Krenzen v. Katz ( 2018 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 Marriage of:
LORI KRENZEN, Petitioner/Appellant,
v.
ADAM KATZ, Respondent/Appellee.
No. 1 CA-CV 17-0367 FC
FILED 7-17-2018
Appeal from the Superior Court in Maricopa County
No. FC2012-091110
The Honorable James D. Smith, Judge
AFFIRMED IN PART; REMANDED
COUNSEL
Franks Law Office PC, Phoenix
By Todd Franks
Counsel for Petitioner/Appellant
Berkshire Law Office PLLC, Tempe
By Keith Berkshire, Erica Gadberry
Counsel for Respondent/Appellee
KRENZEN v. KATZ
Decision of the Court
MEMORANDUM DECISION
Judge Jennifer B. Campbell delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge James P. Beene joined.
C A M P B E L L, Judge:
¶1 Lori Krenzen (“Wife”) appeals the family court’s post-decree
qualified domestic relations order (“QDRO”) and the denial of her request
for attorney fees. For the following reasons, we affirm the QDRO and
remand the issue of attorney fees for the family court to consider the parties’
financial resources.
FACTS AND PROCEDURAL BACKGROUND
¶2 Wife and Adam Katz (“Husband”) were married in 2007.
Wife served Husband with a petition for dissolution of marriage in
September 2012, and the parties were divorced in November 2013. As
relevant here, the decree provided that “Father’s Marker Advisors 401k
shall be divided so that all funds contributed during the marriage (and all
proceeds of such funds) are divided 50/50.” (Emphasis added.)
¶3 Later, Husband proposed a QDRO assigning Wife 50 percent
of the funds contributed in the Marker Advisors 401(k) (the “401(k)”)
through September 2012. Wife objected and argued she was entitled to 50
percent of the 401(k) contributions through November 2013, the date the
court signed the decree. The family court rejected Wife’s argument,
concluding that the phrase “during the marriage” (i) was ambiguous and
(ii) meant “until the marital community terminated” upon service of the
petition, consistent with Arizona law, see Ariz. Rev. Stat. (“A.R.S.”) § 25-
211, and the parties’ positions at trial. Each side requested an award of
attorney fees, arguing that the other had been unreasonable. The court
opined that both parties acted unreasonably and advised the parties “[i]f
subsequent evidence reveals the same lack of communication between the
parties regarding exchanging proposed QDROs at this stage, then the Court
likely will award fees and costs to the more cooperative and responsive
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KRENZEN v. KATZ
Decision of the Court
party.”1 See A.R.S. § 25-324(A). Following entry of the QDRO, Wife timely
appealed.
DISCUSSION
A. The 401(k)
¶4 A divorce decree is a judgment. See Ariz. R. Civ. P. 54(a)
(defining “judgment” to include “a decree and an order from which an
appeal lies”); Craig v. Craig, 227 Ariz. 105, 106, ¶ 6 (2011) (noting a
dissolution decree is a final, appealable judgment). “The legal operation
and effect of a judgment must be ascertained by a construction and
interpretation of its terms.” Paxton v. McDonald, 72 Ariz. 378, 382 (1951)
(citation omitted). We review de novo the interpretation of a decree,
applying the general rules of construction for any written instrument. Cohen
v. Frey, 215 Ariz. 62, 66, ¶¶ 10-11 (App. 2007). We review de novo the
characterization of property as separate or community. Schickner v.
Schickner, 237 Ariz. 194, 199, ¶ 22 (App. 2015). Because a judgment “exists
as an independent resolution by the court of the issues before it,” the parole
evidence rule does not apply. In re Marriage of Zale, 193 Ariz. 246, 249-50,
¶¶ 10-15 (1999).
¶5 Our first inquiry is whether the decree is ambiguous. Cohen,
215 Ariz. at 66, ¶ 11. “The meaning of a decree is to be determined from the
language used.” Id. (quoting Stine v. Stine, 179 Ariz. 385, 388 (App. 1994)).
A decree is ambiguous if it “can reasonably be construed to have more than
one meaning.” In re Marriage of Johnson & Gravino, 231 Ariz. 228, 233, ¶ 16
(App. 2012) (quoting In re Estate of Lamparella, 210 Ariz. 246, 250, ¶ 21 (App.
