Evers v. Rose ( 2017 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:
ELIZABETH ERENE EVERS, Petitioner/Appellee,
v.
KERRY WILLIAMS ROSE, Respondent/Appellant.
No. 1 CA-CV 16-0122 FC
FILED 3-16-2017
Appeal from the Superior Court in Maricopa County
No. FN2012-004778
The Honorable Michael J. Harrod, Judge
AFFIRMED
COUNSEL
Dickinson Wright PLLC, Phoenix
By Dana M. Levy, Anne L. Tiffen
Counsel for Petitioner/Appellee
Rose Law Group PC, Scottsdale
By Kelly Mendoza, Lauren Nageotte
Counsel for Respondent/Appellant
EVERS v. ROSE
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Kenton D. Jones delivered the decision of the Court, in
which Judge Patricia K. Norris and Judge Paul J. McMurdie joined.
J O N E S, Judge:
¶1 Kerry Rose (Husband) appeals the family court’s orders:
(1) denying his motion for relief from a decree of legal separation; and
(2) awarding Elizabeth Evers (Wife) attorneys’ fees. For the following
reasons, we affirm.
FACTS1 AND PROCEDURAL HISTORY
¶2 Wife petitioned for legal separation in November 2012. In
February 2015, the parties stipulated to appoint a Judge Pro Tempore to
conduct a private mediation. The parties attended the mediation, reached
a settlement as to all issues, and executed a binding, written agreement
reflecting the terms of the settlement pursuant to Arizona Rule of Family
Law Procedure (ARFLP) 69 (the Agreement). Pursuant to the Agreement,
Husband was awarded the marital residence, but, if he decided to sell the
residence while the parties were still married, “Wife w[ould] cooperate to
afford Husband the use of her $250,000 [tax] exemption (however, she d[id]
not guarantee that he w[ould] be able to use it).” Moreover, Husband
would be responsible for all tax liabilities resulting from a sale of the
residence. The Agreement also established that “[e]ach party believes the
division of property and obligations is not unfair,” but provided that, “[i]n
the event of a dispute concerning a term of settlement or the
memorialization of those terms,” such dispute must be submitted for
arbitration to the parties’ mediator.
¶3 In April 2015, Husband objected to Wife’s notice of lodging a
decree of legal separation and moved to extend the time for submitting the
decree. Husband explained he was having a tax attorney review the
1 We view the facts in the light most favorable to sustaining the family
court’s ruling. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 522 n.1, ¶ 1 (App.
2007) (citing Kohler v. Kohler, 211 Ariz. 106, 107, ¶ 2 (App. 2005)).
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EVERS v. ROSE
Decision of the Court
Agreement, specifically whether the language regarding Wife’s ability to
extend the use of her $250,000 tax exemption would need to be revised.
¶4 The family court granted Husband’s motion for extension but
adopted a schedule that the parties’ mediator, under his contractual
arbitration authority, had already established for handling disputes
regarding the Agreement’s terms. Pursuant to the mediator’s schedule:
(1) Husband’s tax attorney was to deliver an opinion letter on the tax issue
to Wife by May 26, 2015; (2) Wife had until June 5, 2015, to respond; and (3)
a hearing was scheduled for June 11, 2015, to make corrections and finalize
the settlement documents.
¶5 After timely receiving the opinion letter from his tax attorney,
Husband reported that entry of a separation decree would preclude the
parties from filing joint tax returns, as would be necessary for Husband to
use Wife’s tax exemption. Husband requested the parties delay submitting
the Agreement and entering the separation decree until 2017. The parties’
mediator, now serving as arbitrator, determined that “[w]hile the parties
did anticipate filing joint tax returns in their Rule 69 Agreement, there was
no mandate that it be done.” Moreover, the mediator-arbitrator interpreted
the terms of the Agreement to preclude it from being signed and then
retained. Because Wife made no assurances that Husband would be able to
use the tax exemption, the mediator-arbitrator overruled Husband’s
request that the family court wait until 2017 to enter the separation decree.
