Opinion
No. 1 CA-CV 15-0381 FC
06-09-2016
In re the Matter of: ELIZABETH ARCHULETA, Petitioner/Appellee, v. RALPH RICHARD PAGLIA, Respondent/Appellant.
COUNSEL Gillespie, Shields, Durrant & Goldfarb, Mesa By Mark A. Shields Counsel for Petitioner/Appellee Liszewski Law Group PLLC, Mesa By Matthew D. Liszewski Counsel for Respondent/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. FN2013-092072
The Honorable Carolyn Passamonte, Judge Pro Tempore
The Honorable Benjamin R. Norris, Judge (Retired) AFFIRMED IN PART, VACATED IN PART, REMANDED COUNSEL Gillespie, Shields, Durrant & Goldfarb, Mesa
By Mark A. Shields
Counsel for Petitioner/Appellee Liszewski Law Group PLLC, Mesa
By Matthew D. Liszewski
Counsel for Respondent/Appellant
MEMORANDUM DECISION
Judge John C. Gemmill delivered the decision of the Court, in which Presiding Judge Samuel A. Thumma and Judge Maurice Portley joined. GEMMILL, Judge:
¶1 Ralph Richard Paglia ("Husband") appeals the family court's division of property in the decree dissolving his marriage to Elizabeth Archuleta ("Wife"). We affirm the division of property with the exception that we vacate the ruling regarding the Jamaican property and remand for further fact-finding regarding the source of funds used to purchase that property.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Husband and Wife were married in 2002. Wife filed a petition for dissolution in 2013. Wife's petition sought confirmation of her sole and separate property and an equitable division of the community property and debt, also alleging that Husband had wasted community property.
¶3 During the marriage, the parties owned an interest in several businesses. Upon stipulation of the parties, the court appointed an evaluator to value the community's interest in these businesses and ordered the parties to split the evaluator's fees and costs. Husband, however, failed to participate in or pay for the evaluation. As a result, Wife filed a motion to compel, which the court granted.
¶4 Wife then filed a second motion to compel based on Husband's continued refusal to participate in and pay for the evaluation, as well as his failure to respond to discovery requests. The court granted that motion as well, directing Husband to provide all discovery, pay the evaluator, and supply all documents requested by the evaluator within thirty days. Husband, however, failed to comply with the order.
¶5 Wife then filed a petition for contempt, alleging Husband had wrongfully dissipated more than $200,000 in community assets. Specifically, she alleged that Husband had liquidated two retirement accounts and sold community stock and kept the proceeds, all in violation of the preliminary injunction. Wife asked that the issue be resolved at trial.
¶6 Nine days before trial, Husband's business partner gave the evaluator a small portion of the requested documents. The evaluator then unsuccessfully requested Husband provide specific information regarding business expenses. As a result, the evaluator did not have enough information to complete his valuation.
¶7 Following trial, the court entered a decree valuing the community businesses at $600,000, awarding them to Husband, and entering judgment in favor of Wife for $300,000 (one-half the $600,000 valuation). The court then made an unequal division of the remaining community property based on Husband's dissipation of community assets. The court further ordered Husband to pay all community debt. Finally, the court determined that real property located in Jamaica was Wife's sole and separate property.
¶8 Following entry of the decree, Husband filed a motion for new trial, which the family court denied. The court entered judgment awarding Wife $13,000 in attorney fees and costs. Husband timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") § 12-2101(A)(1).
DISCUSSION
¶9 Under Arizona law, the apportionment of community property "rests within the sound discretion" of the family court. Lee v. Lee, 133 Ariz. 118, 121 (App. 1982). We view the facts and all reasonable inferences derived therefrom in the light most favorable to upholding the decree. See Spector v. Spector, 94 Ariz. 175, 179 (1963). This court will not disturb the apportionment absent an abuse of discretion. See Gutierrez v. Gutierrez, 193 Ariz. 343, 346, ¶ 5 (App. 1998). "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses." Ariz. R. Fam. Law P. 82(A).
Neither party requested findings of facts pursuant to Arizona Rule of Family Law Procedure 82(A). As a result, we are constrained by the presumption that the family court "found every fact necessary to support the judgment, and such presumptive findings must be sustained if the evidence on any reasonable construction justified it." Neal v. Neal, 116 Ariz. 590, 592 (1977) (citations omitted).
I. Valuation of the Community Businesses
¶10 Husband first argues the family court abused its discretion in valuing the community business. Claiming the court improperly valued the businesses, he argues the court "had more than sufficient testamentary and documentary evidence to [properly] value the business."
¶11 Recognizing the difficulty of valuing the community businesses, the court upon stipulation of the parties appointed a business evaluator. Given Husband's refusal to participate, the evaluator was unable to complete his assignment due to a lack of information. Despite court orders directing Husband to provide necessary documents, Husband failed to do so and, nine days before trial, provided only some incomplete records. As a result of Husband's conduct, the evaluator was unable to value the community businesses.
¶12 At trial, Wife explained the community held an interest in four companies, three of which fell under the umbrella of Automotive Media Partners ("AMP"). She estimated the combined "community value" or "income" for the four companies at $477,317 in 2013. She offered little documentary evidence to support her estimate. Next, the evaluator testified that AMP had revenues between $80,000 and $100,000 in 2011 and 2012. There are no documents to support his testimony, and he did not offer an opinion of value. Finally, Husband, testified that AMP's revenue was "about [$]80,000" in 2012 and declined thereafter. He provided no documents to support his testimony. Husband did, however, testify that he left a job earning $150,000 per year to start AMP. The family court found that Wife and the evaluator "were generally credible witnesses" and that "Husband was generally not a credible witness."
