Opinion
2 CA-CV 2022-0057-FC
02-08-2023
In re the Marriage of Sharla Mwinyelle, Petitioner/Appellee, and Frank Mwinyelle, Respondent/Appellant.
Hildebrand Law P.C., Scottsdale By Kip M. Micuda and Lonny Sheinson Counsel for Petitioner/Appellee Bishop, Del Vecchio & Beeks Law Office P.C., Phoenix By Daniel P. Beeks Counsel for Respondent/Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pinal County No. DO202000115 The Honorable Joseph R. Georgini, Judge.
Hildebrand Law P.C., Scottsdale
By Kip M. Micuda and Lonny Sheinson
Counsel for Petitioner/Appellee
Bishop, Del Vecchio & Beeks Law Office P.C., Phoenix
By Daniel P. Beeks
Counsel for Respondent/Appellant
Presiding Judge Eppich authored the decision of the Court, in which Chief Judge Vásquez and Vice Chief Judge Staring concurred.
MEMORANDUM DECISION
EPPICH, PRESIDING JUDGE.
¶1 Frank Mwinyelle appeals from the trial court's order incorporating the parties' Rule 69, Ariz. R. Fam. Law P., separation agreement (the "Agreement") into a final decree of dissolution. He asserts the court violated his due process rights and abused its discretion when it denied his request to set aside parts of the Agreement as unfair or invalid without an evidentiary hearing and when it awarded attorney fees to Sharla Mwinyelle. For the following reasons, we affirm.
Factual and Procedural Background
¶2After Sharla petitioned in January 2020 for dissolution of the fourteen-year marriage with three minor children, she and Frank agreed to mediation. The family business, Integrity Hospice Care, LLC ("IHC"), was the marital community's largest asset. In preparation for mediation, each spouse hired a different valuation expert, who then collaborated to reach an agreed-upon estimated value of $3,076,000 for IHC (valuation as of December 31, 2019). After a nine-hour mediation, the parties settled on all issues except holiday and vacation parenting time. They signed and submitted a Rule 69 Agreement to the trial court that, among other terms, awarded IHC to Frank and provided for a $1,772,021 equalization payment to Sharla, payable in quarterly installments totaling $600,000 per calendar year. See Ariz. R. Fam. Law P. 69. The Agreement awarded Frank other, unvalued business entities. Sharla received the family residence, with equity valued at $77,217, and Frank received real property in Ghana and Arizona, together valued at $97,500. The Agreement also provided that "no parent shall be required to give consent to travel to countries that are not signer [sic] to the Hague convention." Post-mediation, the parties exchanged drafts of a final decree in which Frank approved and adopted Sharla 's redlined change of "Hague Convention" to the "Hague Abduction Convention."
The equalization payment included $250,000 pursuant to Schickner v. Schickner, 237 Ariz. 194, ¶ 22 (App. 2015) (community generally "entitled to the profits and gains attributable to community assets").
¶3 However, the parties never agreed on a final version of the draft decree and Frank moved the trial court to set aside two provisions of the Agreement: the equalization payment to Sharla as unfair because post-mediation, IHCs value had "substantially change[d]"; and the Hague Convention provision regarding international travel with the children because he had assented to the agreement with the "material understanding" that Ghana was signatory to the referenced Hague Convention.
Ghana is not signatory to the Hague Abduction Convention, according to the record. Frank is originally from Ghana and has family in Ghana.
¶4 Following a hearing in December 2021, the trial court denied Frank's request. It determined that the Agreement's property division, including the equalization payment to Sharla, was fair and that the Hague Convention provision was valid and binding. The court granted Sharla's request for attorney fees, awarding her $10,000. It subsequently entered a decree of dissolution that incorporated the Agreement and affirmed its award of attorney fees to Sharla.
The decree states no parent "shall be required to give consent to travel to countries that are not signers [sic] to the Hague Convention on the Civil Aspects of International Child Abduction ('Hague Abduction Convention')."
