Opinion
2 CA-CV 2023-0122-FC
02-12-2024
In re the Marriage of Kristen K. Burns, fka Kristen K. Young, Petitioner/Appellee, and William E. Young, Respondent/Appellant.
Kristen K. Young, Hawthorne, California In Propria Persona The Arizona Firm, Mesa By Jessica Warner Counsel for Respondent/Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. FN2022050220 The Honorable Michael Valenzuela, Judge
Kristen K. Young, Hawthorne, California In Propria Persona
The Arizona Firm, Mesa By Jessica Warner Counsel for Respondent/Appellant
Judge Eckerstrom authored the decision of the Court, in which Presiding Judge Brearcliffe and Judge Kelly concurred.
MEMORANDUM DECISION
ECKERSTROM, JUDGE
¶1 William Young appeals from the trial court's decree dissolving his marriage to Kristen Burns. Young challenges the court's refusal to award him a portion of a bank account he claims held community property. He also seeks half the value of a collection of designer purses and jewelry he contends Burns purchased during the marriage with community funds. For the reasons that follow, we reject these challenges and therefore affirm.
Factual and Procedural Background
¶2 The parties married in December 2020. In early 2022, Burns filed a petition for dissolution of marriage. Young accepted service on February 10, 2022.
¶3 In 2023, the trial court conducted a trial on all issues of division of property and debts. Both parties testified and presented evidence. The court issued a final decree of dissolution, ordering what it deemed to be "an equal division of community property . . . appropriate to achieve equity." It based its findings and order on its consideration of "the parties' arguments and agreements," the case history, and the evidence presented at trial, including the parties' exhibits and "the demeanor of the witnesses." This appeal followed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
Discussion
¶4 Young first "seeks to reverse the trial court's refusal to award [him] a portion of a bank account that contained over $50,000 on the date of service of the divorce petition," money he claims he "directly traced to community property funds through bank statements" presented at trial. He also "seeks to reverse the trial court's refusal to award [him] one-half of [Burns]'s $40,000 designer purse collection," which he claims "she purchased during the marriage" using community funds. Young contends the court's orders granting Burns "these property items are a direct contradiction of Arizona community property law."
¶5 "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, the characterization of property as community or separate is a legal determination we review de novo. 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 explicit and implicit factual findings unless clearly erroneous, Danielson v. Evans, 201 Ariz. 401, ¶ 13 (App. 2001); Twin City Fire Ins. Co. v. Burke, 204 Ariz. 251, ¶ 10 (2003); 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.").
¶6 Community property is to be divided equally when possible, but always equitably. See Toth v. Toth, 190 Ariz. 218, 221 (1997). 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 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).
Wells Fargo Account
¶7 At trial, Young sought a portion of the funds contained in a Wells Fargo savings account held in Burns's name and the name of her son from a prior relationship, who was ten years old at the time of trial. Burns testified that she had opened the account for her son when he was "about a month old," after his father died. She stated that she "set it up for a college fund for him" and deposited an inheritance and social security payments the son received, as well as money he was given for birthday and Christmas gifts. She emphasized that the funds in the account accumulated over ten years. However, Burns conceded that she and Young "borrowed" from the account to pay for their December 2020 destination wedding and to fund periodic community expenses. She testified that they did so with the shared intent of repaying the borrowed money, which they did-as agreed-with community funds, ultimately fully replenishing the account.
In particular, Burns testified that she and Young used funds from the account during the marriage to make down payments on cars and a timeshare, to travel, and to buy household items.
¶8 Young argued before the trial court that, because community funds were deposited into the Wells Fargo account, he is entitled to one-half the roughly $55,000 balance as of the date of service of the divorce petition. The court rejected this argument. It concluded that the Wells Fargo account "was enriched by community funds by only $795.88 during the marriage." It therefore ordered only that portion of the account to be divided among the community, with $397.94 awarded to each party.
The trial court also rejected Young's argument-which he repeats in passing in the captions of his opening brief-that Burns used the Wells Fargo account "to conceal community property." The court found that Burns withdrew funds from the Wells Fargo account and deposited money into it from community sources "during the entire marriage, not just before the dissolution petition was served." This finding is supported by the record, and we therefore defer to it, insofar as the issue is before us. See Danielson, 201 Ariz. 401, ¶ 13.
¶9 In so concluding, the trial court implicitly credited Burns's testimony that she and Young had borrowed money from the Wells Fargo account with the shared intent to repay it, which they did with community funds. Young disputed this testimony, claiming instead that he and Burns had used the Wells Fargo account as their personal savings account with no intent to repay any borrowed funds. But we defer to the trial court "with respect to any factual findings explicitly or implicitly made, affirming them so long as they are supported by reasonable evidence." Twin City Fire Ins. Co., 204 Ariz. 251, ¶ 10 (emphasis added). We do so in part because the trial court stands in the best position to judge the credibility of the witnesses. See Estate of Zaritsky, 198 Ariz. 599, ¶ 5.
