Mikalacki v. Rubezic ( 2022 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
In re the Matter of:
GORDANA MIKALACKI, Petitioner/Appellee,
v.
DRAGAN JOHN RUBEZIC, Respondent/Appellant.
No. 1 CA-CV 21-0483 FC
FILED 10-18-2022
Appeal from the Superior Court in Maricopa County
No. FC2019-005762
The Honorable Max Covil, Judge
AFFIRMED IN PART; VACATED IN PART
COUNSEL
Dragan John Rubezic, Phoenix
Respondent/Appellant
Schmillen Law Firm, Scottsdale
By James Schmillen
Counsel for Petitioner/Appellee
MIKALACKI v. RUBEZIC
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MEMORANDUM DECISION
Judge Jennifer B. Campbell delivered the decision of the Court, in which
Presiding Judge Brian Y. Furuya and Judge Paul J. McMurdie joined.
C A M P B E L L, Judge:
¶1 Dragan Rubezic (Husband) appeals from the decree
dissolving his marriage to Gordana Mikalacki (Wife). He challenges the
superior court’s rulings imposing a disclosure-violation sanction; ordering
legal decision-making authority, spousal maintenance, and child support;
dividing certain assets; and awarding attorney’s fees to Wife. Husband also
contests, on procedural grounds, two of the superior court’s post-decree
rulings. For the following reasons, we affirm the dissolution decree and
vacate the challenged post-decree rulings.
BACKGROUND
¶2 After six years of marriage, Wife petitioned for dissolution.
Apart from their marital relationship and shared parental duties to their
two minor children (the children), Wife and Husband were business
partners – the sole members of the Rubezic Law Group (the firm) and co-
owners of an office building (the commercial building). The superior court
held a two-day trial on contested issues and entered a decree of dissolution.
¶3 In the decree, and specific to this appeal, the superior court:
(1) awarded Wife and Husband joint legal decision-making authority over
the children, with Wife having final decision-making authority over
medical decisions; (2) awarded Wife and Husband equal parenting time; (3)
awarded Wife monthly child support of $762 and arrearages ($29,070.88);
(4) awarded Wife monthly spousal maintenance of $2,000 for 18 months; (5)
ordered the sale of the marital residence and an equal division of the
property’s equity; (6) awarded Wife the commercial building as her sole
and separate property, ordered her to refinance all associated debt solely in
her name, and ordered her to pay Husband one-half of the commercial
building’s equity; (7) allocated the parties’ various bank accounts; (8)
awarded Husband the firm as his sole and separate property and ordered
him to pay Wife one-half of the firm’s equity; (9) allocated the parties’
outstanding debts (credit card balances, medical/dental bills, personal
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loans, and student loans); and (10) awarded Wife her reasonable attorney’s
fees and costs. Husband timely appealed.
DISCUSSION
I. Imposition of Disclosure-Violation Sanction
¶4 Husband challenges the superior court’s pretrial ruling
precluding him from presenting evidence of a purported community loan
at trial. According to Husband, the governing procedural rule barred the
superior court from imposing a sanction that exceeded Wife’s requested
relief.
¶5 During a status conference hearing held approximately 11
months into the dissolution proceedings, Wife’s attorney outlined
Husband’s refusal to comply with repeated discovery requests for financial
information, including, as relevant here, his failure to produce
documentation regarding a loan that his parents purportedly extended to
the parties “for some home renovations.” When questioned about the
purported loan, Husband’s attorney told the court that Husband had
complied with the disclosure requirements because no promissory note
existed (rather than deny the existence of a promissory note, counsel
expressed uncertainty concerning its existence). At the close of the hearing,
the superior court instructed Wife to file a motion to compel regarding the
parties’ discovery disputes other than those relating to the alleged home-
renovation loan. Specific to that dispute, the superior court instructed Wife
to either file a motion in limine or include an objection in her pretrial
statement if Husband failed to produce documentation of the purported
loan before trial.
¶6 Two weeks later, Wife moved to compel disclosure,
addressing the parties’ discovery disputes other than those relating to the
purported home-renovation loan, specifically noting the superior court had
advised her that moving in limine “was the proper vehicle” for resolving
that discovery issue. But in her reply in support of the motion to compel,
Wife reasserted that Husband had failed to provide any documentation to
substantiate his claim that a home-renovation loan “exist[ed],” noting that
such documentation, if it existed, “was in the sole care and control of
Husband.”
¶7 After briefing, the superior court granted Wife’s motion to
compel, finding Husband had no reasonable basis for failing to comply
with the disclosure requests and “simply ignored them.” Specific to the
“purported home improvement loan,” the superior court found that
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Husband “offered no credible reason for why he did not timely respond,
produce at least some of the requested information and documents, or
timely object to the requests.” On that basis, the court precluded Husband
“from introducing evidence at trial to support a claim that the community
owe[d] a debt to [his] parents.”
