Opinion
No. 1 CA-CV 14-0656 FC
02-04-2016
In re the Matter of: SCOTT A. BRITTENHAM, Petitioner/Appellant/Cross-Appellee, v. BETSY BRITTENHAM, Respondent/Appellee/Cross-Appellant.
COUNSEL The McCarthy Law Firm, Tucson By Kathleen A. McCarthy And Haralson Miller Pitt Feldman & McAnally PLC, Phoenix and Tucson By Gerald Maltz and Timothy P. Stackhouse Co-Counsel for Petitioner/Appellant/Cross-Appellee Rusing Lopez & Lizardi PLLC, Tucson By Michael J. Rusing and Sarah J. Stanton Counsel for Respondent/Appellee/Cross-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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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 Pima County
No. D124113
The Honorable Margaret L. Maxwell, Commissioner, Retired
AFFIRMED
COUNSEL The McCarthy Law Firm, Tucson
By Kathleen A. McCarthy And Haralson Miller Pitt Feldman & McAnally PLC, Phoenix and Tucson
By Gerald Maltz and Timothy P. Stackhouse
Co-Counsel for Petitioner/Appellant/Cross-Appellee Rusing Lopez & Lizardi PLLC, Tucson
By Michael J. Rusing and Sarah J. Stanton
Counsel for Respondent/Appellee/Cross-Appellant
MEMORANDUM DECISION
Presiding Judge Andrew W. Gould delivered the decision of the Court, in which Judge John C. Gemmill and Judge Margaret H. Downie joined. GOULD, Judge: ¶1 Scott and Betsy Brittenham ("Husband" and "Wife") both appeal from the family court's post-decree judgment awarding Husband $158,849.34 for payments he made on Wife's life insurance policy. For the following reasons, we affirm.
Husband filed a motion to strike portions of Wife's reply brief in support of her cross-appeal. Because we resolve this appeal on grounds apart from the issues raised in Husband's motion, we deny Husband's motion as moot.
FACTS AND PROCEDURAL HISTORY
¶2 In June 2000, Husband and Wife divorced. To divide their property, the parties entered a Marital Settlement Agreement ("MSA") that, by its express terms, was merged into the divorce decree. The MSA directed that Wife be awarded two Northwestern Mutual Life Insurance policies along with responsibility to pay any outstanding loans on the policies. When the divorce decree was entered, one of the subject policies, policy number 10155741 ("the Policy"), had a loan balance of $158,849.34 ("Wife's Loan"). ¶3 Following entry of the decree, both parties failed to advise Northwestern the Policy had been awarded to Wife. While Husband continued to receive notices regarding the Policy, Wife receive none. Interest continued to accrue on Wife's Loan, but neither party made any payments; thus, by 2003 the balance on Wife's Loan had increased to $187,638.29. ¶4 In April 2003, Northwestern contacted Husband and advised him that due to the unpaid balance on Wife's Loan, the Policy was on the verge of lapsing. In response, Husband paid $100,000 on Wife's Loan. Thereafter, from April 2003 to August 2011, Husband continued to treat the Policy as if it were his own, taking out loans on the Policy and making payments from time to time of part or all of the pending loan amounts. During this time period, Wife did not know Husband was repaying her Loan, nor was she aware that Husband was taking out additional loans on the Policy. ¶5 In December 2012, Husband attempted to transfer the Policy to an Irrevocable Life Insurance Trust with his children as beneficiaries. Because Wife was still listed as the insured on the Policy, Northwestern notified Wife of the change in beneficiary. A few weeks later, in February 2013, Wife's counsel sent a letter to Northwestern demanding transfer of ownership of the Policy to Wife based on the terms of the decree. ¶6 On February 20, 2013, Husband filed a petition in family court requesting the court transfer ownership of the Policy to him. Husband sought this relief on the grounds Wife would be unjustly enriched if the Policy were transferred to her. Alternatively, Husband sought "a constructive trust interest in the amount of his contributions [to the Policy] and growth thereon." ¶7 The family court conducted an evidentiary hearing on Husband's petition. The evidence presented at the hearing showed that in early 2003, prior to Husband's payments, the Policy was on the verge of lapsing. The evidence further established that between 2003 and 2011: (1) Husband took out three new loans on the Policy totaling $466,944.66; and (2) Husband's total payments on Wife's Loan and his own