¶5 Frank appealed and we have jurisdiction under article VI, § 9 of the Arizona Constitution and A.R.S. § 12-2101(A)(1).
We suspended the appeal so that the trial court could amend its order to include the finality language required by Rule 78(c), Ariz. R. Fam. Law P., and final judgment was thereafter entered.
Discussion
¶6 Frank argues the trial court denied his request for an evidentiary hearing after he challenged the Agreement, thereby denying him due process. He further contends the court abused its discretion by incorporating the challenged provisions of the Agreement-the equalization payment and the Hague provision-into the final decree and by awarding attorney fees to Sharla. Sharla counters that Frank cannot credibly argue that he was denied due process, and that their Agreement fairly settled the distribution of marital property and Frank is bound by its terms.
¶7 Parties to a marriage may enter into a written separation agreement providing for the disposition of any community property, spousal maintenance, and the support, legal decision-making and parenting time of their children. A.R.S. § 25-317(A); Ariz. R. Fam. Law P. 69. "[T]he terms of the separation agreement, except those providing for the support, legal decision-making and parenting time of children, are binding on the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced," that the agreement is unfair. § 25-317(B). Courts presume the validity of an agreement made under Rule 69, and the party challenging the agreement bears the "burden to prove any defect." Ariz. R. Fam. Law P. 69(c).
We cite to the current version of the statute because no material changes that are relevant to our decision have since occurred.
Due Process
¶8 Frank first contends the trial court violated his due process rights by denying him an evidentiary hearing and instead relying on counsels' avowals and the admitted exhibits in reaching its rulings. Sharla counters that the court held an evidentiary hearing that comported with due process requirements. We review due process claims de novo. Backstrand v. Backstrand, 250 Ariz. 339, ¶ 28 (App. 2020).
¶9 Due process requires the trial court afford parties a meaningful opportunity to present testimony if "resolution of a material contested issue hinges on credibility." Volk v. Brame, 235 Ariz. 462, ¶ 14 (App. 2014). Frank argues the contested issues hinged on credibility. But, even if we assume that is true, the record reflects the court afforded him an opportunity to present oral testimony. In September 2021, the court held a status conference where it scheduled a hearing on Frank's challenge to the Agreement and inquired whether the parties would be presenting testimony; both parties indicated they planned to do so. The court set the hearing for the parties to present evidence, including oral testimony, and make oral arguments. A later order confirmed that "testimony will be allowed," and both parties submitted pretrial statements listing witnesses and exhibits. In Frank's objection to one of Sharla 's witnesses, he described the upcoming hearing as an "Evidentiary Hearing . . . to determine if the Rule 69 Agreement should be set aside."
The trial court's minute entry stated it set the matter for "Oral Argument" but also described it as a two-hour "Trial," and instructed the parties to submit lists of witnesses and copies of exhibits.
¶10 At the hearing, Frank told the trial court he planned to testify if needed, in addition to presenting two other witnesses. The court swore in Frank, Sharla, and other witnesses, and reminded the parties it would be "happy to consider" testimony. Frank presented testimony from one witness but did not offer his own testimony. At the end of the hearing, the court asked the parties if there was anything else, and indicated that a few minutes remained and he would be happy to hear from witnesses. Instead of offering additional witnesses, the parties moved the court to admit a number of exhibits. The court did so, and the hearing concluded.
¶11 Frank was not denied due process when he was afforded the opportunity to present testimony. See Volk, 235 Ariz. 462, ¶ 14. His decision not to testify was presumably the product of his counsel's strategic decisions regarding what witnesses to call and evidence to present at the hearing. Cf. Nicaise v. Sundaram, 244 Ariz. 272, ¶ 15 (App. 2018) (brevity of testimony was result of "counsel's strategic decisions regarding use of time"), vacated in part on other grounds, 245 Ariz. 566, ¶ 17 (2019). For this same reason, Frank's arguments on appeal that the trial court denied him an evidentiary hearing or made findings without an evidentiary hearing are unsupported by the record.