¶8 We review a superior court’s sanction for disclosure and
discovery violations for a clear abuse of discretion. Seidman v. Seidman, 222
Ariz. 408, 411, ¶ 18 (App. 2009). “A [superior] court abuses its discretion
when it exercises discretion in a manner that is either ‘manifestly
unreasonable’ or based on untenable grounds or reasons.” Kimu P. v. Ariz.
Dep’t of Econ. Sec., 218 Ariz. 39, 42, ¶ 11 (App. 2008) (citation omitted).
¶9 Citing Arizona Rule of Family Law Procedure (Rule) 35(a)(2),
Husband argues the superior court exceeded its authority by imposing a
sanction that Wife did not expressly seek. Rule 35 governs motion practice
generally and requires that motions “state with particularity the grounds
for granting the motion and the relief or order sought.” Ariz. R. Fam. Law
P. 35(a)(2). But the superior court imposed the sanction under Rule
65(b)(1)(B), which specifically governs discovery and disclosure violations
and authorizes a court to enter sanctions against a person who has failed
“to comply with a disclosure or discovery rule,” including “prohibiting the
disobedient party from supporting or opposing designated arguments, or
from introducing designated matters in evidence.” Ariz. R. Fam. Law P.
65(b)(1)(B).
¶10 We interpret procedural rules de novo, “apply[ing]
fundamental principles of statutory construction, the cornerstone of which
is the rule that the best and most reliable index of a statute’s meaning is its
language and, when the language is clear and unequivocal, it is
determinative of the statute’s construction.” State ex rel. Adel v. Covil, 252
Ariz. 40, 41, ¶ 2 (App. 2021) (internal quotation omitted). “When a specific
rule conflicts with a general one, the specific rule controls.” Cosper v. Rea,
228 Ariz. 555, 557, ¶ 10 (2012).
¶11 As noted, Rule 35 governs motion practice generally whereas
Rule 65 specifically governs discovery and disclosure violations.
Accordingly, to the extent there is any arguable conflict between the rules,
Rule 65 controls.
¶12 By its plain language, Rule 65(b) authorizes a superior court
to address a discovery or disclosure rule violation and impose a sanction
on a non-complying party. Rather than narrowly constraining the authority
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to sanction, Rule 65(b) extends broad power to the court to redress
disclosure violations, including, but “not limited to,” barring a disobedient
party from introducing undisclosed evidence at trial. While the better
practice may be for a party to request a sanction specifically, Rule 65(b) does
not limit the permissible sanctions to those expressly requested by a party.
¶13 Applying Rule 65(b) here, the superior court did not abuse its
discretion by precluding evidence of the purported home-renovation loan
as a sanction for Husband’s failure to timely comply with his disclosure
obligations. Being in the best position to observe and assess the parties’
conduct, the superior court found that Husband had engaged in a pattern
of willful discovery delay and noncompliance.1 See MacMillan v. Schwartz,
226 Ariz. 584, 592, ¶ 38 (App. 2011).
II. Order of Legal Decision-Making Authority
¶14 Husband challenges the superior court’s order regarding
legal decision-making, which granted the parties joint legal decision-
making authority but gave Wife final decision-making authority in the
event the parties could not agree on medical care decisions for the children.
He asserts the superior court predicated its ruling on incorrect facts.
¶15 We review legal decision-making determinations for an abuse
of discretion. DeLuna v. Petitto, 247 Ariz. 420, 423, ¶ 9 (App. 2019); see also
Nold v. Nold, 232 Ariz. 270, 273, ¶ 11 (App. 2013); Porter v. Porter, 21 Ariz.
App. 300, 302 (1974) (explaining the superior court has “broad discretion in
determining what will be the most beneficial for the children” and “is in the
best position to determine what is in the children’s interest” (citations
omitted)). “An abuse of discretion exists when the record, viewed in the
light most favorable to upholding the [superior] court’s decision, is devoid
of competent evidence to support the decision” or the court has committed
an error of law “in the process of reaching [a] discretionary conclusion.”
Hurd v. Hurd, 223 Ariz. 48, 52, ¶ 19 (App. 2009) (internal quotations and
citations omitted).
1 In his reply brief, Husband argues for the first time on appeal that
evidence regarding the purported home-renovation loan either was already
in Wife’s possession or “was information she could have reasonably
obtained from other sources.” Because Husband failed to raise this claim in
his opening brief, we do not address it. In re Marriage of Pownall, 197 Ariz.
577, 583, ¶ 25 n.5 (App. 2000) (holding issues raised for the first time in a
reply brief are waived).
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¶16 Legal decision-making is the “right and responsibility to
make all nonemergency legal decisions for a child including those
regarding education, health care, religious training and personal care.”
A.R.S. § 25-401(3). In evaluating legal decision-making, the superior court
must determine the best interests of the child by considering “all factors
that are relevant to the child’s physical and emotional well-being,
including:
(1) The past, present and potential future relationship between the
parent and the child.