¶10 Young argues that community funds deposited into the Wells Fargo account rendered the entire account community property as a matter of law. The trial court implicitly concluded that any deposits from community sources became the separate property of Burns and her son insofar as they were deposited with the shared intent to replenish funds that had been borrowed from the account for community purposes.
For the first time in his reply brief, Young contends the agreement between him and Burns to repay the Wells Fargo account (an agreement he claims never existed) "is not enforceable as a matter of law." In particular, he argues that "Arizona does not recognize verbal agreements between spouses for the division or award of community assets-especially when only the spouse who benefits from the agreement is making the claim." Having failed to raise this argument in his opening brief-despite Burns's repeated invocation of the agreement before the trial court and the court's implicit acceptance of its existence and enforceability-Young has waived it. See, e.g., In re Marriage of Pownall, 197 Ariz. 577, n.5 (App. 2000) ("Arguments raised for the first time in a reply brief are deemed waived.").
¶11 As an initial matter, Young's contention is premised on the claim that the money in the account "was acquired during the marriage." And, the jurisprudence he cites discusses the legal presumptions and evidentiary burdens involved in cases regarding "property acquired during the marriage." In re Marriage of Foster, 240 Ariz. 99, ¶¶ 1, 6-9, 13 (App. 2016). But the record reflects that the Wells Fargo account contained over $50,000 before the parties married. Indeed, Young testified at trial that, on October 1, 2020-three months before the wedding-the account had a balance of $53,105. And, although Young testified that he "was not aware of any inheritance" having been deposited into the account, he conceded that Burns's son had been receiving $300 social security deposits into the account every month for many years. Thus, even according to Young's own testimony, some portion of the funds in the Wells Fargo account-which never reached below $2,793-was not "acquired" during the thirteen-month marriage.
¶12 Nevertheless, the parties agree that community funds were deposited into the Wells Fargo account during the existence of the community. Where separate property and community property have been commingled, "the entire fund is presumed to be community property unless the separate property can be explicitly traced." Cooper v. Cooper, 130 Ariz. 257, 259 (1981) (quoting Porter v. Porter, 67 Ariz. 273, 281 (1948), overruled in part on other grounds by Cockrill v. Cockrill, 124 Ariz. 50, 53-54 (1979)). Our supreme court has reasoned that, where community and separate funds have been "mixed to the extent segregation is impracticable," the whole must be considered community funds because "[t]he law furnishes no rule that will unscramble and separate" the funds and "[t]he court cannot be required to guess what is the proper division." Evans v. Evans, 79 Ariz. 284, 286-87 (1955). However, the mere commingling of funds does not destroy the identity of one spouse's separate property as long as it "can be identified." Nace v. Nace, 104 Ariz. 20, 23 (1968); see also Porter, 67 Ariz. at 282-83 (commingling alone "not sufficient to stamp the whole with the community status," which only occurs "when the commingling results in confusion," "loss of identity of separate items entering into the combined fund," and "lack of sufficient records or evidence from which the court may determine which portion of the combined fund is separate and which is community"). The party claiming that a portion of the commingled funds is separate carries the burden to prove that fact by clear and satisfactory evidence. Cooper, 130 Ariz. at 259-60. Here, the trial court implicitly concluded that Burns had satisfied this burden. The record supports that conclusion.
¶13 The issue is clearest with regard to the money held in the Wells Fargo account before the marriage that was never withdrawn to fund wedding, community, or other expenditures. See Battiste v. Battiste, 135 Ariz. 470, 473 (App. 1983) (rejecting contention that "occasional use of separate funds for community purposes transmutes the remaining balance of the separate funds" to community property). That money-totaling at least $2,793-began as separate property and was easily traceable as such. See, e.g., Honnas v. Honnas, 133 Ariz. 39, 40 (1982) ("Property takes its character as separate or community at the time it is acquired and retains this character even if there is a subsequent marriage."). Indeed, Young uses $2,793 as the starting point for any enrichment of the account from community funds. With regard to the remainder of the account balance at the time of service, the analysis is somewhat more complicated.
¶14 The record reflects that one particular account was the parties'
"joint" bank account. The bank statements for the Wells Fargo account show only three deposits during the marriage from the parties' joint account, totaling $42,200. The statements also reflect fourteen withdrawals from the Wells Fargo account directly to the joint account, totaling $37,425. In other words, $4,775 more was deposited into the Wells Fargo account from the joint account than was withdrawn from the Wells Fargo account to the joint account. But the record also reflects that Burns had a separate business account, which the parties utilized to pay for some of their larger wedding and community expenses because of its higher spending limit. The Wells Fargo bank statements show eight withdrawals to that business account, totaling an additional $36,000. And Young was ultimately awarded fifty percent of the balance of the business account.
