Opinion
No. 1 CA-CV 14-0526 FC
01-28-2016
In re the Marriage of: MARY L. LANGFORD, Petitioner/Appellee, v. GERALD R. LANGFORD, Respondent/Appellant.
COUNSEL Law Office of Judith E. Abramsohn, Phoenix By Judith E. Abramsohn Counsel for Petitioner/Appellee Jack H. Simon Attorney at Law, Phoenix By Jack H. Simon 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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. FN2012-002755
The Honorable Sam J. Myers, Judge
AFFIRMED IN PART AND VACATED IN PART AND REMANDED
COUNSEL Law Office of Judith E. Abramsohn, Phoenix
By Judith E. Abramsohn
Counsel for Petitioner/Appellee Jack H. Simon Attorney at Law, Phoenix
By Jack H. Simon
Counsel for Respondent/Appellant
MEMORANDUM DECISION
Judge Samuel A. Thumma delivered the decision of the Court, in which Presiding Judge Kenton D. Jones and Judge Peter B. Swann joined. THUMMA, Judge:
¶1 Gerald R. Langford (Husband) challenges the property distribution in a decree of dissolution with Mary L. Langford (Wife). For the reasons set forth below, the Decree is affirmed in part and vacated in part and remanded for further consideration consistent with this decision.
FACTS AND PROCEDURAL HISTORY
¶2 Wife filed a petition for dissolution of marriage without minor children in June 2012. The parties reached a valid, binding partial settlement agreement providing that Husband would be awarded the machinery, tools, equipment and hardware used in the community's "machine shop businesses," and "in exchange, Wife will be awarded title to the family residence and all equity therein." After trial, the Decree divided other property and obligations. From Husband's timely appeal, this court has jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) sections 12-2101(A)(1) and (5) (2016).
Absent material revisions after the relevant dates, statutes and rules cited refer to the current version unless otherwise indicated.
DISCUSSION
¶3 Husband challenges the allocation, valuation and characterization of various assets and obligations and the denial of his new trial motion. The Decree's equitable allocation of community property is reviewed for an abuse of discretion. Boncoskey v. Boncoskey, 216 Ariz. 448, 451 ¶ 13 (App. 2007).
I. Partial Settlement Agreement.
¶4 Husband argues the Decree does not properly reflect the parties' settlement agreement because it improperly values settlement agreement property in a manner that Husband claims was improperly "intertwined" with the allocation of community assets and obligations not subject to the agreement. The superior court, however, allocated the remaining community assets and obligations without referring to the values attributed to the settlement agreement property. The superior court did not suggest that the values attributed to settlement agreement property affected the distribution of other community property or debts. Instead, the court appears to have implemented the settlement agreement and attempted to equitably allocate the remaining assets. Therefore, any issue in attributing values to settlement agreement property was not error.
¶5 Husband next argues the Decree failed to award Aero Precision Machining (Aero) to him pursuant to the settlement agreement. The trial evidence established that Aero and L & L Fabrication constituted the "machine shop businesses" awarded to Husband in the settlement agreement. The Decree, however, did not allocate Aero to Husband or mention Aero. Because the settlement agreement allocated Aero to Husband, the failure of the Decree to do so was error. On remand, Aero should be awarded to Husband pursuant to the settlement agreement.
II. Equitable Division Of Community Property.
¶6 The superior court found "that this case does not present a unique set of facts or circumstances. Therefore, an equal division of community property is appropriate to achieve equity." See A.R.S. § 25-318(A); Toth v. Toth, 190 Ariz. 218, 221 (1997). Although that determination is not challenged on appeal, Husband argues the Decree did not equitably divide the community property in several respects.
A. Toyota Tundra And Trailer.
¶7 Husband argues a Toyota Tundra and trailer were used solely for the community businesses; as business assets, he should have received them in the settlement agreement and they should not have been implicated in the Decree's division of community property. Wife contends the Tundra and trailer were community property and, therefore, not subject to the settlement agreement.