....
(5) The mental and physical health of all individuals involved.
(6) Which parent is more likely to allow the child frequent, meaningful
and continuing contact with the other parent[.]
(7) Whether one parent intentionally misled the court to cause an
unnecessary delay[.]
(8) Whether there has been domestic violence[.]
A.R.S. § 25-403(A).
¶17 In her pretrial statement, Wife asserted that an order of joint
legal decision-making authority was contrary to the children’s best
interests. In support of this contention, Wife explained that the parties’
daughter has been diagnosed with a serious, chronic disease requiring
considerable care, treatment, and monitoring and maintained that because
she served as the children’s primary caregiver, she was best positioned to
attend to the daughter’s ongoing medical needs. Wife also alleged that
Husband exposed the children to violence and that his abuse of prescription
drugs created an unstable environment for them.
¶18 Within its detailed findings, the superior court addressed
each factor under A.R.S. § 25-403(A). The court also discussed A.R.S. §§ 25-
403.03(D) and -403.04(A), which establish rebuttable presumptions that the
award of sole or joint legal decision-making to a parent who has committed
domestic violence or engaged in substance abuse is contrary to a child’s best
interests. Husband raises several challenges to the superior court’s findings.
We address each in turn.
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¶19 First, Husband contests the superior court’s finding that he
tested negative for all substances “except for THC.” Consistent with his
challenge, the record reflects that Husband tested negative for all
substances, including THC. Although the superior court incorrectly
recounted Husband’s test results, we conclude that this erroneous finding
did not materially affect the best interests calculus because the court also
found: (1) Wife’s testimony that Husband abused substances not credible,
(2) the drug test results demonstrated that Husband was not “abusing
drugs,” and (3) Husband rebutted the A.R.S. § 25-403.04 presumption that
drug abuse rendered joint legal decision-making contrary to the children’s
best interests.
¶20 Next, Husband disputes the superior court’s finding that he
“has taken classes for anger management.” Consistent with his challenge,
nothing in the record suggests that Husband has participated in anger
management classes. In fact, Husband correctly points to a counseling
assessment report that concluded he was not “in need of anger
management.” Regardless, the record supports the superior court’s finding
that both Husband and Wife have difficulty managing anger. Accepting
Wife’s testimony, the superior court found that Husband engaged in acts of
violence, including domestic violence against Wife and a “road rage”
incident involving a neighbor.2 Contrary to Husband’s contention, the court
also specifically addressed, and gave credence to, Husband’s allegation that
Wife pulled their daughter’s hair. Given its finding that both Husband and
Wife demonstrated difficulty managing anger, we conclude the superior
court’s errant finding that Husband participated in an anger management
class was not a factual predicate for its best-interests determination.3
¶21 Husband also challenges the superior court’s use of his
disclosure delays as a basis for giving Wife final legal decision-making
authority over medical issues, asserting that his noncompliance was
irrelevant to the best-interests determination because his disclosure
2 In his reply brief, Husband argues for the first time on appeal that
the superior court “committed legal and factual error when it found” he
had committed an act of domestic violence against Wife. Because Husband
failed to raise this claim in his opening brief, we do not address it. In re
Marriage of Pownall, 197 Ariz. at 583, ¶ 25 n.5.
3 Notwithstanding Husband’s challenge, we note that the successful
completion of an anger management class is an enumerated statutory basis
for rebutting the A.R.S. § 25-403.03(D) presumption. See A.R.S. § 25-
403.03(E).
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violations pertained to financial information only, not child-care matters.
While Husband correctly characterizes the subject matter of his disclosure
violations, A.R.S. § 25-403(A) does not limit the relevance of unnecessary
delays to only those involving child-care issues. In this case, the superior
court could reasonably conclude that Husband’s refusal to cooperate in
discovery matters might spill over into other aspects of the parties’
relationship, negatively affecting their ability to obtain timely medical care
for their children.
¶22 Finally, Husband argues that Wife’s role as the children’s
primary caregiver “prior to the dissolution” did not provide a reasonable
basis for awarding her final legal decision-making authority over medical
decisions because he has been present “since the dissolution.” (Emphasis
added.) In making this argument, Husband does not meaningfully contest
the superior court’s finding that Wife “has been more present to address
the [c]hildren’s medical needs,” and we reject his assertion that a court may
not consider a parent’s involvement in the care and treatment of his
children’s health before dissolution, or lack thereof, as part of its best-
interests determination.
¶23 In sum, the record reflects that the superior court carefully
considered the relevant statutory factors and weighed the parties’
conflicting testimony. Although the court erroneously found that Husband
participated in an anger management class and tested positive for THC, we
conclude such error was harmless, and the record supports its ultimate
finding that joint legal decision-making authority, with Wife having final
legal decision-making authority over medical decisions, is in the children’s
best interests.
