Opinion
2 CA-CV 2020-0142-FC
07-08-2021
In re the Marriage of Li Yao, Petitioner/Appellant/Cross-Appellee, v. Bohua Zhang, Respondent/Appellee/Cross-Appellant.
Ayala Law Office P.C., Tucson By Siovhan Ayala Counsel for Petitioner/Appellant/Cross-Appellee Berkshire Law Office PLLC, Tempe By Keith Berkshire and Kristi Reardon Counsel for Respondent/Appellee/Cross-Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pima County No. D20180241 The Honorable Renee T. Bennett, Judge.
Ayala Law Office P.C., Tucson By Siovhan Ayala Counsel for Petitioner/Appellant/Cross-Appellee
Berkshire Law Office PLLC, Tempe By Keith Berkshire and Kristi Reardon Counsel for Respondent/Appellee/Cross-Appellant
Judge Brearcliffe authored the decision of the Court, in which Presiding Judge Eppich and Chief Judge Vásquez concurred.
MEMORANDUM DECISION
BREARCLIFFE, Judge.
¶1 Li Yao appeals the final decree of dissolution of his marriage to Bohua Zhang. Yao argues on appeal that the trial court erred in its disposition of property. We affirm.
Factual and Procedural Background
¶2"On appeal, we view the evidence in the light most favorable to affirming the [trial] court's ruling and will affirm if the evidence reasonably supports it." Lehn v. Al-Thanayyan, 246 Ariz. 277, ¶ 14 (App. 2019). Yao, a U.S. citizen, and Zhang, who emigrated from the People's Republic of China ("PRC"), were married in 2010 in the PRC. Yao petitioned for dissolution of marriage in 2018. During their marriage, between October and December 2012, they purchased four properties in the PRC: the Rongchen condominium ("condominium"), the Rongchen parking garage ("garage"), and two retail/commercial properties, Eco-City #112 and Eco-City #107. Only Zhang's name appeared on the purchase and ownership documents for these four properties. There was no dispute that each property was purchased with funds withdrawn from Zhang's bank accounts, except the earnest money for the condominium, which was withdrawn from Yao's bank account.
The trial court found that Yao could not legally own property in the PRC and that, therefore, this fact alone was not sufficient to characterize it as Zhang's sole and separate property.
¶3Zhang claimed throughout the proceedings, and at trial, that the four disputed properties were her sole and separate property because the funds from her account used to purchase the properties came from the sale of premarital assets. Before trial, Yao asserted the properties were community property. On the last day of trial, however, Yao claimed the properties were his sole and separate property because the properties were purchased with proceeds from the sale of his separate property.
¶4 The trial court found that Zhang had shown by clear and convincing evidence that the garage was her sole and separate property, but that neither party had sufficiently shown that the remainder were not community property. The court awarded the condominium and Eco-City #107 to Zhang subject to her paying Yao an equalization payment and ordered Eco-City #112 to be sold and the proceeds distributed equally.
¶5 In May 2020, Zhang filed a motion for reconsideration and/ or clarification, in which she asked the trial court to award her Eco-City #112 and order her to pay Yao an equalization payment. Zhang reasoned that, because they had been trying to sell Eco-City #112 for the past five years without success, it was unlikely the property would be sold soon considering the COVID-19 pandemic. Yao opposed the motion, disputing many of its factual assumptions, and suggested other methods of handling the sale of the property. The court granted Zhang's motion. The final decree of dissolution was entered in July 2020. Yao appealed this judgment. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
Zhang filed a notice of cross-appeal from the decree of dissolution. However, Zhang did not file a combined opening brief on cross-appeal with her answering brief on appeal, as is required in Rule 15(a)(4), Ariz. R. Civ. App. P. And while Zhang argues in her answering brief that, even if Yao had proved by clear and convincing evidence that the properties were purchased with his separate money, the properties would be transmuted into community property, such an argument is a cross-issue, not a cross-appeal. See Larkin v. State ex rel. Rottas, 175 Ariz. 417, 424-25 (App. 1992) (alternative theories to uphold trial court decision are cross issues not cross appeals). Therefore, we only address Yao's appeal.