¶6 Thereafter, the family court entered a decree of legal
separation that contained virtually the same language regarding Wife’s tax
exemption as that found in the Agreement. Husband then filed a motion
for relief from the decree. Husband argued that, under ARFLP 85(C), either
Wife had fraudulently misrepresented her ability to permit Husband to use
her tax exemption, or the Agreement was so inequitable and unfair as to
justify releasing Husband from it. The court denied both of Husband’s
motions and awarded Wife attorneys’ fees.
¶7 Husband timely appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (A.R.S.) sections 12-120.21(A)(1)2 and -2101(A)(2).
2 Absent material changes from the relevant date, we cite a statute’s
current version.
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Decision of the Court
DISCUSSION
I. Wife Did Not Fraudulently Induce Husband to Enter into the
Agreement, and the Agreement was Not Overtly Inequitable.
¶8 In legal separation proceedings, the parties may enter into an
enforceable separation agreement if the agreement is executed in the
absence of fraud or undue influence. Breitbart-Napp v. Napp, 216 Ariz. 74,
79, ¶ 14 (App. 2007) (citing Keller v. Keller, 137 Ariz. 447, 448 (App. 1983)).
Moreover, separation agreements are binding upon the court unless it finds
the agreement unfair. A.R.S. § 25-317(B); see also Breitbart-Napp, 216 Ariz. at
79, ¶ 14 (citations omitted). Once the court approves the separation
agreement and its terms are set forth within a decree of legal separation, see
A.R.S. § 25-317(D), “[t]he provisions as to property disposition may not be
revoked or modified, unless the court finds the existence of conditions that
justify the reopening of a judgment under the laws of this state,” A.R.S.
§ 25-327(A). The reopening of a judgment is governed by Arizona Rule of
Civil Procedure 60, see Breitbart-Napp, 216 Ariz. at 79-80, ¶ 16, which, in
turn, provides the basis for ARFLP 85, ARFLP 85 cmt.; see also ARFLP 2(A);
Duckstein v. Wolf, 230 Ariz. 227, 231, ¶ 8 (App. 2012). Accordingly,
Husband’s challenges to the decree of legal separation must be based upon
ARFLP 85.
¶9 Husband first argues the family court erred by denying him
relief under ARFLP 85(C)(1)(c) because Wife fraudulently induced
Husband to enter into the Agreement.3 We review the court’s denial of a
motion for relief from judgment for an abuse of discretion. Duckstein, 230
Ariz. at 231, ¶ 8 (citing Staffco, Inc. v. Maricopa Trading Co., 122 Ariz. 353, 356
(1979)). “A court abuses its discretion if it commits an error of law in
reaching a discretionary conclusion, it reaches a conclusion without
3 Husband also argues on appeal that the Agreement and
corresponding decree of separation should be rescinded on the basis of lack
of mutual assent. However, this argument was not adequately raised prior
to Husband’s reply to Wife’s response to the motion for relief. Arizona Rule
of Civil Procedure 7.1(a)(3) requires reply memoranda to only address
“those matters raised in the responsive memorandum.” Because Husband
did not raise this argument in his Rule 85 motion for relief from the family
court’s separation decree, it is waived on appeal. See Midfirst Bank v. Chase,
230 Ariz. 366, 369 n.4, ¶ 8 (App. 2012) (citing Mohave Elec. Coop. v. Byers, 189
Ariz. 292, 301 n.2 (App. 1997), and Westin Tucson Hotel Co. v. Ariz. Dep’t of
Revenue, 188 Ariz. 360, 364 (App. 1997)).
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Decision of the Court
considering the evidence, it commits some other substantial error of law, or
‘the record fails to provide the substantial evidence to support the trial
court’s finding.’” Flying Diamond Airpark, L.L.C. v. Meienberg, 215 Ariz. 44,
50, ¶ 27 (App. 2007) (quoting Grant v. Ariz. Pub. Serv. Co., 133 Ariz. 434, 456
(1982)).