III. Calculation of Wife’s Income
¶24 Husband disputes the superior court’s calculation of Wife’s
monthly income ($6,000), arguing the court failed to attribute all of Wife’s
income per the Arizona Child Support Guidelines. Because the superior
court’s spousal maintenance and child support determinations were
predicated partly on this allegedly incorrect income figure, Husband
challenges both orders.
¶25 In support of his contention, Husband points to Wife’s 2019
tax return. He argues it demonstrates that “[Wife]’s actual [monthly]
income is $9,767,” but his explanation of how to calculate this new figure is
speculative. According to Husband, it is “unclear how” Wife’s newly
formed legal practice “operated at a loss,” and in the absence of clear
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evidence, Husband assumes this “[m]ost likely” occurred because Wife
paid herself a salary exceeding the business’ revenue.
¶26 We need not consider Husband’s proffered calculation,
however, because he failed to present it at trial and instead urged the
superior court to impute a monthly income of $6,000 to Wife. Having done
so, Husband cannot now claim the superior court erred by adopting the
figure that he advanced. See State v. Logan, 200 Ariz. 564, 565-66, ¶ 9 (2001)
(explaining a reviewing court “will not find reversible error when the party
complaining of it invited the error”).
IV. Duration of Spousal Maintenance
¶27 Husband challenges the duration of Wife’s spousal
maintenance award. Pointing to the superior court’s reasoning, that Wife
needed spousal maintenance only until her newly formed law firm became
“self-sufficient,” Husband argues the court incorrectly awarded Wife
maintenance for a substantially longer period than necessary.
¶28 “Arizona law extends the [superior] court substantial
discretion to set the amount and duration of spousal maintenance.”
Rainwater v. Rainwater, 177 Ariz. 500, 502 (App. 1993). “The framework for
that discretion” is governed by A.R.S. § 25-319, which requires the court, in
deciding the duration of maintenance, to balance certain, enumerated
factors. Id.; see also A.R.S. § 25-319(B) (2018) (stating a spousal maintenance
award “shall be in an amount and for a period of time as the court deems
just”). “To strike the proper balance, the [superior] court need not apply
every [statutory] factor[.]” Rainwater, 177 Ariz. at 502. Rather, the court
must conduct a “case-by-case inquiry” to determine which factors are
applicable. Id. In this case, the relevant factors include:
1. The standard of living established during the marriage.
....
3. The age, employment history, earning ability and physical
and emotional condition of the spouse seeking maintenance.
4. The ability of the spouse from whom maintenance is sought
to meet that spouse’s needs while meeting those of the spouse
seeking maintenance.
5. The comparative financial resources of the spouses, including
their comparative earning abilities in the labor market.
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....
9. The financial resources of the party seeking maintenance,
including marital property apportioned to that spouse, and
that spouse’s ability to meet that spouse’s own needs
independently.
10. The time necessary to acquire sufficient education or
training to enable the party seeking maintenance to find
appropriate employment[.]
A.R.S. § 25-319(B).
¶29 Applying these factors to this case, the superior court found:
(1) the parties enjoyed a high standard of living during their marriage; (2)
Wife “has the ability to earn”; (3) Husband retained control of the firm
while Wife “started her own firm”; (4) “[Wife] needs assistance for a brief
period to ensure the success of her [f]irm”; and (5) a spousal maintenance
award to allow Wife time to grow the new firm “is appropriate.” Based on
these findings, the superior court ordered Husband to pay Wife $2,000
monthly for 18 months.
¶30 It is undisputed that Wife incorporated her firm in September
2019. Because 18 months elapsed between the date of incorporation and the
date the superior court issued the dissolution decree (March 2021),
Husband argues that the court’s award of spousal maintenance to Wife for
an additional 18 months was excessive.
¶31 At trial, the superior court probed Wife about the length of
time necessary to develop goodwill and establish a client base for her new
firm. Wife testified that she needed two years to establish the firm as a stable
and reliable source of income. Noting that Wife’s firm “ha[d] already been
in existence” for approximately 16 months by the trial, the court questioned
whether an award of 24 additional months was necessary. In response, Wife
explained that her ability to grow the firm had been severely hampered by
both the pandemic and her need to attend to the parties’ ill child, who had
a significant medical episode during those 16 months. On this record, and
given the superior court’s firsthand opportunity to observe the parties and
assess their credibility, we conclude the court did not abuse its discretion
by fashioning a spousal maintenance award of 18 months’ duration. See
MacMillan, 226 Ariz. at 592, ¶ 38.
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V. Division of the Firm
¶32 Husband contests the superior court’s valuation of the firm,
arguing the court improperly accepted the value calculation offered by
Wife’s expert witness, Brendan Kennedy. Husband also contends that the
superior court failed to make sufficient findings establishing the factual
predicate for its valuation ruling, despite Wife’s pretrial request for specific
findings of fact.
