion).
(d) 2012 Entegra Aspire Motor Home
¶30 The parties also purchased a 2012 Entegra Aspire motor home during the marriage for $191,999. The trial court awarded it to Lawrence, subject to equalization. In so doing, the court utilized a value based on J.D. Power NADAguides Value Reports for the motor home as of May 2022, which were presented by Lolita and admitted as evidence with no objection from Lawrence. She testified the reports indicated a value between $187,985 and $190,185. However, the court utilized the lower of two average retail base prices provided in the reports: $165,500.
In its decree, the trial court noted that the purchase receipt for the motor home indicated an outstanding debt, which was to be deducted from the value reflected in the decree when calculating the equalization payment. In his Rule 83 motion, Lawrence claimed that the amount of the debt to be deducted was $110,000 plus interest. In its August 2022 ruling denying the remainder of that motion, the court explained that Lawrence had failed to adequately prove the balance of the purported debt, but it provided him another opportunity to do so in order to receive the reduction. However, the court warned that, if he failed to make the required disclosure before the September 2022 review hearing, "the issue w[ould] be deemed settled, and no reductions to the equalization [would] be calculated." No disclosure appears to have been made, and Lawrence has abandoned the issue on appeal.
¶31 Lawrence contends the trial court erred by utilizing a retail estimate value for the motor home rather than the value for which the vehicle could be sold on the open market. He urges us to remand the case to the trial court, where he argues Lolita should be ordered to "submit the same NADA report she prepared and filed," but modified to reflect the "trade-in" option, with him then being given "a reasonable period to respond in writing to the lodged exhibit."
¶32 Lawrence raised this objection for the first time in his Rule 83 motion. Before and during trial, he focused exclusively on claims aimed at establishing the motor home as his sole and separate property-claims he also failed to substantiate with documentary evidence and has abandoned on appeal. He provided no testimony or documentary evidence regarding the actual present value of the motor home. Indeed, before trial, when Lolita requested a detailed description of the motor home in order to obtain an accurate value, Lawrence failed to respond. Having failed to timely raise this argument or any objections to Lolita's exhibit before the trial court, Lawrence has waived it on appeal. See Gutierrez, 193 Ariz. 343, ¶ 28.
Claim on Cross-Appeal
¶33 Lolita contends the trial court abused its discretion in awarding her only $5,892.30 out of her more than $20,000 in attorney fees and costs. "It is well established in Arizona that the amount of attorney fees in a dissolution action is a matter left to the sound discretion of the trial court." Baum v. Baum, 120 Ariz. 140, 146 (App. 1978). "In determining what is a reasonable fee, the trial judge can draw upon his knowledge of the case and upon his own experience." Id.
¶34 Like her Rule 83 motion, Lolita's briefs on cross-appeal focus entirely on reciting the events that led the trial court to award attorney fees and costs. That recitation of case history merely confirms that the court was well within its discretion to conclude that Lolita had, indeed, established an entitlement to an award of fees and costs under both § 25-324(A) and § 25-415(A)(1), on the grounds articulated in its May 2023 judgment. See Burkhardt v. Burkhardt, 109 Ariz. 419, 421 (1973) (allowance of attorney fees in divorce action, in addition to amount thereof, is "a matter left to the sound discretion of the trial court"). The recitation does nothing to support the conclusory claim that the reduced fee award was "a clear abuse of discretion by the Court in light of the facts surrounding the trial of this matter and [Lawrence]'s subsequent contemptuous behavior."
¶35 The trial court's final award does not explain in detail its rationale for awarding Lolita only a quarter of her attorney fees and costs. But, on cross-appeal, Lolita has not carried her burden of showing that the court erred in awarding her less money toward her attorney fees and costs than she requested. See Myrick v. Maloney, 235 Ariz. 491, ¶ 12 (App. 2014). She has not provided even the most minimal justification for the particulars of her fee request. She has provided neither record citation nor legal authority to support her claim that the court's decision to award her only some of the fees and costs requested-an amount the court increased in response to her Rule 83 motion-reflects an abuse of its broad discretion. See Ariz. R. Civ. App. P. 13(a)(7). We must therefore affirm.
Attorney Fees and Costs on Appeal
¶36 Lolita requests an award of her attorney fees and costs on appeal pursuant to § 25-324. Lawrence has made no such request.
¶37 Lawrence's appeal-which repeated without correction many of the same claims already presented to and refuted in detail by the trial court-"was not grounded in fact or based on law." § 25-324(B)(2). We therefore award Lolita her reasonable attorney fees and costs incurred in defending that appeal.
¶38 However, having failed to carry her burden to establish an abuse of the trial court's discretion in its calculation of attorney fees and costs below, Lolita is not entitled to an award of either fees or costs incurred in pursuing her cross-appeal. As the prevailing party in this limited sense, Lawrence is entitled to recover any costs incurred solely in defending against the cross-appeal, see A.R.S. § 12-341, upon his compliance with Rule 21(b), Ariz. R. Civ. App. P.
Disposition
¶39 For the foregoing reasons, we affirm the judgments of the trial court.