¶8 The classification of property as community or separate is a question of law reviewed de novo. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523 ¶ 4 (App. 2007). Where there is a mixed question of law and fact on appeal, this court accepts the superior court's facts unless clearly erroneous, but reaches its own legal conclusions from the facts found by the superior court. Huskie v. Ames Bros. Motor & Supply Co. Inc., 139 Ariz. 396, 401 (App. 1984).
¶9 There was conflicting evidence as to whether the Tundra and trailer were owned by the businesses or the community. Husband points to the parties' 2010 and 2011 tax returns, stating the Tundra was used exclusively for business purposes. Neither the Tundra nor the trailer, however, was identified as a business asset in the settlement agreement. Moreover, neither was titled in any community business. The Tundra was titled in both parties' names, while the trailer was titled in Husband's name. "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, 347 ¶ 13 (App. 1998). Given this conflicting evidence, Husband has not shown the superior court erred in concluding that the Tundra and trailer were community property.
Husband also objects to language in the Decree which states that, as to the Toyota Tundra and trailer (and a Harley Davidson motorcycle discussed below), Husband "shall be responsible for any debt associated with the foregoing property and shall hold [Wife] harmless from any debt or liabilities associated with same." Husband, however, has not shown that this standard language was prejudicial or entitles him to relief.
¶10 Husband also argues the superior court abused its discretion by accepting Wife's testimony that the Tundra was worth $11,000. Again, the evidence regarding the value of the Tundra was disputed and Husband has not shown the court abused its discretion in accepting Wife's valuation. See Huskie, 139 Ariz. at 401. Accordingly, the superior court did not err in awarding or valuing the Toyota Tundra and trailer.
B. Returned Check On Business Account 9173.
¶11 The superior court found Husband withdrew business funds from Arizona Federal Credit Union (AFCU) business account 9173 and diverted business receivables from this account. As a result, the court ordered Husband to pay a "[b]ounced check" for $3,102.15 drawn on business account 9173. Husband contends this is not supported by the record and that Wife's withdrawal caused the check to bounce.
Wife contends Husband is precluded from raising this issue on appeal because he offered to pay this debt in his proposed decree. Husband's proposed decree, however, was never entered. Thus, Husband is not precluded from raising this issue on appeal.
¶12 The evidence on the point was conflicting, including evidence about Husband diverting business payments from Tyco Trailers. Moreover, the payments by Tyco to Brandwood Cars, which purportedly did work on behalf of L & L Fabrication, were made after the date the check bounced. Accordingly, any diversion of income appears to have no bearing on the fact the check bounced. It is not clear from the record which party made a withdrawal from business account 9173 that caused the check to bounce or whether there were sufficient funds in the account when the check was written. The debt, however, was an L & L Fabrication business expense, and because Husband properly was awarded L & L Fabrication under the settlement agreement, it was not an abuse of discretion to require him to pay the bounced check for $3,102.15 drawn on business account 9173.
C. Debt to Doris Langford.
¶13 Husband argues the superior court failed to address community debt owed to Doris Langford, his mother. At trial, Husband testified Doris loaned the community $159,513.97 over the course of the marriage. Husband offered bank records showing the transfer of funds from Doris' account to the community, but only one cancelled check indicated that it was a loan. Wife admitted the parties borrowed $55,000 from Doris to acquire Sandbullet Motorsports, Inc.; however, she testified the parties did not owe Doris any money. The superior court has discretion to weigh witness credibility and conflicting evidence. See Gutierrez, 193 Ariz. at 347 ¶ 13. There was testimony and other evidence supporting the superior court's implicit conclusion that the community did not owe a debt to Doris. Accordingly, Husband has shown no error in addressing the claimed community debt owed to Doris.