¶33 “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 a superior court’s valuation of a
business as part of a divorce proceeding for an abuse of discretion, Schickner
v. Schickner, 237 Ariz. 194, 197, ¶ 13 (App. 2015), and view the evidence in
the light most favorable to upholding the court’s decision, see In re Marriage
of Molloy, 181 Ariz. 146, 152 (App. 1994). In determining fair market value,
the superior court may rely on a testifying expert’s opinion, and challenges
to the expert’s methodology generally “go[] to the weight of the expert’s
opinion, not the admissibility.” Kelsey, 186 Ariz. at 51. Because the superior
court is in the best position to assess and resolve conflicting evidence, we
accept its factual findings absent clear error. Id.; A.N.S. Props., Inc. v. Gough
Indus., Inc., 102 Ariz. 180, 182 (1967) (explaining “we will not substitute our
opinion thereof for that of the [superior] court” if there is any “reasonable
evidence” to support the superior court’s findings).
¶34 At trial, Kennedy testified that he calculated the firm’s value
as of June 7, 2019, using various approaches (asset, income, and market).
He explained that he based his calculation on the financial information Wife
provided and his independent analysis of comparable businesses, opining
that the firm’s value was $269,000. Husband’s counsel thoroughly
questioned Kennedy’s methods and conclusions on cross-examination but
did not present any competing expert opinion testimony concerning the
firm’s value. During his testimony, however, Husband opined that the firm
had a value of only $161,000 because Wife left the firm after June 7, 2019,
and took several clients with her.
¶35 In the dissolution decree, the superior court adopted
Kennedy’s valuation of the firm - $269,000. The court specifically found
Husband’s testimony challenging Kennedy’s valuation not credible.
¶36 On appeal, Husband does not dispute Kennedy’s
qualifications as an expert witness concerning business valuations. Nor
does he otherwise contend that the superior court improperly admitted
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Kennedy’s valuation report or testimony. Instead, Husband alleges various
deficiencies with Kennedy’s opinion and maintains that the superior court
should have discounted Kennedy’s valuation.
¶37 First, Husband argues that Kennedy’s expert opinion
evidence was deficient because he performed a calculation of value report
rather than an opinion of value report. While “a ‘calculation of value’
opinion may be short of the gold standard, it is not per se unacceptable.”
Larchick v. Pollock, 252 Ariz. 364, 368, ¶ 18 (App. 2021) (citation omitted). In
other words, a fact-finder need not discount an expert’s opinion solely
because the expert “did not consider every single process and procedure
that would be included” had he conducted a fuller valuation. Id. In this case,
counsel had an unhindered opportunity to question Kennedy regarding his
methodologies and conclusions, and Husband had ample opportunity to
provide the basis for his valuation. Id. at ¶ 17 (noting that expert opinion
testimony based on a calculation of value methodology may be “vulnerable
to effective cross-examination” and the trier of fact is “free to give the
expert’s opinion little or no weight”). Deciding which conflicting
methodology and valuation to rely on was within the superior court’s
discretion. See Mitchell v. Mitchell, 152 Ariz. 317, 323 (1987). Accordingly, the
superior court did not abuse its discretion by relying on a calculation of
value supported by expert testimony and based on an acceptable valuation
method.
¶38 Second, Husband argues that Kennedy’s opinion testimony
was unreliable because he considered only the financial information
provided by Wife. Notably, Husband refused to timely disclose financial
information as required by the governing procedural rules. Had Husband
timely complied, Kennedy could have considered his disclosures. It is
unavailing that he now complains that Wife’s expert did not consider
information he refused to produce.
¶39 Third, Husband challenges Kennedy’s use of a June 7, 2019
valuation date. “[I]n a dissolution proceeding the superior court has wide
discretion to choose a business’s valuation date, so long as the ultimate
valuation is equitable.” Meister v. Meister, 252 Ariz. 391, 397, ¶ 18 (App.
2021). The selection of a valuation date should be based on “pragmatic
considerations” and the “principles of fairness and equity.” Id. at ¶ 17.
While the court “may use the date of service [of a petition for dissolution],
or a date near the date of service, as a starting point in choosing the
valuation date[,] . . . . the court must select a different date when necessary to
ensure an equitable result.” Id. at ¶ 18 (emphasis added). Here, Kennedy
used the date Wife petitioned for a dissolution of marriage as the valuation
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date. Although Husband argues that Kennedy’s calculation of value failed
to account for Wife’s subsequent departure from the firm and Husband’s
renaming and relocating of the firm, even accepting his representations,
Wife took only 16% and Husband retained 84% of the firm’s clients.
Moreover, Husband does not meaningfully contest Kennedy’s expert
opinion testimony that a firm’s goodwill, reputation, and overall
acceptance in the legal community – here, all associated with Husband’s
last name – has considerable value. Cf. id. at ¶ 19 (concluding the selected
valuation date (near the date of service) for the marital business led to an
inequitable valuation because the marital business sustained a substantial
loss shortly after the valuation date, and the loss was caused by a spouse’s
conduct and alleged mismanagement of the business during the marriage
– before the date of service).