Analysis
Clear and Convincing Evidence of Separate Property
¶6 Yao first argues that the trial court erred in finding that he had not shown by clear and convincing evidence that the condominium, garage, and the Eco-City properties were his sole and separate property. "The superior court's characterization of property is a question of law that we review de novo." Hefner v. Hefner, 248 Ariz. 54, ¶ 6 (App. 2019). However, we review the division of property and factual determinations for an abuse of discretion. Id.
¶7 Property obtained during marriage is presumed to be community property, and the spouse seeking to overcome that presumption must show by clear and convincing evidence that the property is separate. Brebaugh v. Deane, 211 Ariz. 95, ¶ 6 (App. 2005). The trial court determined that neither party had presented clear and convincing evidence that three properties - the Eco-City properties and the condominium-were either's separate property, and found them therefore to be community property. "Whether evidence is sufficient to be clear and convincing is for the trial court and its findings will not be disturbed unless as a matter of law no one could reasonably find the evidence to be clear and convincing." Stevenson v. Stevenson, 132 Ariz. 44, 46 (1982).
¶8 Yao asserts, as he did below, that he bought certain land prior to marrying Zhang for ¶1.5 million and sold it in 2012 for ¶6.51 million. He claims that he then transferred the funds he received from that sale to Zhang's bank accounts, which was then used to purchase the four contested properties. The only evidence Yao presented of the sale of this property in 2012 was a power of attorney document, which did not state how much the land was sold for. And the only evidence he provided showing he purchased the land in 2008 showed that he paid ¶18, 000, not ¶1.5 million. While Yao offered explanations for this discrepancy and lack of other supporting evidence, the trial court was not bound to accept such explanations. We defer to the trial court's determination of a witness's credibility. Gutierrez v. Fox, 242 Ariz. 259, ¶ 49 (App. 2017).
¶9 Yao did present evidence that money was transferred from his account to Zhang's accounts at the time the four disputed properties were purchased. However, the fact of these transfers does not show that each property was purchased with Yao's sole and separate funds. Based on the record and the significant deference we give the trial court in weighing evidence, judging credibility, and characterizing property, we cannot say the court abused its discretion in concluding that Yao failed to carry his burden.
Valuation of Properties
¶10 Yao also claims that the trial court abused its discretion and made an error of law when it based its valuation of the four disputed properties on Zhang's valuations. "The valuation of assets is a factual determination that must be based on the facts and circumstances of each case." Kelsey v. Kelsey, 186 Ariz. 49, 51 (App. 1996). We review the trial court's valuation of the properties for an abuse of discretion. See Hefner, 248 Ariz. 54, ¶ 6 (factual determinations reviewed for abuse of discretion). A trial court abuses its discretion when it misapplies the law or predicates its decision on incorrect legal principles." Id.
Because the court awarded the garage to Zhang as her separate property, and we have affirmed that decision, we do not address this argument as to the value of the garage.
¶11 Yao argues that the trial court abused its discretion by accepting Zhang's estimated valuation of the properties "without any evidence corroborating" her estimation. The court valued Eco-City #112 at $225,828.57 and Eco-City #107 at $211,057.14, and valued the condominium at $178,766 "based on an annual increase in value of 10%." Regarding the condominium, both parties testified at trial as to the rate at which property values increase in the PRC every year. The court adopted Zhang's estimate of ten percent. Additionally, the court "rejected [Yao's] assertion that property in Eco-City had increased in value," and "accepted [Zhang's] estimate of valuation as more credible." Neither Yao nor Zhang provided independent appraisals of the properties and Zhang testified that appraisals could not be obtained in the PRC unless the property owner is trying to sell his property. Zhang's daughter also testified about and provided evidence of an explosion in 2015 that occurred near the Eco-City properties to support her estimation that they had decreased in value. Although Yao claims Zhang's testimony was "grossly inaccurate," he provided no evidence of his own.