¶15 Other deposits reflected in the Wells Fargo bank statements- from before, during, and after the marriage-are labeled as child support, child-related stimulus, and social security payments. The trial court implicitly concluded that such moneys are Burns's separate property, not subject to division. We agree. Burns did not earn the child support, stimulus, or social security payments during the marriage. Rather, they were intended to benefit her son and are properly considered her separate property, just as preexisting child support obligations remain one spouse's separate debt. Hines v. Hines, 146 Ariz. 565, 567 (App. 1985); see also Kelly v. 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).
According to the Internal Revenue Service, "Under the American Rescue Plan of 2021, advance payments of up to half the 2021 Child Tax Credit were sent to eligible taxpayers." See Advance Child Tax Credit Payments in 2021, https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 (last visited February 6, 2024). Young conceded at the evidentiary hearing that the stimulus money reflected in the April 2021 Wells Fargo bank statement is "her money," nowhere arguing that it should be treated as community property.
The bank statements also reflect deposits from two accounts associated with Burns's adult children. She provided testimony indicating that the money in these accounts derived from child support arrears. Although the trial court appears to have treated these and other accounts associated with the adult children as community property subject to division-awarding half of each to Young-it also implicitly treated the deposited child support funds as retaining their separate character once they were deposited into the Wells Fargo account associated with the minor child. We have no basis to question this characterization.
¶16 Young emphasizes that Burns also made a number of "unexplained cash deposits" into the Wells Fargo account, arguing that "[a]t no time did [she] testify that the deposits had come from some non-community property source." This is accurate. The bank statements reflect six deposits of unidentified cash or checks totaling $49,650. But those deposits are fully offset by four unidentified cash withdrawals also reflected in the statements, which total $52,000.
¶17 Together, this evidence supports the trial court's implicit conclusion that Burns had carried her burden of demonstrating which portion of the balance of the Wells Fargo account retained its separate character. See Evans, 79 Ariz. at 287; Cooper, 130 Ariz. at 260. It shows that deposits from the parties' joint account during the marriage were more than offset by withdrawals Burns testified reflected wedding and community expenses the parties intended to repay. Other deposits were either identified as stemming from non-community sources or offset by roughly equivalent cash withdrawals. Thus, it was reasonable for the court to use the starting value of the account before the parties' borrowing occurred to measure enrichment during the existence of the community, rather than attempting to parse in detail the complicated bank records.
¶18 Young argues that, even if the trial court correctly treated funds repaying the Wells Fargo account and other deposits as separate, the court's "accounting is not correct." In particular, he contends the account's balance in November 2020, "just before marriage," was $33,831, not "about $54,205.49" as found by the court. But Young refers to the balance remaining at the end of December 2020. Burns testified that she and Young started borrowing from the account in November to pay for their wedding. The record reflects a balance of precisely $54,205.49 on November 4, 2020, and it therefore supports the court's finding.
¶19 In sum, based on our de novo review of the record-viewing the evidence in the light most favorable to supporting the trial court's decision-we conclude that the court correctly characterized the balance of the Wells Fargo account as separate property insofar as it was equivalent to the balance of that account before the parties began borrowing from it to fund wedding and community expenses. See Hatcher, 188 Ariz. at 157; Hammett, 247 Ariz. 556, ¶ 13. The court's equal division of the remainder of the account balance-which was consistent with its equal division of other community accounts, including Burns's business account and the accounts associated with her adult children-was well 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.
Designer Purse and Jewelry Collection
¶20 Young argues that, "[d]uring the marriage, [Burns] purchased numerous designer purses from community property sources and also expensive jewelry," with the value of those purchases exceeding $60,000. He claims to have established these purchases by "clear and convincing evidence" in the form of bank statements, which he says provide "clear proof of the value and existence of the purses and jewelry." He contends the trial court "abused its discretion in refusing to accept the evidence and in refusing to award [him] an equalization payment for such property."
¶21 The trial court concluded that it lacked sufficient evidence to determine "what exactly the purchases related to." We agree. The bank statements in question reflect only the name and general location of the stores where the disputed transactions occurred, the date each charge posted, and the dollar amount of the purchases in question. The records alone do not establish what was purchased, by whom, or for what purpose.
We also note that Young's briefs provide varying values for the purported luxury purse and jewelry collection, ranging from $40,000 and "over $40,000," to "over $48,000" and even "exceed[ing] $60,000."
¶22 At trial, Burns adamantly disputed that all of the charges highlighted during Young's testimony reflected her purchase of luxury purses and jewelry for herself. She testified that many of the challenged purchases were gifts from Young to her, and that others involved items Young had purchased for himself. Young disputed this testimony. But it was for the trial court to weigh this competing testimony and assess the credibility of the witnesses appearing before it. See Gutierrez, 193 Ariz. 343, ¶ 13. We find no abuse of discretion in the trial court's determination that it "lack[ed] sufficient evidence to find that [Young] is due an equitable offset in relation to these purchases."
Disposition
¶23 For the foregoing reasons, we affirm the trial court's dissolution decree. As the prevailing party, Burns is entitled to her costs on appeal, A.R.S. § 12-341, upon her compliance with Rule 21(b), Ariz. R. Civ. App. P.