¶40 Finally, Husband argues that Kennedy failed to adequately
explain various adjustments noted in his valuation report. But the record
reflects that Husband had an unimpeded opportunity to vigorously cross-
examine Kennedy regarding his methodologies and conclusions, including
any adjustments he found questionable. See Larchick, 252 Ariz. at 368, ¶ 15
(explaining cross-examination and the presentation of contrary evidence
“are the traditional and appropriate means of attacking shaky but admissible
evidence” (quotation and citation omitted)).
¶41 Because Kennedy’s expert opinion testimony and report
provided a reasonable basis for calculating the value of the firm and
Husband had a full opportunity to challenge Kennedy’s opinion at trial, we
find no abuse of discretion in the superior court’s valuation ruling. Though
succinct, we further conclude that the superior court’s findings concerning
valuation were sufficient. The court specifically adopted Kennedy’s
calculation of value and found Husband’s contradictory testimony
regarding valuation not credible. Cf. Dumes v. Harold Laz Advert. Co., 2 Ariz.
App. 387, 388 (1965) (observing that an interested party’s uncorroborated
testimony “may be rejected”).
VI. Allocation of the Commercial Building
¶42 Husband challenges the superior court’s allocation of the
commercial building and the associated rental bank account. He argues the
court inequitably divided these assets.
¶43 We review a superior court’s apportionment of property for
an abuse of discretion. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4
(App. 2007). As part of a dissolution proceeding, the court must “divide the
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community, joint tenancy and other property held in common equitably,
though not necessarily in kind.” A.R.S. § 25-318(A).
¶44 First, Husband questions the propriety of the superior court’s
allocation of the commercial building to Wife, asserting the dissolution
decree “is devoid of any explanation as to why” the court apportioned the
property in that manner and suggesting that he could manage the property
more profitably than Wife. By failing to cite relevant supporting authority
or develop the argument further, Husband waived any claim that the
superior court abused its discretion by allocating the commercial building
to Wife. See Polanco v. Indus. Comm’n of Ariz., 214 Ariz. 489, 491, ¶ 6 n.2 (App.
2007) (an appellant’s failure to develop and support an argument waives
the issue on appeal).
¶45 Next, Husband points to the superior court’s ruling requiring
Wife to refinance the loan on the commercial building and pay him one-half
of the equity, arguing the court failed to make the specific findings
necessary to effectuate that ruling - that is - the court failed to adopt either
parties’ valuation of the commercial building or provide its calculation.
Although Husband and Wife submitted competing appraisals of the
commercial building, $970,000 and $920,000, respectively, at trial, Wife
testified that the parties “agree[d] that the Court should use a midpoint
between the two valuations of approximately [$]935,000.” Importantly,
Husband neither objected to Wife’s testimony nor offered any contravening
testimony. While the better practice is for the superior court to detail any
stipulations that serve as the factual predicate for its rulings within a
dissolution decree, here, the record makes clear that the equity in the
commercial building must be determined based on an undisputed
valuation of $935,000.
¶46 Husband also contends that the superior court failed to divide
the rental income from the commercial building equitably. To the extent
Husband argues that he is entitled to one-half of the rents Wife received
from the commercial building during the pendency of the divorce litigation,
the record reflects that the superior court imputed the rents to Wife as
income for purposes of calculating spousal maintenance and child support.
Having imputed those monies as income to Wife, thereby minimizing
Husband’s maintenance and support obligations, it would have been
inequitable for the court to also attribute those monies to Wife as part of her
share of the commercial building.
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¶47 In sum, we find no merit in Husband’s various challenges to
the superior court’s allocation of the commercial building and rental bank
account and conclude the court acted well within its discretion.
VII. Award of Attorney’s Fees to Wife
¶48 Husband challenges the superior court’s post-decree award
of $72,992.70 in attorney’s fees to Wife. Pointing to two interim attorney’s
fees awards granted to Wife before trial, Husband argues the final award to
Wife, purportedly encompassing all attorney’s fees she incurred
throughout the litigation, was improper.
¶49 As part of the dissolution decree, the superior court awarded
Wife her reasonable attorney’s fees under A.R.S. § 25-324(A), which
authorizes an award of attorney’s fees after considering both parties’
financial resources and the reasonableness of their positions throughout the
proceedings. While the court found “no substantial disparity of financial
resources between the parties,” it determined that Husband had “acted
unreasonably in the litigation,” specifically noting his failure to comply
with his discovery and disclosure obligations.
