Opinion
2 CA-CV 2022-0093-FC
06-08-2023
In re the Marriage of Christian Jones, Petitioner/Appellant, and Debra Norton, Respondent/Appellee.
Alexander R. Arpad, Phoenix Counsel for Petitioner/Appellant Buntrock Harrison &Gardner Law PLLC, Mesa By Shane D. Buntrock 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Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court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. FN2020096853 The Honorable Adele Ponce, Judge
Alexander R. Arpad, Phoenix Counsel for Petitioner/Appellant
Buntrock Harrison &Gardner Law PLLC, Mesa By Shane D. Buntrock Counsel for Respondent/Appellee
Vice Chief Judge Staring authored the decision of the Court, in which Judge Sklar and Judge O'Neil concurred.
MEMORANDUM DECISION
Staring, Vice Chief Judge
¶1 Christian Jones appeals from the trial court's decree of dissolution of his marriage to Debra Norton. He challenges the court's characterization of the parties' former marital residence as community property, alternatively arguing the court erred in ordering equal division of the home's equity. For the following reasons, we affirm in part, vacate in part, and remand.
Factual and Procedural Background
¶2 "We view the facts in the light most favorable to sustaining the trial court's judgment." Harris v. City of Bisbee, 219 Ariz. 36, ¶ 3 (App. 2008) (quoting Cimarron Foothills Cmty. Ass'n v. Kippen, 206 Ariz. 455, ¶ 2 (App. 2003)). Jones and Norton married in February 2020. The parties subsequently contracted for the purchase of a home, the Clipper Lane residence. They planned to use proceeds from the sale of Jones's separately owned property to finance this purchase. When the sale of Jones's home fell through, Jones and Norton asked family members to loan them money to allow them to purchase their new home while waiting for Jones's property to sell. Members of both families agreed to loan money to the couple, and Jones also borrowed from his insurance business $10,000 for the earnest money and an additional $88,000 to put towards the down payment at closing.
¶3 In July, Jones and Norton took title to their new home as community property with right of survivorship. Later that month, Jones's property sold, and he deposited the proceeds from the sale into a joint account. Both Jones and Norton wrote checks out of the account to repay some of the family loans.
¶4 In August 2020, the parties jointly deeded the Clipper Lane house into a trust (the Golden Goose Family Trust) containing Jones's property. The deed defined "grantor" as Jones and Norton, "husband and wife, as community property with right of survivorship" and defined "grantee" as Jones, "Trustee of the Golden Goose Family Trust." The deed stated as follows: "FOR GOOD AND SUFFICIENT CONSIDERATION, the above-named Grantors do hereby GRANT and CONVEY unto the abovenamed Grantee, the real property above described, together with the appurtenances, as community property."
¶5 The same day, Jones and Norton met with an attorney, and Jones signed his trust. Norton was not a party to the trust and therefore did not sign it. Section 1.03(d) of the trust-which related to the transfer of property into the trust-provided that "[a]ny community property transferred to [Jones's] trust, including the property's income and the proceeds from the property's sale or exchange, will retain its character as community property during [Jones's] life and the life of [Norton], to the same extent as if it had not been transferred to [Jones's] trust." However, Section 13.05, entitled "Effect of Legal Separation or Dissolution of Marriage," stated in pertinent part that
[i]f [Norton] or [Jones] file[s] a petition for legal separation or dissolution of marriage and unless and until the petition is dismissed, [Norton], her parents, all of her descendants who are not [Jones's] descendants and all spouses of such persons who are not descendants of [Jones's] parents will be deemed to have died intestate on the date of the filing for all purposes of this instrument (except Section 13.01, above). Any exercise or exercises of any power of appointment by any person identified in this paragraph that has not become effective prior to the filing date will be null and void.The trust was revocable solely by Jones and included provisions purporting to control disposition of trust property.
¶6 In September 2020, Jones filed for legal separation, and Norton subsequently filed a cross-petition for dissolution of marriage. Jones asserted the marital residence was his "sole and separate property" based on the terms of the trust. And he claimed he had been the source of most of the funds used to purchase the home. Norton argued that she and Jones jointly owned the residence and that there was no evidence that she had "authorize[d] the execution of [her] loss of interest" in the property. Norton asserted that during the appointment to create Jones's trust, he had "suggested that [they] put the . . . house into his sole and separate trust" in order to protect the community asset in case a "lawsuit . . . occur[red] with his insurance business."