Fairness of the Rule 69 Agreement's Equalization Payment
¶12 Frank also contends the record was devoid of evidence supporting the trial court's factual finding that the Agreement's equalization payment to Sharla was fair. We review the court's allocation of marital property and finding of fairness for an abuse of discretion. See Hutki v. Hutki, 244 Ariz. 39, ¶¶ 13-14 (App. 2018). A trial court abuses its discretion if no competent evidence supports its decision. Hurd v. Hurd, 223 Ariz. 48, ¶ 16 (App. 2009). We will not reweigh evidence, id., which is construed in the light most favorable to affirming the decision, Lehn v. Al-Thanayyan, 246 Ariz. 277, ¶ 14 (App. 2019).
¶13 In his motion to set aside the Agreement and during the subsequent hearing, Frank argued the equalization payment was no longer fair because, post-mediation, an unanticipated, significant billing adjustment of $192,882.96 had been levied by Medicare against IHC for overpayment by Medicare during the 2019 fiscal year. In denying his motion, the trial court found that the property settlement provisions of the Agreement were fair because both Frank and the experts that had valued IHC were aware of the Medicare billing adjustment issue, which could result in either upward and downward adjustments, and that the issue of subsequent readjustments had been accounted for in determining the equalization payment. The court noted "[Sharla] agreed to forego or accept discounted payouts on numerous other entities . . . that were awarded to [Frank] in exchange for the total equalization payment to be paid to [Sharla]." It refused Frank's request to "surgically remove" part of the property settlement terms when "so many other portions" of the Agreement relied on it.
¶14 On appeal, Frank relies on Meister v. Meister, 252 Ariz. 391, ¶ 19 (App. 2021), to argue that if a marital community's business suffers financial losses after its valuation, it is no longer fair for property to be distributed based on that valuation. In Meister, we concluded the trial court had erred by selecting a valuation date for a business that failed to take into account significant events occurring less than four weeks after the service of the petition of dissolution and almost two years before the trial. Id. ¶ 19. We held that in dissolution proceedings, a trial court "has wide discretion to choose a business's valuation date, so long as the ultimate valuation is equitable," and remanded for the court to analyze whether the valuation and the property distribution were fair and equitable. Id. ¶¶ 18, 30. However, Meister did not involve a Rule 69 agreement. Id. ¶¶ 2, 7-11.
¶15 A trial court must independently determine whether a Rule 69 agreement fairly distributes marital property. Hutki, 244 Ariz. 39, ¶ 27 & n.5. To do so, a court needs to determine the community's assets and "whether the party challenging the agreement had full knowledge of the property involved." Sharp v. Sharp, 179 Ariz. 205, 210 (App. 1994), superseded by statute, Rule 69, Ariz. R. Fam. Law P.
¶16 Here, we cannot say the trial court had no basis or evidence in the record to support its finding that the Agreement had fairly distributed the marital property, even taking into account the subsequent billing adjustment for fiscal year 2019. It considered testimony from Frank's witness that Medicare frequently makes readjustment payment requests several years after the fact and, at the time of the mediation, it was reasonable to believe there would be future readjustment penalties for past years. The witness also testified that shortly before mediation, Frank had been notified of an $830,000 penalty for the 2020 fiscal year. Furthermore, the record before the court included evidence showing that Frank had appealed readjustment penalties assessed by Medicare for the 2019 fiscal year and could appeal the penalty at issue, such that the final penalty for that fiscal year might be reduced as a result of negotiations. The Agreement contained valuations of all significant community assets except those business entities awarded to Frank, who controlled those assets yet offered no evidence to suggest their value would affect the fairness of the property distribution. See Sharp, 179 Ariz. at 210 (court considers if party challenging agreement had full knowledge of community property). Finally, the court considered the Agreement's provision dividing any tax liability for 2018 and 2019 equally, which it could have reasonably believed would be reduced by any unexpected loss suffered by IHC due to the Medicare readjustment. Because competent evidence supported its conclusion, the court did not abuse its discretion in finding the Agreement's property division to be fair.