¶50 We review a superior court’s ruling on an attorney’s fees
request under A.R.S. § 25-324 for an abuse of discretion. Myrick v. Maloney,
235 Ariz. 491, 494, ¶ 6 (App. 2014). We will uphold an attorney’s fees award
“if there is any reasonable basis for it.” In re Marriage of Gibbs, 227 Ariz. 403,
410, ¶ 20 (App. 2011) (quotation omitted).
¶51 In its ruling on temporary orders, the superior court granted
Wife’s request for an interim attorney’s fees award of $5,000.00. Later, the
court also ordered Husband to pay Wife an additional $4,246.00 in
attorney’s fees after granting her motion to compel production. Husband
asserts that Wife included the attorney’s fees already awarded her in her
final application for attorney’s fees – resulting in an award of duplicative
attorney’s fees. Because the superior court already ordered him to pay
Wife’s attorney’s fees relating to the motion to compel, Husband also
argues that any additional award of attorney’s fees predicated on his
noncompliance with the discovery and disclosure rules should have been
limited to the only other discovery dispute – a motion in limine. In other
words, Husband argues that his pattern of noncompliance with the
disclosure rules did not justify an overarching award of all attorney’s fees
incurred by Wife throughout the litigation.
¶52 We find no merit in Husband’s contentions. In her final
application for attorney’s fees, Wife expressly subtracted her two prior
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attorney’s fees awards, and Husband has failed to identify a single
duplicative billing entry. Nor has he cited any authority to support his
contention that the superior court’s discretion was limited to awarding only
the portion of attorney’s fees about discovery disputes. The record supports
the superior court’s finding that Husband acted unreasonably, and we
conclude the court did not abuse its discretion by awarding Wife $72,992.70
in attorney’s fees.
VIII. Imposition of a Conditional Lien
¶53 Husband asserts that the superior court inequitably divided
the marital home and the commercial building. Specifically, he argues that
the court unfairly apportioned these assets to “punish” him for
“misconduct.”
¶54 Recognizing that the superior court has substantial discretion
to determine “what is equitable in each case,” Toth v. Toth, 190 Ariz. 218,
221 (1997), we will uphold its division of community property absent a clear
abuse of discretion, Miller v. Miller, 140 Ariz. 520, 522-23 (App. 1984). In
reviewing the superior court’s apportionment of assets, we consider the
evidence in the light most favorable to upholding the court’s ruling.
Boncoskey v. Boncoskey, 216 Ariz. 448, 451, ¶ 13 (App. 2007). We construe
statutes, however, de novo. Murray v. Murray, 239 Ariz. 174, 176, ¶ 5 (App.
2016).
¶55 In the final section of the dissolution decree, the superior
court addressed various additional orders and granted Wife’s pretrial
petition for contempt for Husband’s non-payment of child support, child
support arrears, spousal maintenance, attorney’s fees, and community debt
(HOA arrearages). Declining to set a purge amount, the court ordered that
in the event Husband “fail[ed] to pay the amounts ordered, [Wife] may
offset the amounts owed” from Husband’s “share of the sale of the marital
property and the refinancing of the [commercial] building.”
¶56 Although this court lacks jurisdiction over a civil contempt
adjudication on direct review, Henderson v. Henderson, 241 Ariz. 580, 587,
¶ 16 (App. 2017) (explaining contempt findings are reviewable only by
special action), Husband does not challenge the superior court’s finding
that he failed to comply with temporary and interim orders. Instead, he
argues that the superior court could not impose a conditional lien – thereby
potentially reducing his equity in jointly-held marital assets – without
violating A.R.S. § 25-318(A).
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¶57 Section 25-318 governs the disposition of property in a
dissolution proceeding. As outlined in subsection (A), the superior court
must divide “community, joint tenancy and other property held in common
equitably, though not necessarily in kind.” And, as Husband notes, this
division must be made “without regard to marital misconduct.” A.R.S. § 25-
318(A). But applying subsection (A) to these facts, the superior court did
not run afoul of the statutory mandate. On the contrary, the court ordered
Wife to pay Husband one-half of the equity in both the marital residence
and the commercial building – a precisely equal share.
¶58 Notably, Husband fails to acknowledge that A.R.S. § 25-
318(E) expressly permits a court to “impress a lien on . . . marital property
awarded to either party in order to secure the payment of,” as relevant here,
community debts, child support, and spousal maintenance. A.R.S. § 25-
318(E)(2), (3). Having equitably divided the jointly held property under
subsection (A), the superior court acted well within its authority by
imposing a conditional lien offsetting Husband’s equity in the marital
residence and commercial building against debts he owed to Wife. Simply
put, the superior court correctly applied A.R.S. § 25-318 to both equitably
divide the community assets and secure payment of Husband’s prior debts
to Wife, in the event he failed to timely extinguish those debts before the
sale and refinance of the marital residence and commercial building,
respectively. The superior court had the statutory authority to grant such
relief within the dissolution decree as part of its equitable division of the
community property.