Wife was familiar with the businesses, having performed bookkeeping functions. She testified that Automotive Digital Marketing had revenue of approximately $39,000 per month. She further testified that Hire the Winner had revenue of approximately $3,000 per year. Finally, she testified that the community's share of revenue from Auto Con was $47,100 in 2012.
¶13 Based on this limited evidence, the family court valued the community's interest in the businesses at $600,000, reasoning as follows:
Husband's testimony establishes that he left a job that was paying $150,000.00/year to go to work with Media Partners. [The business evaluator] testified that the appropriate multiple of net earnings for determining the value of an income stream from a business such as Media Partners is between 2x and 4x; the Court will adopt the high end of this range and multiply the salary Husband gave up ($150,000.00)
by four to determine the value of the community's interest in Media partners and its associated business(es) (i.e., $150,000.00 x 4 = $600,000.00).Given Husband's repeated failure to disclose information necessary to value the businesses, notwithstanding orders requiring such disclosure, we cannot say the court abused its discretion in developing its own method of valuation. See Helland v. Helland, 236 Ariz. 197, 201, ¶ 21 (App. 2014) (holding that the family court is "free to accept or reject part or all of any expert's opinion in determining the value of the business"). Accordingly, Husband has not shown the valuation of the community businesses was error.
II. Division of Remaining Community Property
¶14 Husband next argues the family court abused its discretion in awarding Wife a "grossly unequal share of the community property."
¶15 Under Arizona law, the family court shall "divide the community, joint tenancy and other property held in common equitably, though not necessarily in kind." A.R.S. § 25-318(A). In dividing property, the family court is "specifically authorized to consider excessive or abnormal expenditures and the concealment or fraudulent disposition of community property when apportioning community property." Gutierrez, 193 Ariz. at 346, ¶ 6. This authority derives from A.R.S. § 25-318(C). If the family court determines that one spouse has "wasted or dissipated marital assets, it may apportion the community property in a manner designed to compensate the other spouse for the waste." Helland v. Helland, 236 Ariz. 197, 201, ¶ 17 (App. 2014).
¶16 Husband admitted to dissipating two retirement accounts. The first account contained approximately $93,000 in community funds and the second $56,000. Likewise, Husband admitted to selling community stock valued at $31,700. Collectively, these total more than $180,000. In addition, the record contains documentary evidence suggesting that Husband may have transferred or concealed additional assets after Wife filed her petition.
Husband closed the first retirement account in February 2014. At that time, the account contained $160,185.56. A special master later determined the community interest in the account was $93,165.80. --------
¶17 Following trial, the court awarded Wife judgments for one-half of the dissipated retirement accounts and stock. The court also found that "Husband disposed of significant community assets without the knowledge or consent of Wife or the Court." Based on the finding, the court concluded that "an unequal division of community property is appropriate to achieve equity." Accordingly, the court also awarded Wife the full amount of both her retirement accounts totaling nearly $64,000. Finally, the court ordered Husband to pay all community debt, totaling nearly $21,500.
¶18 On this record, which contains significant evidence of waste and dissipation, Husband has not shown the family court's division of the remaining community assets and debt was an abuse of discretion. See Hrudka v. Hrudka, 186 Ariz. 84, 94 (App. 1995) (holding that "equity favored the distribution of a greater share of community assets" to one spouse), superseded in part by statute on other grounds as recognized in Myrick v. Maloney, 235 Ariz. 491, 494, ¶ 8 (App. 2014).
III. Jamaica Property
¶19 Husband argues the family court abused its discretion by awarding Wife real property in Negril, Jamaica as her sole and separate property. Under Arizona law, property acquired during the marriage is presumed to be community property, and the spouse seeking to overcome the presumption must present clear and convincing evidence to establish the sole and separate character of the property. See Brebaugh v. Deane, 211 Ariz. 95, 97-98, ¶ 6 (App. 2005).
¶20 The court awarded the property to Wife without offset to Husband, stating:
With regard to the real property near Neg[r]il, Jamaica, no evidence was submitted by either party as to the origin of the funds used to purchase this property. However, the Court finds that Husband disclaimed any interest in such property in his discovery responses admitted as Exhibit 74 (Bates p. 01926) and only asserted an interest in his pretrial [statement] filed the day before trial. Given this, and given Wife's credibility and Husband's general lack of honesty during the case and his lack of credibility on the stand, IT IS ORDERED awarding this property to Wife as her sole and separate property, without offset to Husband.
¶21 Our review of the record, however, reveals that each side presented evidence regarding the origin of funds used to purchase this property. Wife testified that she bought the property in Jamaica during the marriage but used funds she inherited from her mother. She also produced evidence of a wire transfer of $30,000 sent in her name. And Husband testified the property was purchased with community funds, but offered no supporting documentary evidence regarding the source of the funds. Furthermore, our review of the record does not support the court's finding that Husband disclaimed his interest in the property in his discovery responses within Exhibit 74; rather, he listed the property as real estate in which he had an interest.
¶22 Therefore, even though the court noted Husband's "general lack of honesty during the case and his lack of credibility on the stand," the record does not support a potentially meaningful portion of the court's stated reasons for concluding that the Jamaican real estate was Wife's sole and separate property. Under these circumstances, further fact-finding is required on this issue.
CONCLUSION
¶23 For the foregoing reasons, we affirm the decree, except we vacate the portion of the decree awarding the Jamaican real estate to Wife as sole and separate property and remand for further proceedings to determine the source of funds and the separate or community ownership of that property.
¶24 Both Husband and Wife request attorney fees on appeal pursuant to A.R.S. § 25-324(A), which authorizes an award of fees after consideration of the financial resources of the parties and the reasonableness of their positions. In the exercise of our discretion and after considering the statutory criteria, we deny both requests for attorney fees. Finally, because each party has prevailed to some extent but not completely, we also decline to award costs to either side.