¶10 Under ARFLP 85(C)(1)(c), “the court may relieve a party . . .
from a final judgment, order or proceeding for . . . fraud, misrepresentation,
or other misconduct of an adverse party.” Fraud can generally be viewed
“as a misrepresentation as to the status of the law or as a misrepresentation
of the facts to be applied.” State ex rel. Corbin v. United Energy Corp. of Am.,
151 Ariz. 45, 53 (App. 1986) (citing Echols v. Beauty Built Homes, Inc., 132
Ariz. 498, 500 (1982)).
¶11 Husband alleges Wife led him “to believe that by entering
into the Agreement and agreeing to take on a significant amount of tax
liability, he would be afforded the benefit of Wife’s $250,000 tax exemption
upon sale of the marital residence.” But the parties’ separation agreement
and corresponding decree explicitly stated that Wife did not guarantee
Husband the ability to use her tax exemption. See supra ¶ 2. The parties’
mediator also recognized that, in regard to the tax exemption, “Wife would
do whatever [wa]s reasonably requested of her, however, she [wa]s not
representing or putting forth any assurances that anything could happen to
benefit [Husband].” Furthermore, both Wife and Wife’s counsel at the
mediation averred they did not counsel or induce Husband, who was also
represented at the mediation, to rely upon Wife’s ability to extend Husband
her $250,000 tax exemption. Wife’s counsel even went so far as to declare
she had not researched, prior to the mediation, whether a legally separated
couple could file a joint tax return.
¶12 The record is devoid of evidence of Wife or Wife’s counsel
misrepresenting either law or fact as relevant to the parties’ mediation and
resulting Agreement. Instead, the record shows Husband, represented by
counsel, executed the Agreement and afterward sought legal advice on
certain tax provisions to which he was already bound. He did not condition
his assent upon receiving that advice and ensuring his use of Wife’s tax
exemption. The family court, therefore, did not abuse its discretion by
denying Husband relief under ARFLP 85(C)(1)(c).
¶13 Husband next argues the Agreement and separation decree
should have been set aside under ARFLP 85(C)(1)(f) because they set forth
“an unfair and inequitable distribution of property.” ARFLP 85(C)(1)(f),
the family law corollary to Arizona Rule of Civil Procedure 60(b)(6),
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Decision of the Court
permits a court to relieve a party from a judgment for “any other reason
justifying relief from the operation of the judgment.” ARFLP 85(C)(1)(f)
may be applied when relief is not available under other subsections of
ARFLP 85(C)(1) and the movant can show extraordinary hardship or
injustice resulting from an unfair and inequitable court order. See Rogone v.
Correia, 236 Ariz. 43, 48, ¶ 12 (App. 2014) (citing Hilgeman v. Am. Mortg. Sec.,
Inc., 196 Ariz. 215, 220 (App. 2000)); Birt v. Birt, 208 Ariz. 546, 552, ¶ 22 (App.
2004) (citing Ulibarri v. Gerstenberger, 178 Ariz. 151, 164 (App. 1993)).
¶14 Husband contends that, because he assumed all tax liabilities
in the Agreement, his subsequent inability to offset those liabilities through
the use of Wife’s tax exemption resulted in an inequitable separation decree.
But Husband admits he freely and voluntarily entered into the Agreement,
which, as previously mentioned, specifically disclaimed any guarantee by
Wife that she would be able to permit Husband to use her tax exemption.