D. Joint Expenses.
¶14 Husband was ordered to reimburse Wife one-half of the amount Wife claimed she spent between July 16, 2012 and August 12, 2013 (half of $4,217.58) for her contributions to community expenses during that period. According to Wife's summary, these expenses included premiums for life and dental insurance for both parties, insurance on the Monte Carlo, payments on a Kohl's credit card, payment on a First Edition credit card (sometimes referred to as the Elan card/Card Member Service account), T-Mobile payments and an insufficient funds charge.
¶15 Husband argues these are not community obligations because they were incurred after the community terminated on June 20, 2012. See A.R.S. § 25-211(A)(2). Husband also contends the life and dental insurance policies did not benefit the community. Husband, however, does not argue that these policies did not exist during the marriage, and the parties are required to maintain insurance coverage. See A.R.S. § 25-315(A)(1)(c). Thus, the policies remained community obligations until allocated by the court. Therefore, the insurance payments remained community obligations for which Husband was equally responsible.
¶16 Although Wife did not provide much detail about the remaining expenses, she testified they were "joint expenses." The evidence suggests the First Edition card included at least some previous community purchases; therefore, Husband remained responsible for one-half of those credit card payments. As to the Kohl's and T-Mobile charges, the court was presented only with Wife's claim that they were "joint expenses" and Husband's denial. Neither party offered any evidence to establish when the charges were made or by whom. This court defers to the superior court's resolution of witness credibility and the weight to give conflicting evidence. See Gutierrez, 193 Ariz. at 347 ¶ 13. Accordingly, Husband has not shown error in the allocation of these expenses by the superior court.
Husband also contends the superior court erred because there was no evidence regarding the amount, if any, of the Kohl's and First Edition credit card obligations. To the extent there were no such obligations, as Husband suggests, the inclusion of this language was not prejudicial to either party because there was no obligation to pay.
III. Husband's Other Challenges To The Decree.
A. Sandbullet Motorsports, Inc.
¶17 The Decree states Sandbullet Motorsports, Inc.'s "remaining inventory [was] valued at approximately $20,000 in addition to the inventory valued at approximately $6,000 that is being stored by [Husband] at Brandwood Cars as established through trial testimony." The Decree also awarded Husband Sandbullet and the inventory and awarded Wife money market account 7098 in exchange. Husband contends that no evidence supported the $26,000 valuation.
¶18 Wife testified that her pretrial statement accurately stated the value of Sandbullet's inventory to be $20,000. Husband's objection to that evidence is not well taken, particularly where he offered no contradicting valuation, but asserted that the parties should sell Sandbullet assets and split the proceeds. That evidence, however, was the only evidence in the record regarding the value of Sandbullet. The $26,000 value attributed to Sandbullet's inventory in the Decree is not supported by Wife's pretrial statement, her testimony or by any other record evidence. Accordingly, the $26,000 valuation of Sandbullet's inventory cannot stand. As a result, and because Wife received the entire money market account 7098 in exchange for awarding Sandbullet and the inventory to Husband, the award of money market account 7098 similarly must be vacated. On remand, the court should determine a fair and equitable allocation of money market account 7098 based on the offsetting $20,000 valuation of Sandbullet's inventory that was supported by the evidence.
B. Motor Vehicles.
¶19 Apart from the Toyota Tundra and trailer discussed above, the Decree awarded Husband two vehicles in exchange for his interest in money market account 7098. Husband argues this was inequitable because the vehicles were not community property. The classification of property as community or separate is a question of law reviewed de novo. Bell-Kilbourn, 216 Ariz. at 523 ¶ 4. Where there is a mixed question of law and fact on appeal, this court accepts the superior court's facts unless clearly erroneous but reaches its own legal conclusions from the facts found by the trial court. Huskie, 139 Ariz. at 401.