¶7 In June 2021, following an evidentiary hearing, the trial court issued a decree of dissolution. It found the parties' residence was community property, stating that although Norton had "signed a document placing her interest in the . . . house into a trust, she did not enter a valid agreement to deprive her of any interest in the home in the event of a dissolution." Further, the court found "it [was] not appropriate to deviate from the general rule that . . . an equitable property division should be substantially equal." Accordingly, the court ordered the property to "be placed on the market to be sold within 45 days," with equal division of the home's equity between the parties "after payment of any loans and other costs associated with the sale."
¶8 Jones filed a motion to alter or amend the decree pursuant to Rule 83, Ariz. R. Fam. Law P., requesting that the trial court "award[] the Clipper Lane property as his sole and separate property . . . or in the alternative . . . order an unequal division of the Clipper Lane property." The court denied Jones's motion, reasoning,
The trust in this case defined each spouse's property rights in the event of divorce. Yet [Norton] was not a party to its creation, had no representation when she transferred her interest in the trust, and . . . there was no evidence presented indicating the trust was created when divorce was contemplated. [She] did not sign a disclaimer deed-rather she signed a special warranty deed to place her community interest into a trust, which trust provided she would be treated as dying intestate upon the filing of a petition for dissolution. This was neither fair nor equitable. The Court affirms its prior determination that [Norton] did not enter a valid agreement to deprive her of any interest in the . . . [h]ouse at the time of dissolution.
This appeal followed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1), (2).
We initially stayed the appeal and revested jurisdiction in the trial court because "[o]ne order being appealed [wa]s not final because it [wa]s not signed by the judge and, thus, not appealable in its present form."
Discussion
¶9 On appeal, Jones argues the trial court erred in dividing the house as community property without regard to the terms of his trust. Alternatively, he contends, if we conclude the house was properly divided as community property, the court nevertheless erred in "[d]ividing the Clipper Lane house equally." Jones further asserts the court erred in failing to "allocate any 2020 tax consequences" to Norton and in concluding only $100,000 was owed on the house.
Jones also argues the court erred in "ordering the house sold," asserting he "should be allowed to refinance the house to pay for [Norton]'s share if he wants to do so." However, Jones fails to cite any legal authority in support of his argument, stating only that he and his children "had sole possession" of the house "throughout the dissolution proceedings" and that there is no "logical reason why [he] and his children should be uprooted." Thus, we do not further consider this argument. See Ariz. R. Civ. App. P. 13(a)(7)(A); see also Boswell v. Fintelmann, 242 Ariz. 52, n.3 (App. 2017).
Characterization of House
¶10 Jones first argues the trial court erred in dividing the parties' residence as community property. The court's characterization of property as separate or community is a question of law we review de novo. See Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, ¶ 4 (App. 2007). Additionally, we review the interpretation of instruments such as deeds and trusts de novo. See In re Indenture of Tr. Dated Jan. 13, 1964, 235 Ariz. 40, ¶ 7 (App. 2014); Squaw Peak Cmty. Covenant Church of Phx. v. Anozira Dev., Inc., 149 Ariz. 409, 412 (App. 1986).
¶11 "Property takes its character as separate or community at the time of acquisition and retains that character throughout the marriage." Schickner v. Schickner, 237 Ariz. 194, ¶ 22 (App. 2015) (quoting Bell-Kilbourn, 216 Ariz. 521, ¶ 5). "Property acquired by either spouse during marriage is presumed to be community property" unless demonstrated otherwise by clear and convincing evidence. Cockrill v. Cockrill, 124 Ariz. 50, 52 (1979); accord Sommerfield v. Sommerfield, 121 Ariz. 575, 577 (1979); see A.R.S. § 25-211(A). "[M]arried couples are free to determine at any time what the status of their property is to be," and "spouses may convey their separate or community property interests to one another." Bender v. Bender, 123 Ariz. 90, 93 (App. 1979). "Arizona courts have placed the requirement that such a conveyance between spouses not only must be by a written instrument, but must have a contemporaneous conduct coupled with such instrument indicating an intention that the grantee/spouse should have the property." Id.; accord In re Sims' Estate, 13 Ariz.App. 215, 217 (1970).
¶12 Jones argues on appeal that the special warranty deed was sufficient to convert the home to his separate property "for all practical purposes," but, regardless of the home's characterization as separate or community, "once the parties conveyed the [house] into the trust, the terms of the trust rather than the default rules set by Arizona community property law were controlling." Norton responds that the trial court correctly concluded the warranty deed and the terms of Jones's trust were "not valid to deny [her] community property claim to" the marital home.