loans, including interest and principal, were $674,539.34. Husband also presented evidence that by August 2011, he had paid off all of the existing loans on the Policy, including Wife's Loan. ¶8 Both parties presented expert testimony regarding the value of the Policy. Husband's expert testified that Husband increased the value of the Policy by paying Wife's Loan and taking out additional loans and eventually paying off all loans. Conversely, Wife's expert testified that Husband's loans lessened the value of the Policy. ¶9 The family court denied Husband's request to change ownership of the Policy and ordered him to transfer the policy to Wife. In addition, the court ordered Wife to pay Husband $158,849.34 "as and for the debt owed by her on the [Policy] on 6-14-00 [date of entry of the decree]." The court also awarded Wife $23,462.50 in attorneys' fees pursuant to Arizona Revised Statute ("A.R.S.") § 25-324. Husband and Wife filed motions to amend the judgment which the court denied. Both parties timely appealed.
Husband listed the Policy's loan balance as of the date of the decree at $158,815.51, while Wife listed it at $158,849.34. This minor discrepancy is immaterial to our decision.
Husband's expert testified that because Husband paid a higher interest rate on his loans than the existing market rate, Northwestern received a higher rate of return on its assets due to Husband's loans. He opined that this, in turn, increased the dividends for owners of Northwestern policies, leading to a higher growth in value for all Northwestern policy holders, including the subject Policy.
Husband does not challenge the family court's order directing him to transfer ownership of the Policy to Wife.
DISCUSSION
I. Standard of Review ¶10 We review the family court's findings of fact for clear error. See Scottsdale Princess P'ship v. Maricopa Cty., 185 Ariz. 368, 372 (App. 1995). We review its legal conclusions de novo. Libra Grp., Inc. v. State, 167 Ariz. 176, 179 (App. 1991). Whether equitable relief was available is a matter of law we review de novo. Andrews v. Blake, 205 Ariz. 236, 240 (2003). II. The Unjust Enrichment/Restitution Claim ¶11 Husband argues the family court failed to award him full restitution on his unjust enrichment claim. Husband contends that in ordering Wife to pay $158,000, the amount of Wife's Loan, the court only awarded him partial restitution. Husband claims his payments on Wife's Loan and his own loans caused the value of the Policy to increase, and that he should be awarded "full restitution" for this increased value. Alternatively, Husband argues he should be awarded the amount of payments he made on Wife's Loan and his loans. Husband also contends he is entitled to pre-judgment interest on his unjust enrichment claim. ¶12 Wife counters that Husband cannot bring a claim of unjust enrichment because an express agreement, the MSA, governs the parties' relationship concerning the Policy. As a result, Wife argues Husband was required to pursue a breach of contract action to enforce the terms of the MSA. Wife also argues, however, that Husband cannot pursue a breach of contract claim because the MSA was merged into the decree. Accordingly, she contends Husband's unjust enrichment claim is nothing more than an improper attempt to modify the property settlement provisions of the decree. ¶13 The family court confirmed the MSA was merged into the decree. Thus, Husband cannot assert a breach of contract claim based on the MSA, and any rights under the MSA must be enforced through the decree. See LaPrade v. LaPrade, 189 Ariz. 243, 247 (1997) ("When merger occurs, 'the separation agreement is superseded by the decree, and the obligations imposed are not those imposed by contract, but are those imposed by decree, and enforceable as such.'") (quoting Glassford v. Glassford, 76 Ariz. 220, 226 (1953)). ¶14 The family court also concluded it had no authority to modify the property settlement division ordered in the decree. Property disposition provisions of a decree may not be revoked or modified "unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state." A.R.S. § 25-327; In re Marriage of Gaddis, 191 Ariz. 467, 469 (App. 1997); see Ariz. R. Fam. Law. P. Rule 85(C) (listing the grounds for reopening a decree). Here, Husband did not allege any grounds to reopen the decree. ¶15 Contrary to the parties' arguments on appeal, the