2005)). We construe the language used in accordance with its natural and
legal import and with reference to related provisions. Cohen, 215 Ariz. at 66,
¶¶ 10-11; In re Marriage of Johnson & Gravino, 231 Ariz. at 233, ¶ 17 (quoting
Lopez v. Lopez, 125 Ariz. 309, 310 (App. 1980)).
¶6 The family court determined that the language of the decree
is ambiguous. Whether or not we agree with that determination, we agree
with the ultimate outcome. Specifically, the parties’ “marriage” ended in
November 2013. See A.R.S. § 25-325(A). The community property aspect of
the marriage “is deemed to have terminated upon the service of a petition
1 Although the family court did not specifically “deny” the fee
requests, his failure to rule implies they were denied. See Pearson v. Pearson,
190 Ariz. 231, 237 (App. 1997).
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KRENZEN v. KATZ
Decision of the Court
that results in a decree of dissolution.” Bobrow v. Bobrow, 241 Ariz. 592, 596,
¶ 15 (App. 2017) (citing A.R.S. § 25-211(A)(2)). Accordingly, property
acquired post-service of process is considered separate property if the
parties get divorced. Brebaugh v. Deane, 211 Ariz. 95, 97-98, ¶¶ 6-7 (App.
2005); see also A.R.S. § 25-213(B). Wife’s claim to “all funds contributed” in
the 401(k) through November 2013 cannot be harmonized with Arizona
law. Id.; see also Cohen, 215 Ariz. at 67, ¶ 14 (construing the decree’s language
in the context of the family court’s duty to equitably distribute the
community property). Although the family court has broad discretion to
equitably divide the community property, Boncoskey, 216 Ariz. at 451, ¶ 13;
see A.R.S. § 25-318(A), separate property must be assigned to the proper
spouse. In re Marriage of Flower, 223 Ariz. 531, 534-35, ¶ 12 (App. 2010)
(citing A.R.S. § 25-318(A)).
¶7 To this end, though, Wife contends the decree equitably
divides the community’s interest in post-service of process contributions to
the 401(k) resulting from Husband’s pre-service (i.e., community) efforts.
But Wife did not claim an interest in post-service of process 401(k)
contributions at trial, nor did she suggest any post-service 401(k)
contributions were for pre-service work.2 Instead, she requested that the
family court divide the 401(k) based on a balance of $145,037.47 as of
December 2012 (three months after service of the petition). In her pretrial
statement, Wife alleged (i) the 401(k) was worth $145,037.47, (ii) the
community’s interest was $115,082.77, and (iii) she was entitled to receive
$57,541.39.3 See Leathers v. Leathers, 216 Ariz. 374, 378, ¶ 19 (App. 2007)
(explaining that the pretrial statement controls the course of the litigation).
She did not offer a 401(k) statement past December 2012. Wife’s failure to
support her argument by reference to the evidence constitutes a waiver on
appeal. See Sholes v. Fernando, 228 Ariz. 455, 461, ¶ 16 (App. 2011).
¶8 Wife submits that she asserted an interest in post-service of
process contributions in the 401(k) via her testimony regarding a Wells
Fargo account. She relies on the following:
2 Wife does not contend the community was entitled to a lien on
Husband’s separate property. See A.R.S. § 25-318(E); see also Valento v.
Valento, 225 Ariz. 477, 481, ¶¶ 11-12 (App. 2010).
3 The decree recited: “Marker Advisors 401k. Mother wants
$115,082.77 of the $145,037.47 treated as community property and divided
50/50.”
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KRENZEN v. KATZ
Decision of the Court
Q Lori, how did [Husband] earn his income?
A Now?
Q Did he have commissions previously?
A Oh yes.
Q Okay. And so, when he earned money did he get it
right the day he earned it?
A No. He would get paid on the backend. He’s a – as a
real estate agent, after the house sold. And then he got paid
on the back ends of all of his consulting jobs and for flipping
houses.
...
A He rebuilt houses for people. And his money came
from the end of the projects.