Because the court here determined that the Agreement had adequately taken into consideration the potential for future Medicare readjustments, we need not decide whether Meister would require a trial court to re-visit an agreed-to valuation of a business asset after the filing of a Rule 69 agreement based on unanticipated subsequent events. See Meister, 252 Ariz. 391, ¶ 19.
Validity of the Hague Abduction Convention Provision
¶17 Frank also asserts the Agreement's Hague provision was not enforceable and that the trial court abused its discretion by incorporating it into the final decree. Our review of the validity and enforceability of a separation agreement is de novo. Ertl v. Ertl, 252 Ariz. 308, ¶ 11 (App. 2021).
¶18 Frank contends the provision was unenforceable because there was no mutual consent since "the parties had a different understanding of the term [Hague Convention]." The misunderstanding was reasonable, he argues, and therefore, the contract is unenforceable. He further argues that the provision is "inherently ambiguous" because the term "Hague Convention" might refer to more than one international law convention, and a "unilateral mistake induced by contractual ambiguities" constitutes grounds for finding a contract void. He argues his unilateral mistake was his belief that "Ghana was a signatory country, and that he could travel to Ghana with the Children without [Sharla 's] consent." Sharla counters that he cannot escape his contractual obligation because he failed to exercise due diligence as to which countries were signatory to the Hague Abduction Convention. She argues both parties understood the provision to reference the Hague Abduction Convention, the only Hague Convention that would be applicable to "a parenting plan addressing the international travel of [their] children."
¶19 General contract law principles determine the validity of settlement agreements. Buckholtz v. Buckholtz, 246 Ariz. 126, ¶ 10 (App. 2019). A contract requires "an offer, acceptance, consideration, a sufficiently specific statement of the parties' obligations, and mutual assent." Id. (quoting Muchesko v. Muchesko, 191 Ariz. 265, 268 (App. 1997)). Mutual assent requires a "distinct intent common to both parties . . . without doubt or difference, and until all understand alike there can be no assent." Hill-Shafer P'ship v. Chilson Fam. Trust, 165 Ariz. 469, 473 (1990). Mutual assent is based on "objective manifestations of assent by the parties," id. at 474, and only reasonable misunderstandings are grounds for finding a lack of mutual assent, Buckholtz, 246 Ariz. 126, ¶ 11. A unilateral mistake can make a contract unenforceable if one party made a mistake regarding a material and basic assumption underpinning an agreement, and the other party "knew of the mistake of fact and unfairly exploited" the error. Ertl, 252 Ariz. 308, ¶ 18.
¶20 Here, Frank has not met his burden of showing either that there was no mutual assent to the Agreement or that his unilateral mistake would make a provision unenforceable. See Ariz. R. Fam. Law P. 69(c) (burden on party challenging separation agreement). He acknowledges that during mediation, Sharla "requested a term providing that the other parent's consent would be required before either parent could travel to countries that were not parties to the Hague Abduction Convention." Frank, who was represented by counsel, then signed the Agreement with the following provision:
iii. PASSPORTS FOR THE MINOR CHILDREN MOTHER
shall hold the passports for the minor children. Neither parent will unreasonably withhold their consent for the minor children to
travel internationally with either parent, but no parent shall be required to give consent to travel to countries that are not signer [sic] to the Hague Convention.
Examining the entire provision, which is the objective manifestation of Frank's assent to the contract, the parties agreed that any international travel required the other parent's consent-belying his argument that he believed he could travel to Ghana without Sharla 's consent. Moreover, the term "Hague Convention" is not ambiguous placed in its context of a separation agreement provision governing international travel with the parties' minor children and Sharla 's stated intent during mediation for including the provision. See Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 154 (1993) (extrinsic evidence admissible to determine the meaning intended by the parties).