1. Harley Davidson.
¶20 Husband argues the Harley Davidson was a gift and not community property. Property acquired by gift is the separate property of that spouse, A.R.S. § 25-213(A), while property acquired during the marriage is presumed to be community property, A.R.S. § 25-211(A). "[T]he spouse seeking to overcome the presumption has the burden of establishing the separate character of the property by clear and convincing evidence." Brebaugh v. Deane, 211 Ariz. 95, 98 ¶ 6 (App. 2005). Thus, Husband had the burden of proving a gift by clear and convincing evidence.
¶21 It was undisputed that Husband paid for the Harley Davidson with funds from a joint account Husband held with his mother. Husband testified the Harley Davidson was a gift from his mother and it was titled in Husband's name alone. There was no evidence that this was a loan. In fact, Wife's position was that they did not owe Husband's mother for the purchase. The evidence established, without contradiction, that the money to pay for the Harley Davidson was a gift from Husband's mother, meaning it was Husband's separate property and should not have been considered when dividing community assets. Therefore, in considering the allocation of money market account 7098 to Wife on remand, the Harley Davidson cannot be considered.
Wife contends any error was harmless because the overall property allocation would remain equitable. The superior court did not place a specific value on money market account 7098 or the Harley Davidson. Therefore, it is not possible to ascertain whether the award would remain equitable in light of the errors regarding Sandbullet and the Harley Davidson.
2. Monte Carlo.
¶22 The Decree awarded Husband a Monte Carlo the parties did not dispute was owned by Husband's mother. Property owned by a third party cannot be assigned in a Decree. See A.R.S. § 25-318(A). Accordingly, that portion of the Decree awarding the Monte Carlo to Husband is vacated. In considering the allocation of money market account 7098 to Wife on remand, the Monte Carlo cannot be considered.
C. Retirement Accounts.
¶23 The Decree stated that awarding each party his or her own retirement accounts with no offsets was fair and equitable based on the "surrender value" of those accounts. There were three retirement accounts: (1) a Troon 401(k) account in Wife's name; (2) an Allianz account in Husband's name and (3) an Allianz account in Wife's name.
¶24 Husband argues there was no evidence of the surrender value for the Troon 401(k) plan. Unlike the Allianz account statements (which list cash surrender and other values), the Troon 401(k) statement lists one "account balance" value. The Troon 401(k) statement was the only record evidence establishing the value of this account. Husband did not object or question whether this statement accurately reflected, or materially differed from, a surrender value. Accordingly, Husband has not shown the Decree's valuation of Wife's Troon 401(k) account was error.
¶25 Husband contends the Decree inconsistently stated the higher "accumulated value" for Husband's Allianz account and the lower "cash surrender value" for Wife's Allianz account. Although the Decree stated the valuation was based on the "surrender value," the amount attributed to Husband's Allianz account was the higher accumulation value (not the cash surrender value), while the amount attributed to Wife's Allianz account was the lower cash surrender value (not the accumulated value). Although Wife argues the Decree used analogous valuations based on definitions in the account statements, those definitions do not support that argument. Nor is there any suggestion that using a different valuation for these accounts was justified, particularly where the Decree reflects an intent to use the same valuation method for both accounts. The use of different valuation methods to value the Allianz accounts resulted in an inequitable division. Accordingly, the allocation of the parties' Allianz retirement accounts is vacated and the issue remanded to apply the same valuation method to both Allianz accounts before determining if either party is entitled to a resulting equalization payment.
On their face, the Allianz account statements show a significant difference between cash surrender values and accumulated (for Husband's) or annuitization (for Wife's) values.
D. Reimbursement Orders.
1. Business Account 9173.
¶26 The Decree ordered Husband to reimburse Wife one-half of the $2,547.62 he withdrew from AFCU business account 9173 between June 21 and July 27, 2012. Wife's summary of the parties' transactions, however, showed Wife separately withdrew $2,200 from business account 9173 during the same time period. There was no testimony regarding either parties' withdrawals. The Decree also ordered the parties to equally split the $7,313.31 on deposit in business account 9173 as of June 20, 2012. Wife contends this "subsumes and expands on the reimbursement request."
