Opinion
No. 2 CA-CV 2017-0010-FC
07-21-2017
IN RE THE MARRIAGE OF KIP B. KEMPTON, Petitioner/Appellant, and STACY L. KEMPTON, Respondent/Appellee.
COUNSEL Berkshire Law Office, PLLC, Phoenix By Keith Berkshire and Erica Gadberry Counsel for Petitioner/Appellant The Murray Law Offices, P.C., Scottsdale By Stanley David Murray Counsel for Respondent/Appellee
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Graham County
No. DO201200197
The Honorable Dean C. Christoffel, Judge Pro Tempore
AFFIRMED
COUNSEL Berkshire Law Office, PLLC, Phoenix
By Keith Berkshire and Erica Gadberry
Counsel for Petitioner/Appellant The Murray Law Offices, P.C., Scottsdale
By Stanley David Murray
Counsel for Respondent/Appellee
MEMORANDUM DECISION
Presiding Judge Staring authored the decision of the Court, in which Judge Espinosa and Judge Kelly concurred. STARING, Presiding Judge:
The Hon. Virginia C. Kelly, a retired judge of this court, is called back to active duty to serve on this case pursuant to orders of this court and our supreme court.
¶1 Kip Kempton appeals from the trial court's award of attorney fees to his former spouse, Stacy Kempton, arguing the trial court erred by (1) concluding the parties' settlement agreement did not resolve payment of attorney fees, (2) enforcing the agreement despite the omission of a term resolving attorney fees, and (3) awarding fees pursuant to A.R.S. § 25-324 without conducting a separate hearing. For the reasons that follow, we affirm.
Factual and Procedural Background
¶2 We view the facts in the light most favorable to upholding the trial court's decision. In re Marriage of Foster, 240 Ariz. 99, ¶ 2, 376 P.3d 702, 703 (App. 2016). The parties married in 1991, and have three children together. Kip petitioned for legal separation in January 2012, and, in October 2014, Stacy requested amendment of the pleadings pursuant to A.R.S. § 25-313(4) to seek dissolution of the marriage.
¶3 On February 8, 2016, the parties reached a comprehensive settlement agreement, which expressly provided the parties would bear their own attorney fees. As permitted by its terms, Kip rescinded the agreement in its entirety the following day, because he was unable to secure a loan to make a $425,000 lump sum equalization payment.
Although both parties refer to the exhibit of the February 8 agreement, the record on appeal does not include any trial exhibits. We therefore rely on the parties' testimony concerning the substance of the rescinded agreement.
¶4 Also on February 9, Kip made another written settlement offer that provided for a cash equalization of $383,500, comprised of an initial payment of $100,000 and minimum monthly payments to repay the balance over ten years. The February 9 offer did not contain any provision concerning attorney fees. Stacy promptly accepted the offer, and Kip's attorney filed a notice of settlement, which contained a stipulation to vacate the trial scheduled for February 18-19.
¶5 The parties subsequently disagreed about whether the second settlement agreement had determined the issue of attorney fees. The trial court held a hearing, and found the agreement as outlined in the February 9 letter was enforceable and did not resolve attorney fees. At the court's direction, the parties submitted affidavits, documentary evidence, and written arguments on the issue. The court thereafter signed a decree that included a $75,000 award of attorney fees to Stacy. Kip filed a timely notice of appeal, and we have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
The decree contains a provision stating the amount of attorney fees and costs are undetermined but that the decree is otherwise final and appealable pursuant to Rule 78(B), Ariz. R. Fam. Law P. The trial court directed the parties to include this statement in the form of decree, but then included attorney fees and costs in the decree without removing the contrary statement. It is clear that attorney fees and costs were decided, and that the decree is final with respect to all issues.
Interpretation and Enforceability of Settlement Agreement
¶6 Despite the omission of any attorney fees provision, Kip argues the parties intended the February 9 settlement agreement to preclude any award of attorney fees, and that such intent is evident from the subsequent notice of settlement stating "the parties ha[d] reached a full settlement of all issues." Otherwise, Kip contends, there was no "meeting of the minds" and the entire agreement is invalid.
¶7 General principles of contract law govern determinations concerning the validity, interpretation, and scope of settlement agreements. Emmons v. Superior Court, 192 Ariz. 509, ¶ 14, 968 P.2d 582, 585 (App. 1998). We thus review de novo the trial court's conclusion that the settlement agreement is enforceable. See Estate of DeCamacho ex rel. Guthrie v. La Solana Care & Rehab, Inc., 234 Ariz. 18, ¶ 9, 316 P.3d 607, 609 (App. 2014). We also review de novo the court's interpretation of the agreement. See Jordan v. Rea, 221 Ariz. 581, ¶ 15, 212 P.3d 919, 926 (App. 2009) (parenting plan analogous to contract, reviewed de novo).