IX. Post-Decree Orders
¶59 Husband challenges the superior court’s post-decree rulings
on Wife’s motions to amend and clarify the judgment. He asserts that Wife’s
motion to amend was untimely and that the superior court improperly
granted both motions without providing him an opportunity to respond.
¶60 We review a superior court’s rulings on motions to amend or
clarify the judgment for an abuse of discretion. See Wisniewski v. Dolecka, 251
Ariz. 240, 241, ¶ 5 (App. 2021). “A court abuses its discretion if it applies an
incorrect rule of law.” Id.¶61 As outlined in Rule 83, “[t]he court may on its own or on
motion alter or amend all or some of its rulings” on certain enumerated
grounds. Ariz. R. Fam. Law P. 83(a)(1). A party seeking Rule 83 relief must
file a motion “no[] later than 25 days after the entry of [a Rule 78 final]
judgment.” Ariz. R. Fam. Law P. 83(c)(1). “This deadline may not be
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extended by stipulation or court order” unless: (1) the moving party did not
receive notice of the entry of judgment within 21 days after its entry; (2) the
moving party files the motion within 30 days after the specified time to act
expires or within 7 days after receiving notice of the entry of the judgment;
and (3) no party would be prejudiced by extending the time to act. Ariz. R.
Fam. Law P. 83(c)(1) (emphasis added); Ariz. R. Fam. Law P. 4(b)(2).
“Within 15 days of the filing of a motion” under Rule 83, “the court must
either summarily deny the motion or set a deadline for a response.” Ariz.
R. Fam. Law P. 83(c)(2). “The court may not grant a motion without
providing the non-moving party an opportunity to file a response.” Id.(emphasis added).
¶62 Applying Rule 83 here, it is undisputed that Wife filed her
motion to alter or amend the decree on April 6, 2021 (asserting clerical
errors in the dissolution decree related to the marital residence and a
business checking account), more than 25 days after the superior court
entered the March 9, 2021 dissolution decree, which contained a
certification of finality under Rule 78. Although Wife acknowledged the
untimeliness of her motion, she did not assert that her delay was excused
under Rule 4(b)(2)’s limited exception. Rather, she stated that she could not
draft the motion by the “suggested deadline” and asked for an extension,
arguing Husband would sustain no prejudice.
¶63 On the same day, Wife filed her motion for clarification
(asserting clerical errors in the dissolution decree related to the commercial
building). Although not a time-extending motion, a party may file a motion
for clarification at any time “if [a] ruling is confusing or is susceptible to
more than one reasonable interpretation.” Ariz. R. Fam. Law P. 84(a), (b).
Unless ordered by the court, a party may not file a response to a motion for
clarification. Ariz. R. Fam. Law P. 84(c). Like Rule 83, however, a “court
may not grant a motion for clarification without providing the nonmoving
party an opportunity to file a written response.” Id.¶64 Without ordering Husband to respond, the superior court
granted both Wife’s motions. Because Wife’s Rule 83 motion was untimely
and Husband was not permitted to respond to either motion, we vacate
both rulings granting Wife’s requested relief. See Vincent v. Shanovich, 243
Ariz. 269, 271, ¶ 8 (2017) (explaining the superior court “may correct
judgmental errors only within [the] limited time frames” delineated in the
governing procedural rules); Mathews v. Eldridge, 424 U.S. 319, 333 (1976)
(holding each party has a fundamental right to be heard “at a meaningful
time and in a meaningful manner”) (quotation and citation omitted).
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CONCLUSION
¶65 For the foregoing reasons, we affirm the decree of dissolution
and vacate the post-decree rulings on Wife’s motions to amend and clarify
the judgment, and remand for proceedings consistent with this decision.
Both parties request an award of attorney’s fees under A.R.S. § 25-324,
alleging that the other has been unreasonable and not acted in good
faith/argued contrary to the facts and law. 4 We do not find that Wife’s
appellate arguments or positions have been unreasonable or submitted in
bad faith. She has prevailed on all claims other than Husband’s challenges
to the post-decree rulings and, in her answering brief, Wife acknowledged
that the superior court erred by failing to provide Husband an opportunity
to respond to her motions to amend and clarify the judgment. Husband, on
the other hand, has been unreasonable. In violation of ARCAP 13(a)(7), he
raised multiple arguments for the first time on appeal or in his reply brief,
without adequate citation to the record or supporting legal authority. His
arguments concerning the superior court’s imposition of a disclosure-
violation sanction, allocation of the commercial building, award of
attorney’s fees to Wife, and imposition of a conditional lien are contrary to
applicable statutes and court rules or misconstrue the record. Therefore,
pending her compliance with ARCAP 21, we award Wife her taxable costs
and reasonable attorney’s fees incurred on appeal.
AMY M. WOOD • Clerk of the Court
FILED: AA
4 We note that Husband filed his reply brief in propria persona and
that Wife’s appellate counsel has withdrawn as the attorney of record.
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