¶27 Regardless of whether these orders are consistent, the Decree does not account for Wife's withdrawal of $2,200 from business account 9173 during this time. Nothing in the record or Decree suggests any reason for this different treatment of the parties' nearly equal withdrawals. Accordingly, it was error to require Husband to reimburse Wife for one-half of the $2,547.62 he withdrew from business account 9173 without similarly addressing Wife's withdrawal of $2,200 from that same account during this same time. Accordingly, that portion of the Decree addressing business account 9173 is vacated. On remand, both parties' withdrawals during the period should be considered when dividing this account.
2. Overdraft Fees On Joint Account 7601.
¶28 The Decree ordered Husband to reimburse Wife $103 for overdraft fees from joint checking account 7601. The Decree states these fees "were incurred as a result of [Husband] removing all of the funds from the account; such fees are set forth in the June 2012 and July 2012 bank statement for this account." The record does not support this finding. The record contains only the June 2012 bank statement, which does not show any overdraft fees or reflect which party was responsible for any overdraft fees. Although Wife's summary of joint expenses lists a $103.47 charge from AFCU dated August 2, 2012, for "funds to cover account withdrawal overages to joint account," the evidence of record does not establish which party caused that overdraft.
Although Husband refers to bank statements attached to Exhibit 22, that exhibit on appeal does not include bank statements. --------
¶29 On this record, it is unclear that one party alone is responsible for these fees. To the extent the parties were both using joint account 7601 at the time of the overdraft charge, they should equally share the cost. Accordingly, the portion of the Decree requiring Husband to reimburse Wife $103 for overdraft fees on joint account 7601 is vacated and, on remand, is to be shared equally by the parties.
¶30 Given the valuation and allocation of various assets required on remand, and given that the Decree directs that "an equal division of community property is appropriate to achieve equity," on remand, after revaluing these assets, the court is directed to consider the new valuations, as well as the allocation in the Decree (apart from those under the settlement agreement) affirmed by this decision and again reallocate assets so that the allocation on remand results in an equal division of community property to achieve equity. See also A.R.S. § 25-318(A).
IV. Attorneys' Fees And Costs On Appeal.
¶31 Wife requests an award of attorneys' fees and costs on appeal pursuant to A.R.S. §§ 25-324 and -349 based on Husband's allegedly unreasonable and groundless positions. Husband successfully appealed some issues, and his remaining arguments were not unreasonable or groundless. Therefore, Wife is not entitled to an award of fees or costs on appeal. Each party shall pay his or her own attorneys' fees and costs on appeal.
CONCLUSION
¶32 The Decree is affirmed in part and vacated and remanded in part.
¶33 On remand, the superior court is directed to award Aero Precision Machining to Husband pursuant to the settlement agreement. The Harley Davidson is Husband's separate property not subject to award under the Decree and the order awarding the Monte Carlo to Husband is vacated because that car is owned by a third party and cannot be assigned in the Decree.
¶34 The award of money market account 7098 to Wife is vacated. On remand, the allocation of money market account 7098 shall take into account the correct valuation of Sandbullet and shall not include any value for the Harley Davidson or the Monte Carlo. The allocation of the parties' three retirement accounts is vacated and remanded for reconsideration using consistent valuation methods. Similarly, the orders regarding business account 9173 are vacated and, on remand, the superior court is directed to consider both parties' withdrawals from business account 9173 in determining how to allocate the funds remaining in this account. The order that Husband reimburse Wife for $103 in overdraft fees from joint account 7601 is vacated and, on remand, the fees are to be shared equally by the parties. On remand, and after revaluing the assets listed above, the court is directed to consider the new valuations, as well as the allocation in the Decree (apart from the settlement agreement) affirmed by this decision and again reallocate assets so that the allocation on remand results in an equal division of community property appropriate to achieve equity.
¶35 All remaining orders in the Decree are affirmed.