¶8 A written agreement between the parties to a family law case is "presumed to be valid and binding," and any party challenging the agreement has the burden of proving otherwise. Ariz. R. Fam. Law P. 69(A)(1), (B). An agreement is generally not binding unless both parties mutually assent to all material terms. Hill-Shafer P'ship v. Chilson Family Tr., 165 Ariz. 469, 473, 799 P.2d 810, 814 (1990). The requisite assent is determined, however, based on the outwardly objective appearance of mutual assent, and not "the hidden intent of the parties." Id. at 474, 799 P.2d at 815; see also Ames v. Ames, 239 Ariz. 246, ¶ 15, 370 P.3d 115, 118 (App. 2016).
¶9 Here, Kip's attorney transmitted an offer letter containing proposed settlement terms, which Stacy promptly accepted. Although Kip contends he intended the agreement to resolve all issues, nothing in the February 9 offer communicates this intent in an outwardly objective manner. In fact, the offer failed to address several issues in addition to attorney fees, including retroactive support payments, whether Stacy should be required to refinance the former marital home within twenty-four months, and the division of several items of personal property.
¶10 Kip argues the trial court erred by not considering extrinsic evidence, including the term in the rescinded settlement agreement that both parties would bear their own attorney fees. See Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 153-54, 854 P.2d 1134, 1139-40 (1993) (court may consider extrinsic evidence in determining parties' intent). He contends that the February 9 agreement was almost identical to the first agreement, and merely changed the equalization payment and spousal maintenance terms, and that the court should have concluded the parties intended the February 9 agreement to contain the same terms, including an agreement that the parties would bear their own attorney fees.
¶11 The trial court, however, did consider evidence of the rescinded agreement, over Stacy's objection, and ultimately rejected Kip's interpretation. The court found the two agreements "differed in material ways," the second agreement was unambiguous, and that, regardless of the reason why the February 9 agreement contained no term resolving attorney fees, nothing warranted expanding the agreement beyond its express terms.
The trial court found, inter alia, that "[t]here is no ambiguity in the agreement . . . and therefore, there is nothing that will permit the [c]ourt to go beyond the plain meaning of the agreement." When read in isolation, this statement might suggest the trial court relied on the lack of textual ambiguity to deny consideration of Kip's extrinsic evidence, contrary to the warning in Taylor, 175 Ariz. at 153-54, 854 P.2d at 1139-40. Construed together, however, with the court's findings concerning the material differences between the agreements and lack of any reference to attorney fees in the February 9 agreement, the court's decision to enforce the express terms of the agreement does not suggest it misapplied Taylor.
¶12 Moreover, even if we accept Kip's assertion that the second agreement essentially approximated the equalization amount and other terms from the first agreement, it does not follow that the two agreements were essentially equal. The second agreement provided for an initial payment of $100,000 and payment of the balance of the $383,500 equalization over ten years, as opposed to the lump sum payment of $425,000 required by the first agreement. In light of the lowered payment amount, and the extended payment schedule, we cannot conclude Stacy should have viewed the agreements as essentially equal and thereby understood that Kip intended for the second agreement to require her to bear her own attorney fees.
¶13 And, although the notice of settlement stated "the parties ha[d] reached a full settlement of all issues," it did not include any terms supplementing the February 9 agreement. Stacy testified she had not seen the notice of settlement before filing, and had focused solely on the written offer terms before agreeing to accept. On this record, the trial court did not err in determining the notice was merely a statement by counsel and separate from the parties' settlement agreement. Furthermore, the court could not have found that the notice supplemented the agreement without essentially rewriting it by inserting a term specifying the resolution concerning attorney fees. "It is not within the province or power of the court to alter, revise, modify, extend, rewrite or remake an agreement." Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472, 421 P.2d 318, 320 (1966).
We find Kip's citations to authority concerning latent ambiguity and misunderstanding distinguishable. In Hill-Shafer Partnership, the agreement was rescinded for lack of assent because it contained an incorrect property description neither party understood. 165 Ariz. at 475-76, 799 P.2d at 816-17. In Buckmaster v. Dent, the contract was unenforceable for lack of mutual assent because it failed to specify which of two existing easements it governed. 146 Ariz. 521, 523, 707 P.2d 319, 321 (App. 1985). Here, in contrast, it was possible to enforce the February 9 agreement as written.
¶14 Accordingly, we conclude the trial court did not err in determining the February 9 agreement was enforceable and did not contain any terms concerning attorney fees.
Hearing Requirement
¶15 In the alternative, Kip argues the trial court violated his right to due process when it awarded Stacy attorney fees pursuant to A.R.S. § 25-324 without conducting a separate evidentiary hearing on the parties' financial resources and the reasonableness of their positions. He contends both issues involved credibility determinations and thus required live testimony and the opportunity for cross-examination.
Although it does not appear Kip explicitly mentioned due process in his arguments below, we have discretion to consider constitutional arguments not raised before the trial court. See Ramsey v Yavapai Family Advocacy Ctr., 225 Ariz. 132, ¶ 19, 235 P.3d 285, 291 (App. 2010).