¶21 Frank's argument indicates that he wrongly believed that Ghana was signatory to the Hague Abduction Convention, not that he believed that the parties were agreeing to a different convention. And if he believed a different convention was being referenced, such a belief was not reasonable-the parties were not contemplating an international adoption governed by the Hague Adoption Convention, the only Hague Convention to which Ghana is signatory according to the record before the trial court. See Buckholtz, 246 Ariz. 126, ¶ 11 (misunderstanding must be reasonable). That Frank later approved and adopted Sharla 's redlined change of "Hague Convention" to the "Hague Abduction Convention" is further evidence that the parties both referred to the same convention, even if he had not yet realized that Ghana was not a signatory party.
In support of Frank's argument that he mistakenly believed Ghana to be signatory to the Hague Abduction Convention, he submitted evidence that an internet search for the term "Hague Convention," resulted in a link to a U.S. government website regarding the Hague Adoption Convention that lists Ghana as a signatory party.
¶22 Moreover, Frank has not established a claim for relief from a unilateral mistake because he does not allege that Sharla knew of his mistake and unfairly exploited it. See Ertl, 252 Ariz. 308, ¶ 18. Therefore, the trial court did not err in denying Frank's motion to set aside the Hague provision governing international travel with the children.
Attorney Fees Award by Trial Court
¶23 Finally, Frank asserts the trial court lacked evidence supporting its award of $10,000 in attorney fees to Sharla pursuant to A.R.S. § 25-324(A), a ruling we review for an abuse of discretion. See Gutierrez v. Gutierrez, 193 Ariz. 343, ¶ 32 (App. 1998). In its order denying his motion to set aside certain provisions of the Rule 69 Agreement, the court stated Frank's challenge to the Agreement was "unreasonable" and without "factual or legal basis," and he had been a "bad faith actor." The court found, among other things, that he was in violation of unchallenged provisions of the Agreement such as child support payments and a commitment to resolve disputes via arbitration, and in violation of a preliminary injunction requiring he maintain Sharla on health insurance until the issuance of a final decree.
¶24 Frank argues no evidence supports these findings. But the record reflects he was $5,000 in arrears on child support payments at the time of the final decree. Additionally, counsel had communicated regarding Sharla 's removal from the health insurance and Frank's failure to complete paperwork to transfer property as required by the Agreement, and Sharla had requested arbitration pursuant to the Agreement but Frank instead filed a motion to set aside its terms.
¶25 Frank also argues the trial court could not award $10,000 in attorney fees, an amount "pulled . . . from thin air." However, 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," and the court may draw upon its own knowledge of the case and upon its own experience. Baum v. Baum, 120 Ariz. 140, 146 (App. 1978). Furthermore, Sharla subsequently submitted an affidavit detailing more than $10,000 in attorney fees incurred in responding to Frank's challenge to the Agreement. That the Agreement provided for each party to bear its own attorney fees and costs, as Frank notes, does not change that the trial court was bound by A.R.S. § 25-324, not the settlement agreement, and its award is "based upon very different considerations than those contemplated by the property settlement agreement." Gubser v. Gubser, 126 Ariz. 303, 304 (1980). Therefore, we affirm the award of $10,000 in fees to Sharla.
Attorney Fees on Appeal
¶26 Frank requests his attorney fees and costs on appeal pursuant to § 25-324 due to the unreasonableness of Sharla 's positions. Sharla requests her attorney fees and costs based on the parties' significant income disparity and Frank's unreasonable positions, also citing § 25-324. Although Frank never submitted an Affidavit of Financial Information to the trial court, Sharla did and her Affidavit indicated she was working on commission as a realtor but not earning any income. For purposes of the child support calculation, the Agreement attributed Sharla a monthly income of $5,416 and Frank a monthly income of $50,000. Frank indicates that the record does not reflect either party's income has changed materially. In the exercise of our discretion and taking into account all relevant factors, we award Sharla her reasonable attorney fees and costs pursuant to § 25-324 upon her compliance with Rule 21, Ariz. R. Civ. App. P.
Disposition
¶27 For the foregoing reasons, we affirm the trial court's decree.