The parties to an agreement have the power to determine contractual terms,
particularly where they are represented and have relatively equal
bargaining power, see Swanson v. Image Bank, Inc., 206 Ariz. 264, 267-68,
¶ 12 (2003) (citation omitted), and “[c]ourts should not assume an overly
paternalistic attitude toward the parties to a contract by relieving one or
another of them of the consequences of what is at worst a bad bargain,”
Nelson v. Rice, 198 Ariz. 563, 568, ¶ 15 (App. 2000) (quoting Pac. Am. Leasing,
152 Ariz. 96, 103 (App. 1986) (citations omitted); cf. Keg Rests. Ariz., Inc. v.
Jones, 240 Ariz. 64, 76, ¶ 43 (App. 2016) (“[Contractual] consideration need
not be of like or identical value, and the court will not inquire into the
adequacy of consideration.”) (quoting Nickerson v. Green Valley Recreation,
Inc., 228 Ariz. 309, 321, ¶ 29 (App. 2011)).
¶15 In hindsight, the Agreement may have been a bad bargain for
Husband, but he entered into that bargain while fully aware that Wife had
not guaranteed she could convey the tax exemption and, more importantly,
that he did not know whether she could convey the tax exemption. Indeed,
Husband did not condition his acceptance of the Agreement on receiving
legal advice and confirmation that he could take advantage of the
exemption. The family court did not abuse its discretion by approving the
Agreement and implicitly finding it to be fair.
II. The Family Court Did Not Abuse Its Discretion by Awarding Wife
Attorneys’ Fees.
¶16 Husband also argues the family court erred in granting Wife
attorneys’ fees. Pursuant to A.R.S. § 25-324(A):
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EVERS v. ROSE
Decision of the Court
[A]fter considering the financial resources of both parties and
the reasonableness of the positions each party has taken
throughout the proceedings, [the court] may order a party to
pay a reasonable amount to the other party for the costs and
expenses of maintaining or defending any [dissolution of
marriage] proceeding.
Moreover, if the court determines a party filed a petition not grounded in
fact or based on law, the court must award reasonable costs and attorneys’
fees to the other party. A.R.S. § 25-324(B)(2). This Court reviews the family
court’s award of attorneys’ fees for an abuse of discretion. MacMillan v.
Schwartz, 226 Ariz. 584, 592, ¶ 36 (App. 2011) (citing In re Marriage of Berger,
140 Ariz. 156, 167 (App. 1983)).
¶17 Here, the family court found: (1) a substantial financial
disparity between the parties; (2) Husband took an unreasonable legal
position; and (3) Husband’s motion for relief from the separation decree
was not grounded in fact or based on law. Either one of the first two
findings would have been sufficient for a discretionary award of fees, see
Mangan v. Mangan, 227 Ariz. 346, 353 n.13, ¶ 27 (App. 2011) (citing Magee v.
Magee, 206 Ariz. 589, 591 n.1, ¶ 8 (App. 2004)), and the court was required
to award Wife attorneys’ fees once it found Husband’s motion for relief was
not grounded in fact or based on law. Although Husband is correct when
he states that A.R.S. § 25-324 does not establish a prevailing party standard,
see Breitbart-Napp, 216 Ariz. at 84, ¶ 39 (citation omitted), Husband’s motion
for relief contained only conclusory assertions of Wife’s fraudulent
misrepresentations, asserted an untenable position not supported by the
specifically articulated language of the Agreement to which he objected,
and proffered no legal basis to support rescission of the Agreement on
equitable grounds. Accordingly, the court did not abuse its discretion by
awarding Wife attorneys’ fees.
CONCLUSION
¶18 The family court’s order denying Husband’s motion for relief
from the separation decree is affirmed, as is the court’s order awarding Wife
attorneys’ fees.
¶19 Both parties request attorneys’ fees on appeal pursuant to
A.R.S. § 25-324. Because Husband’s arguments are virtually unchanged
relative to those presented to the family court, and, as addressed above, we
support the trial court’s awarding of fees, we likewise find on appeal he has
taken an unsupported legal position such that we award Wife her
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reasonable costs and attorneys’ fees under A.R.S. § 25-324(B)(2), contingent
upon her compliance with ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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