¶16 Section 25-324(A) allows a trial court to award attorney fees in dissolution proceedings "after considering the financial resources of both parties and the reasonableness of the positions each party has taken throughout the proceedings." We review a court's decision to award fees under § 25-324 for an abuse of discretion. Myrick v. Maloney, 235 Ariz. 491, ¶ 6, 333 P.3d 818, 821 (App. 2014). Kip's due process claim is a question of law that we review de novo. See Savord v. Morton, 235 Ariz. 256, ¶ 16, 330 P.3d 1013, 1017 (App. 2014).
¶17 "The fundamental requirement of due process is the opportunity to be heard 'at a meaningful time and in a meaningful manner.'" Mathews v. Eldridge, 424 U.S. 319, 333 (1976), quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965). Determining the specific requirements of due process in a civil proceeding generally requires considering "(1) the nature of 'the private interest that will be affected,' (2) the comparative 'risk' of an 'erroneous deprivation' of that interest with and without 'additional or substitute procedural safeguards,' and (3) the nature and magnitude of any countervailing interest in not providing 'additional or substitute procedural requirement[s].'" Turner v. Rogers, 564 U.S. 431, 444-45 (2011), quoting Mathews, 424 U.S. at 335 (alteration in Turner). In other words, the procedures required to satisfy due process differ according to the interests involved and the likelihood more robust procedures will improve the accuracy of the decision. See Mathews, 424 U.S. at 344 ("procedural due process rules are shaped by the risk of error inherent in the truthfinding process").
¶18 Consistent with due process, a trial court may not make required factual findings on a contested issue without allowing the parties to submit any evidence. See Murray v. Murray, 239 Ariz. 174, ¶ 18, 367 P.3d 78, 83 (App. 2016) (findings concerning children's best interests may not be made based on arguments alone). Moreover, where "a material contested issue" requires the court to make credibility determinations, deciding the issue without taking testimony "categorically violates due process." Volk v. Brame, 235 Ariz. 462, ¶ 14, 333 P.3d 789, 793-94 (App. 2014); see also Pridgeon v. Superior Court, 134 Ariz. 177, 181-82, 655 P.2d 1, 5-6 (1982) (court considering petition to modify child custody may determine whether hearing is required based on affidavits, but must conduct hearing if affidavits "are directly in opposition upon any substantial and crucial fact"). Due process, however, does not mandate a hearing on every contested matter. For example, in Mathews, the Supreme Court concluded that a review of written documents and exhibits was an adequate safeguard before an initial termination of disability benefits. 424 U.S. at 344-45. In discussing decisions concerning the requirement for a hearing prior to deprivation of a property interest, the Court observed that only one decision had required "a hearing closely approximating a judicial trial." Id. at 333-34; see also Goldberg v. Kelly, 397 U.S. 254, 266-71 (1970) (discussing due process requirements for hearing prior to termination of welfare benefits).
Mathews involved social security disability benefits. 424 U.S. at 323-24. As another example, litigation of disability coverage disputes under private employer-sponsored policies usually allows only for review of the administrative record. See Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 943-44 (9th Cir. 1995). --------
¶19 In this case, the trial court concluded an evidentiary hearing was not required because the parties' settlement agreement resolved the contested factual issues related to Kip's income and the valuation of his business and property interests. The court explicitly considered the cost of conducting an additional hearing, and concluded any remaining issues could be resolved by considering the written evidence and arguments.
¶20 Further, Kip fails to provide any meaningful explanation of how his rights were violated. He does not argue the trial court's determination of attorney fees based on negotiated financial figures, documentary evidence, and written arguments deprived him of an opportunity to be heard, or that it created any risk of an erroneous decision. His argument below was that there was no true disparity after accounting for the pending equalization payment. Here, in conclusory fashion, he asserts credibility was at issue and a hearing was therefore required. But he fails to identify any contested factual issue requiring the court to weigh the credibility of testimony, or any specific evidence he sought to present by way of live testimony that would have improved the court's decision. Kip has thus failed to demonstrate that the court's use of negotiated income and property amounts, as well as arguments of counsel, to determine reasonableness and income disparity deprived him of a meaningful opportunity to be heard. Accordingly, we conclude he has failed to meet his burden of proving the court erred in not conducting a separate evidentiary hearing. See Gen. Elec. Capital Corp. v. Osterkamp, 172 Ariz. 191, 193, 836 P.2d 404, 406 (App. 1992) (appellant has burden of proving trial court error to obtain relief).
Attorney Fees on Appeal
¶21 In our discretion, we deny both parties' requests for an award of attorney fees on appeal pursuant to A.R.S. § 25-324 and Rule 21(a), Ariz. R. Civ. App. P. Stacy is, however, entitled to an award of costs on appeal pursuant to A.R.S. § 12-341, subject to her compliance with Rule 21(b).
Disposition
¶22 For the foregoing reasons, we affirm.