¶9 Wife posits the “uncontested evidence” proved Husband
received “back-end payments” from pre-service of process efforts, which
“could result in further 401(k) contributions.” But the premise underlying
Wife’s position is not supported by the evidence—as noted by the family
court, which cautioned Wife about speculating on Husband’s post-service
earning deposits:
THE COURT: How do you know that?
THE WITNESS: How would he make so much money
in --
THE COURT: Okay, well I’m -- see, your guesses aren’t
useful to me. If there’s something specific you know about
where this money come -- came from and how it was
generated and what your rights or [Husband]’s rights to this
money were, then I can take that into account. But if you’re
just saying, ‘I’m guessing that this money must be something
that he made before the divorce petition was filed,[‘] I – that’s
not really evidence.
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Decision of the Court
In the end, the family court concluded the community had no interest in
Husband’s separate bank account deposits.4 We affirmed this ruling on
appeal, explaining that Wife had offered no evidence concerning the
community’s interest in the account “[a]side from her own speculative
testimony.” Krenzen v. Katz, 1 CA-CV 14-0037, 2015 WL 631453, at *6, ¶ 33
(Ariz. App. Feb. 12, 2015) (mem. decision).
¶10 To interpret the decree as Wife urges means that the family
court either (1) treated Husband’s post-service of process earnings as
community property, contrary to Arizona law, or (2) characterized
Husband’s post-service of process earnings as community property,
contrary to the evidence. The better interpretation is that the family court
intended to award each party half of the funds contributed in the 401(k)
until the community terminated. On this basis, we find no error.
B. Attorney Fees
¶11 Wife argues that the family court erred by denying her
request for attorney fees without considering the parties’ financial
resources. We review a decision on fees for an abuse of discretion. Nicaise
v. Sundaram, 1 CA-CV 17-0069 FC, 2018 WL 1101654, at *7, ¶ 32 (Ariz. App.
Mar. 1, 2018); MacMillan v. Schwartz, 226 Ariz. 584, 592, ¶ 36 (App. 2011).
¶12 The family court may award reasonable attorney fees “after
considering the financial resources of both parties and the reasonableness
of the positions each party has taken throughout the proceedings.” A.R.S. §
25-324(A). Although the court may award fees based on either financial
disparity or reasonableness, see Magee v. Magee, 206 Ariz. 589, 591 n.1, ¶ 8
(App. 2004); see also Rinegar v. Rinegar, 231 Ariz. 85, 90, ¶ 23 (App. 2012)
(affirming fee award based on financial disparity), it must consider both
factors. Myrick v. Maloney, 235 Ariz. 491, 494, ¶ 9 (App. 2014); Nicaise, 2018
WL 1101654, at *8, ¶ 34 (“And because two factors must be considered, a
neutral finding on one factor does not necessarily preclude an award.”).
Although Wife suggests that Husband’s “substantial financial superiority
should have tipped the balance” in her favor,5 we remand so the court can
4 The court found only one community bank account containing
$2,816, which he awarded to Wife.
5Two months earlier, the family court awarded Wife $8,730.50 in
attorney fees incurred on a prior appeal based solely on the parties’
disparate financial resources. Husband did not appeal this award, nor does
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KRENZEN v. KATZ
Decision of the Court
consider the issue in the first instance. Cf. Paul E. v. Courtney F., 1 CA-CV
17-0048 FC, 2018 WL 1602496, at *11, ¶¶ 34-35 (Ariz. App. Apr. 3, 2018)
(remanding so the family court could determine whether fee award was
justified based solely on financial disparity).
CONCLUSION
¶13 For the foregoing reasons, we affirm the QDRO. We remand
the order denying Wife’s request for attorney fees so the family court can
consider the parties’ financial resources in addition to the reasonableness of
the parties’ positions. See A.R.S. § 25-324(A). We deny the parties’ requests
for attorney fees on appeal without prejudice. On remand, the family court
may decide whether to award fees incurred on appeal. Because each party
partially prevailed on appeal, we make no award of taxable costs.
AMY M. WOOD • Clerk of the Court
FILED: AA
he contend the parties’ financial circumstances have changed since it was
entered.
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