¶13 It is undisputed that the parties' house was acquired during the marriage and was thus presumed to be community property. See § 25-211(A); see also Cockrill, 124 Ariz. at 52. And, contrary to Jones's argument, the special warranty deed signed by both parties was insufficient to change the house's character from community property to separate property. See Armer v. Armer, 105 Ariz. 284, 288 (1970) ("Without a clear intention on the part of [wife] to alienate her interest, the original character of the property, presumed to be community, would remain unchanged" by quit claim deed). Indeed, it expressly stated the parties were conveying the home into the trust "as community property" and in no way indicated the home was to be Jones's sole and separate property. See Yano v. Yano, 144 Ariz. 382, 384 (App. 1985) ("intent of the parties to a deed is generally held to be the deed language itself in the absence of clear and convincing evidence to the contrary"); cf. Bender, 123 Ariz. at 93 ("[I]n the absence of fraud, a court must give effect to the contract as it is written, and the terms or provisions of the contract, where clear and unambiguous, are conclusive."). Nor does the record contain evidence of "contemporaneous conduct indicating an intention that [Jones] should have the property," as required by Sims' Estate. 13 Ariz.App. at 217; see also Bender, 123 Ariz. at 93. Rather, Norton testified she had "signed the document to put [their] community asset in his trust" to protect it from potential creditors in the event of a lawsuit, not to "transfer ownership of the property out of [her] name." The warranty deed did not operate to disclaim Norton's interest in the home.
¶14 As a result, we disagree with Jones's assertion that the home was subject to "disposition in accordance with the terms of [his] Trust" regardless of its character as separate or community property. As noted, the special warranty deed did not disclaim or otherwise change Norton's interest in the home. Moreover, Jones does not offer authority meaningfully supporting his claim that the terms of the trust-to which he is the only party and signatory-control over the plain language of the deed and Arizona community property law in general. Neither can we say Norton's presence at the attorney's office and her signing the deed the same day Jones signed the trust evidenced an intent to relinquish her interest in the home upon dissolution, particularly given the deed's clarity. Because Jones failed to establish that Norton intended the warranty deed, either on its own or in combination with the terms of Jones's trust, to constitute a written conveyance of her interest in the property to Jones as his separate property, the trial court did not err in characterizing the home as community property. See Bender, 123 Ariz. at 93; In re Sims' Estate, 13 Ariz.App. at 217.
Because the deed was as a matter of law insufficient to disclaim Norton's interest in the home, we need not address Jones's argument based on Norton's failure to allege fraud.
Although we agree with the trial court's ultimate conclusion that Norton had "not enter[ed] a valid agreement to deprive her of any interest" in the home upon dissolution, it appears to have done so on the basis of principles of fairness and equity. We affirm the court's ruling if legally correct for any reason. See In re Marriage of Gibbs, 227 Ariz. 403, ¶ 16 (App. 2011).
Equitable Division of House
¶15 Jones asserts that "[t]o the extent the community had any divisible interest in the . . . residence, the trial court erred in holding that this case does not justify an unequal division of property." Recognizing that the court has discretion to determine "what is equitable in each case," Toth v. Toth, 190 Ariz. 218, 221 (1997), we will uphold its division of community property absent a clear abuse of that discretion, see Miller v. Miller, 140 Ariz. 520, 522-24 (App. 1984). "A court abuses its discretion if it commits an error of law in reaching a discretionary conclusion, it reaches a conclusion without considering the evidence, it commits some other substantial error of law, or 'the record fails to provide substantial evidence to support the trial court's finding.'" Walsh v. Walsh, 230 Ariz. 486, ¶ 9 (App. 2012) (quoting Flying Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44, ¶ 27 (App. 2007)). We will not reweigh conflicting evidence on appeal and we "give due regard to the . . . court's opportunity to judge the credibility of the witnesses." Hurd v. Hurd, 223 Ariz. 48, ¶ 16 (App. 2009).
¶16 Below, Jones argued in his motion to alter or amend the decree of dissolution that the trial court had erred in concluding this case "does not present a unique set of facts or circumstances to make an unequal division of property." In support of his argument, he pointed to the short duration of the marriage, the two-month period of time the parties had actually lived in the house together, his use of the proceeds from the sale of his separate property to "pay off the majority" of the debts the parties had incurred in purchasing the house, Norton's improved "financial position" upon dissolution, and his investments in Norton's sole and separate residence, which compensated Norton for any contribution she may have made to the Clipper Lane residence. Jones relied on Toth for the proposition that in addition to the enumerated factors set forth in A.R.S. § 25-318, courts may equitably, rather than equally, divide jointly held property after considering "the source of the funds used to purchase or improve the property in question" and other "equitable factors" "such as, but not limited to, the duration of the marriage." And, relying on Flower v. Flower, 223 Ariz. 531 (App. 2010), Jones argued "fairness requires" unequal division in this case.