¶12 "[I]t is well established law that an owner of property is always competent to testify as to its value," and "[a]ny explanation of how he arrived at that value merely goes to the weight of his evidence." Bd. of Regents of the Univ. & State Colls. of Ariz. v. Cannon, 86 Ariz. 176, 178 (1959). We will defer to the weight the court gives to conflicting evidence and witness credibility, Gutierrez v. Gutierrez, 193 Ariz. 343, ¶ 13 (App. 1998), and, in resolving such factual disputes as this, it is the trial court's duty to use its best judgement under the circumstances, Reed v. Reed, 82 Ariz. 168, 172 (1957). Therefore, because Zhang's testimony and evidence supports the court's valuation, we find the court did not abuse its discretion in valuing those properties as it did. See Little v. Little, 193 Ariz. 518, ¶ 5 (1999).
Zhang's Motion for Reconsideration
¶13 Finally, Yao argues that the trial court abused its discretion in granting Zhang's motion for reconsideration and awarding her the Eco-City #112 property subject to an equalization payment. We review the court's ruling on a motion for reconsideration for an abuse of discretion, McGovern v. McGovern, 201 Ariz. 172, ¶ 6 (App. 2001), and we will only find such an abuse if the court's ruling was "manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons," Tilley v. Delci, 220 Ariz. 233, ¶ 16 (App. 2009). And, as noted above, we review the court's apportionment of community property between the parties at dissolution for an abuse of discretion. See Hefner, 248 Ariz. 54, ¶ 6.
¶14 Yao argues that the trial court's acceptance of Zhang's motion for reconsideration was "without any reason." He asserts that this order gave Zhang "the benefit of selling [Eco-City #112] at an actual higher value," and "also punished [him] by depriving him the opportunity [to] sell the property at a higher value."
¶15 As Zhang noted in her answering brief on appeal, Yao has not provided this court with the transcript for the June 25 resolution management conference at which the trial court granted Zhang's motion for reconsideration. "If the appellant will contend on appeal that a judgment, finding or conclusion, is unsupported by the evidence . . . the appellant must include in the record transcripts of all proceedings containing evidence relevant to that judgment, finding or conclusion." Ariz. R. Civ. App. P. 11(c)(1)(B). When the necessary transcripts are not provided on appeal, we will assume the missing transcripts support the trial court's decision. Kline v. Kline, 221 Ariz. 564, ¶ 33 (App. 2009). Therefore, we presume that the transcript of the June 25 resolution management conference supports the court's decision to grant Zhang's motion for reconsideration and that its decision was not "without reason." The record nonetheless provides reasonable support for the court's decision, namely Zhang's testimony that the parties had been trying to sell the Eco-City #112 for five years. Based on how long Zhang had been trying to sell the property without success, it was not unreasonable for the court to grant both the motion for reconsideration and the relief requested.
¶16 Community property must be divided equitably, though not necessarily in kind. Schickner v. Schickner, 237 Ariz. 194, ¶ 14 (App. 2015). Equitable division normally means an equal division. Lynch v. Lynch, 164 Ariz. 127, 130 (App. 1990). By awarding the property to Zhang and ordering an equalization payment to Yao based on the trial court's accepted valuation, the court equally divided the value of the property. Because the court has broad discretion in how it equitably distributes property if such distribution does not award or punish either party, Lee v. Lee, 133 Ariz. 118, 121 (App. 1982)-and there is no evidence the motion for reconsideration was granted to punish Yao-we cannot say the court abused its discretion here either in granting the motion for reconsideration or in the ultimate relief granted.
Attorney Fees and Costs on Appeal
¶17 Zhang has requested attorney fees and costs on appeal pursuant to A.R.S. § 25-324 and Rule 21, Ariz. R. Civ. App. P. Section 25-324 requires us to consider Yao and Zhang's financial resources and the reasonableness of their positions on appeal. See Leathers v. Leathers, 216 Ariz. 374, ¶ 22 (App. 2007); see also Lehn, 246 Ariz. 277, ¶ 33. Because the trial court found that a financial disparity exists between Yao and Zhang and nothing we have decided on appeal has changed this finding, in our discretion, we award Zhang the requested attorney fees and costs on appeal upon compliance with Rule 21, Ariz. R. Civ. App. P. See Magee v. Magee, 206 Ariz. 589, ¶ 22 (App. 2004).
Disposition
¶18 For the foregoing reasons, we affirm the decree of dissolution.