family court did not grant Husband restitution damages for alleged unjust enrichment. Although the court did note that Wife was enriched, and Husband was impoverished, to the extent Husband paid Wife's Loan, the court stated the doctrine of unjust enrichment has no application to a situation where an explicit contract has been performed. The court went on to recognize the MSA was a contract between Husband and Wife. Accordingly, the court simply enforced the divorce decree in light of the parties' failure to carry out the terms of the decree regarding the Policy for 13 years. ¶16 The family court also did not, as Wife contends, reopen the decree. When the court's order is read as a whole, it is clear the court ordered Wife to reimburse Husband for paying her Loan, a debt that was assigned to Wife under the decree. Specifically, the court's order states the MSA required each party to pay "any and all debts, liabilities, and obligations in connection with property awarded" to them. The court found that: (1) under the terms of the MSA, Wife was awarded the Policy "subject to the loans thereon"; (2) on the date the decree was entered, the balance on Wife's Loan was $158,849.34; and (3) in April 2003, Husband made a payment towards the then loan balance in the amount of $176,778.00. The family court concluded by stating that in paying Wife's Loan, Husband "paid a debt of [Wife] which was her responsibility" under the decree. Based on these findings, the family court entered a judgment against Wife and in favor of Husband for $158,849.34, the amount of Wife's Loan. ¶17 At oral argument before this court, Wife argued the loan balance on the Policy was not a debt assigned to Wife under the divorce decree because Wife could have chosen to allow the Policy to lapse rather than repay the loan. Wife's position ignores the reality of the family court's action in the divorce decree. As part of the MSA, the parties agreed to borrow $30,000.00 against the two life insurance policies awarded to Wife under the MSA to balance out the property division. Thus, the divorce decree did intend to assign the existing loan balance on the Policy to Wife as a vehicle for equitable property division. See Wine v. Wine, 14 Ariz. App. 103, 105 (1971) ("Divorce courts are required to divide community property at the time of a divorce on a just basis."). ¶18 In making its order, the family court acted within its authority. The facts in this case are similar to those in Srock v. Srock, 11 Ariz. App. 483, 485 (1970). In Srock, wife paid off a debt assigned to husband in the decree. Wife then filed a post-decree petition seeking repayment by husband. Based on these facts, the court held the trial court had jurisdiction to enforce husband's responsibility for the debt under the terms of the decree by means of a money judgment. Id.; see A.R.S. § 25-317(E) (stating that the terms of a property settlement agreement merged into a decree "are enforceable by all remedies available for enforcement of a judgment. . ."). ¶19 Accordingly, we conclude the family court did not err in ordering Husband to transfer the Policy to Wife and Wife to re-pay Husband for her Loan obligation. III. Pre-judgment Interest ¶20 Husband seeks an award of pre-judgment interest on his unjust enrichment damages, and he argues his damages based on the increased value of the Policy constitute a liquidated sum. In the alternative, Husband asserts that his damages based on the amount of payments he made on the Policy are also a liquidated sum. ¶21 Whether a claim is liquidated is a question of fact. Able Distrib. Co. v. James Lampe, Gen. Contractor, 160 Ariz. 399, 406 (App. 1989). Pre-judgment interest accrues from the date of demand for a sum certain. Alta Vista Plaza, Ltd. v. Insulation Specialists Co., 186 Ariz. 81, 83 (App. 1995) (as corrected on reconsideration, Nov. 30, 1995). To be entitled to pre-judgment interest the creditor must provide "'sufficient information and supporting data [is provided] so as to enable the debtor to ascertain the amount owed."" Id. (citing Homes & Son Constr. Co., v. Bolo Corp., 22 Ariz. App. 303, 306 (1974)). A claim is not liquidated where the exact amount of damages cannot be determined solely based upon the facts, but require the exercise of discretion by the factfinder. See John C. Lincoln Hosp. & Health Corp. v. Maricopa Cty., 208 Ariz. 532, 544, ¶ 40 (App. 2004) (citing Charles T. McCormick, Handbook on the Law of Damages § 54, at 216 (1935)). ¶22 Husband's damage claims are not liquidated. Both claims for the growth of the Policy are premised on Husband's theory of "direct recognition"; the concept that Husband's loan activity incurring interest at a rate higher than the current market rate would increase the Policy's dividend thereby adding to the Policy's value. The extent that Husband's loans may have increased the value of the Policy was an area of strong disagreement between the parties and their experts that would have required the factfinder to exercise its discretion to resolve. ¶23 Perhaps more importantly, the fundamental problem with Husband's position is that he was not awarded restitution "damages" for unjust enrichment. Husband's claim as pled only sought pre-judgment interest on damages awarded for unjust enrichment. Because the family court merely enforced the divorce decree from 2000, by ordering Husband to assign the Policy to Wife and Wife to pay Husband for his repayment of the loan, there are no "damages" from which interest can be calculated. For this reason, the family court did not err in refusing Husband's requests for pre-judgment interest. IV. Attorneys' Fees ¶24 Husband argues the family court abused its discretion in awarding Wife attorneys' fees under A.R.S. § 25-324. He claims Wife should not have been awarded fees because her request was untimely, she did not file a financial affidavit, and there was no evidence supporting the family court's conclusion she had less financial resources. ¶25 We review an award of attorneys' fees under A.R.S. § 25-324 for an abuse of discretion. MacMillan v. Schwartz, 226 Ariz. 584, 592, ¶ 36 (App. 2011). ¶26 Section 25-324 provides that the court "may order a party to pay a reasonable amount to the other party for the costs and expenses" of maintaining or defending the matter "from time to time, after considering the financial resources of both parties and the reasonableness of the positions each party has taken throughout the proceedings." A.R.S. § 25-324(A). ¶27 The absence of financial affidavits is not fatal to Wife's fee award. Section 25-324(A) states the family court may award fees "from time to time," indicating the court may award fees to a party sua sponte, regardless of whether a timely fee request has been made. Section 25-324 also does not contain a requirement the parties file financial affidavits; it merely requires the court to make specific findings to support the award if a party requests such findings. A.R.S. § 25-324. ¶28 Additionally, the family law procedural rules do not require that a financial affidavit be filed to support the court's fee award in this case. Arizona Rule of Family Law Procedure 78(D) permits an award of fees to be supported by essentially any evidence - "affidavit, exhibits, or testimony" - pursuant to the court's discretion. Id. Here, the record contains several years of financial information concerning the parties, and it is reasonable to assume the family court was aware of the parties' relative financial resources based on this evidence. Indeed, the record contains the parties' December 31, 2013 bank statements, which clearly support a finding of financial disparity between the parties. Accordingly, we find no abuse of discretion in the award of attorneys' fees to Wife. V. Attorneys' Fees on Appeal ¶29 Husband requests costs on appeal, and Wife requests an award of fees on appeal pursuant to A.R.S. § 25-324. In our discretion, we deny Wife's request for fees. In addition, because both parties have appealed the family court order and neither has prevailed, each party will bear his or her own costs.
Husband contends this sum is approximately $349,000, which he calculates as follows: (1) the value of the Policy on the date Wife demanded transfer of ownership (February 2013), which was approximately $354,000, (2) minus the value of the Policy on the date of his first payment on Wife's Loan (April 2003), which was approximately $5,000.
Husband argues this sum is approximately $207,000. He calculates this sum as follows: (1) his total payments made on Wife's Loan and his loans, which was approximately $674,000, (2) minus the amount of loans he received, which was approximately $467,000. --------
CONCLUSION
¶30 For the reasons above, we affirm the family court's order.