¶17 In ruling on Jones's motion, the trial court distinguished Toth and Flower, explaining that although these cases involved unequal division of houses following short marriages based on claims that "no community funds had been used to purchase or improve the propert[ies]," neither case "involved a house purchased during the marriage by the parties." The court noted that in those cases, separate property had been "transferred or converted to community property or property held in joint tenancy," while in this case, Jones and Norton had purchased the house during the marriage with loans taken out by both parties, "assum[ing] title to it as Husband and Wife." Thus, the court continued, because the house was community property, Jones "had the burden of proving by clear and convincing evidence that [it] was purchased with his separate funds." See Bourne v. Lord, 19 Ariz.App. 228, 231 (1973). The court concluded Jones had failed to satisfy this burden, reasoning the evidence presented to support his claim that "all but $20,000 of the funds used to purchase the [house] were his separate funds"-including bank statements, "other work documents," and his "conclusory" testimony-was insufficient. See Martin v. Martin, 156 Ariz. 440, 443 (App. 1986) (failure to produce "convincing documentation or records showing that . . . funds used to purchase . . . assets were traceable to . . . separate funds" precluded claim that asset was separate property).
¶18 As to Jones's argument that unequal division was appropriate based on his contributions to Norton's separate property, the trial court concluded the "fact that [Jones] contributed funds to a separate property owned by [Norton] on which she earned rental income is peripheral to the question of how to divide" the marital home, "which was a community asset." And, although Jones asserted he had waived a community lien as to Norton's separate property, the court stated that "whether [he] had a lien on [her] separate house was not an issue that was litigated in Court" and in any event did "not warrant an unequal distribution of a community asset." Further, the court "acknowledge[d] that [Norton] is leaving a marriage with half an asset the parties were able to purchase due to [Jones]'s income and financial resources." It continued,
Because the marriage was of such a short duration, [Jones] argues that this is fundamentally inequitable. This sort of inequity, however, occurs anytime one spouse earns considerably more than the other, and the Court does not find that the parties' sevenmonth marriage was so short that the Court should divide it other than equally. The Court does not find that the circumstances of this case are such that an unequal distribution is warranted.
¶19 On appeal, Jones maintains that because he "used the proceeds from the sale of his sole and separate property to pay off the majority" of the debts incurred by the community in purchasing the house, and "did so in reliance on [Norton]'s agreement to convey the property into his trust," he was entitled to receive "equitable consideration for giving up his separate house in service to a marriage that ended a few weeks later." Again, he relies on Toth and Flower. However, as the trial court recognized, these cases are distinguishable. The property in this case was purchased during the marriage with community loans, including funds from Norton's parents. In Flower, the husband "signed a deed" to "transfer[] title to both parties as community property with right of survivorship." 223 Ariz. 531, ¶ 2. In Toth, the husband used "sole and separate funds to buy a house for the couple." 190 Ariz. at 219. Moreover, courts "may not order a substantially unequal division of [real] property solely to reimburse the purchasing spouse." Flower, 223 Ariz. 531, ¶ 15; accord Toth, 190 Ariz. at 222; see also Inboden v. Inboden, 223 Ariz. 542, ¶ 12 (App. 2010).
¶20 Further, the length of the parties' marriage and Jones's contributions to Norton's separate property, although factors to consider, did not require unequal division. See Inboden, 223 Ariz. 542, ¶¶ 14, 18. Given the trial court's discretion in dividing community property, we cannot say it erred in ordering equal division of the parties' house. See Toth, 190 Ariz. at 221-22 (unequal division of community property rarely appropriate to achieve equity); Miller, 140 Ariz. at 522.
Tax Responsibility
¶21 Jones further argues the trial court erred "in declining to hold [Norton] partly responsible for taxes on [the] 2020 community income" based on the "substantial benefit" she had received from that income during the parties' marriage. In addition to the payment of "ordinary expenses" during the marriage, he points to Norton's $40,000 withdrawal from the community account before the filing of the petition for dissolution, which the court permitted her to keep; the parties' purchase of "tens of thousands of dollars['] worth of furnishings for the new house," half of which the court allocated to Norton; and the community's payment of "over $20,000 toward improvements on [Norton]'s separately owned house." We review the division of community property, including related tax consequences, for an abuse of discretion. See Boncoskey v. Boncoskey, 216 Ariz. 448, ¶ 13 (App. 2007); § 25-318(B) (property subject to division includes taxes).
¶22 At trial, Jones argued he had been saving the $40,000 Norton withdrew from the community account to pay taxes and asked the trial court to order Norton to reimburse him. In denying his request, the court stated, "The funds were in a community account, and [Jones] has not overcome the presumption that these were community funds." In his subsequent motion to alter or amend, Jones asserted that because Norton had filed taxes separately, "she received all the benefits of the seven months of marriage, including the $40,000 the Court allowed her to keep, without paying any of the taxes associated therewith." Thus, he contended, Norton should have been held responsible for a proportionate share of the 2020 income taxes, and the fact that she was not further supported his argument for unequal division of the marital home. The court denied Jones's motion.
¶23 On appeal, Jones argues that because the trial court "did not address the tax issue in the ruling denying [his] motion to alter or amend," we should "remand" to allow the court to "enter an order providing for [Norton] to pay a proportionate share of the community tax obligation." Although the court did not expressly reject Jones's apparent request that it order Norton to share in payment of the 2020 taxes on community income, it implicitly rejected this argument in denying his motion to alter or amend. See Pearson v. Pearson, 190 Ariz. 231, 237 (App. 1997) (failure to rule on a motion is implicit denial of the motion). Moreover, because Jones raised this argument for the first time in his post-trial motion to alter or amend the dissolution decree, we do not further consider it. See Airfreight Express Ltd. v. Evergreen Air Ctr., Inc., 215 Ariz. 103, ¶ 17 (App. 2007) ("[A] party must timely present his legal theories to the trial court so as to give the trial court an opportunity to rule properly." (alteration in Airfreight Express Ltd.) (quoting Payne v. Payne, 12 Ariz.App. 434, 435 (1970))); Conant v. Whitney, 190 Ariz. 290, 293 (App. 1997) (issue waived when raised for the first time in a motion for new trial); Evans Withycombe, Inc. v. W. Innovations, Inc., 215 Ariz. 237, ¶ 15 (App. 2006) ("Generally we do not consider arguments on appeal that were raised for the first time at the trial court in a motion for reconsideration."). But cf. Crown Life Ins. Co. v. Howard, 170 Ariz. 130, 132 (App. 1991) (declining to find argument waived when court considered merits of argument first raised in motion for reconsideration).
Determination of Debt
¶24 Finally, Jones asserts the trial court incorrectly stated in the decree of dissolution that the community still owed $100,000 to Norton's parents when the amount owed at the time of trial was $200,000 plus interest. Accordingly, he asks us to "remand for a corrected determination of the associated community debt." Norton does not dispute that a clerical error occurred "in the Decree stating the remaining debt owed to [her] parents was only $100,000" and "has no objection to correcting the record." It appears this issue was not first "raised and decided by the family court." See Vincent v. Shanovich, 243 Ariz. 269, ¶ 10 (2017); see also Ariz. R. Civ. App. P. 13(a)(7)(B) (appellant's opening brief must specify where in the record "the particular issue was raised and ruled on"). However, we are not precluded from correcting the clerical error on appeal. See Ace Auto. Prods., Inc. v. Van Duyne, 156 Ariz. 140, 142 (App. 1987) (distinguishing judgmental errors, which "cannot be advanced for the first time on appeal," from clerical errors, which are governed by Rule 60, Ariz. R. Civ. P.). A court can correct clerical errors in the judgment at any time. Egan-Ryan Mech. Co. v. Cardon Meadows Dev. Corp., 169 Ariz. 161, 166 (App. 1990); see also Ariz. R. Fam. Law P. 85(a). Thus, we remand for the trial court to correct the apparent clerical error in the decree.
Attorney Fees
¶25 Both Jones and Norton request attorney fees on appeal pursuant to A.R.S. § 25-324. In our discretion, we decline to award fees to either party. See Backstrand v. Backstrand, 250 Ariz. 339, ¶ 33 (App. 2020). However, Norton is entitled to her costs on appeal upon compliance with Rule 21, Ariz. R. Civ. App. P. See A.R.S. § 12-341.
Disposition
¶26 For the foregoing reasons, we affirm in part and vacate in part, remanding the case for correction of the clerical error.