Sembower v. Sembower ( 2021 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:
LARISA LEE SEMBOWER, Petitioner/Appellee,
v.
GREG LITMAN SEMBOWER, Respondent/Appellant.
No. 1 CA-CV 20-0210 FC
FILED 3-4-2021
Appeal from the Superior Court in Maricopa County
No. FN2019-092241
The Honorable Joan M. Sinclair, Judge
AFFIRMED
COUNSEL
Jeffrey M. Zubriggen PC, Phoenix
By Jeffrey M. Zurbriggen
Counsel for Petitioner/Appellee
The Murray Law Offices PC, Scottsdale
By Stanley D. Murray
Counsel for Respondent/Appellant
SEMBOWER v. SEMBOWER
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Judge Kent E. Cattani and Judge Cynthia J. Bailey joined.
H O W E, Judge:
¶1 Greg Littman Sembower (“Husband”) appeals from the trial
court’s decree dissolving his marriage to Larissa Lee Sembower (“Wife”).
Husband claims that the court erred in interpreting the parties’ premarital
agreement to find a community interest in Husband’s 401(k) account that
had to be shared with Wife. We affirm the trial court’s ruling that Wife was
entitled to an equal share of the community property contributions made
to the account and any appreciation or increase attributable to those
contributions.
FACTUAL AND PROCEDURAL HISTORY
¶2 Husband and Wife lived together and filed an affidavit of
common-law marriage in Colorado on December 28, 2013, so that Wife
could qualify for health insurance through Husband’s employer. Before
they filed the affidavit, they signed a prenuptial agreement. The parties
created the agreement with the understanding that both parties had been
previously married, had children from their previous marriages, and
intended to “define their rights and responsibilities regarding property and
financial matters to the extent these can be foreseen.”
¶3 The agreement stated that neither party would be obligated
to support the other upon the dissolution of their marriage. The agreement
also stated that “as otherwise provided in this Agreement, the following
property now owned by either party shall remain and be their separate
property. . .[t]he property currently owned by each party is described on
Exhibits A and B to this Agreement.” Exhibit A included Husband’s
retirement account, which had an approximate value of $860,000 at the
time.
¶4 The agreement stated that on dissolution of marriage, the
following provisions shall apply:
a. Each party shall have an equal interest in all property
acquired by either party during the course of marriage (except
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property that is merely the result of an increase in the value
of property owned separately by the parties prior to the
marriage, as listed on the attached schedules). [“Clause a”]
b. All savings, investment, retirement accounts, and all
property listed on the attached schedules as separate property
(owned by a party prior to the marriage) shall remain the
separate property of that party who brought such property
into the marriage, including any appreciation, income, or
other increase in property.
Husband disclosed that his net worth was slightly over a million dollars at
the time of the agreement. Wife disclosed that she had more liabilities than
assets but that she received $55,000 a year in child support. The agreement
contained a severance clause that provided that if any of its terms were
ruled invalid, the remainder of the agreement would still be effective. The
agreement also stated that the parties entered the agreement voluntarily
and that they each waived further disclosures and accepted the amounts in
the exhibits as their probable value. The parties subsequently held a
marriage ceremony on January 16, 2016.
¶5 At the start of 2017, the retirement account’s value was
$1,108,768.88. Husband’s payroll deductions and employer’s contributions
to the account totaled $45,077.68 in 2017, $70,753.50 in 2018, and $46,585.08
as of August 31, 2019. Wife filed for dissolution of the marriage in August
2019, and requested, among other things, an equitable distribution of the
community property acquired during marriage and an award of spousal
maintenance as allowed under A.R.S § 25–319. At that time, the account’s
approximate value was $3.2 million.
¶6 In his pretrial statement, Husband asserted under the
agreement that Wife was not entitled to spousal maintenance and that the
account was his sole and separate property upon dissolution. In her pretrial
statement, Wife opposed the validity of the agreement:
The disclosures on Exhibit “A” indicate[s] Husband had
retirement plans in 2013—3 years prior to marriage of only
$860,000. Husband has never disclosed—to this day—what
the value of his retirement plans were on the date of marriage.
¶7 Wife testified that the agreement entitled her to her share of
the communal contributions made to the account during their marriage as
well as the appreciation, increases, and incomes related to those
contributions. She conceded that Exhibit A included the account and that
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the balance in the account at the time of marriage would remain Husband’s
sole and separate property, including any increases, income, and
appreciation that increased that balance during the marriage. She also
testified that Husband wanted the agreement, drafted it, and gave it to her
on the day they signed it. Wife also submitted an affidavit of common law
marriage, reversing her course from her pretrial statement and arguing that
the marriage occurred on December 28, 2013.
¶8 Husband testified that the agreement made the account and
increases to it from contributions during the marriage his sole and separate
property. He testified that Wife wanted the agreement so that he could keep
his 401(k) and home. Finding a template online, he modified the agreement
according to her wishes. Husband agreed that the date of their marriage
was December 28, 2013, stating that they submitted the affidavit of common
law marriage and entered the agreement so Wife could enroll in his
employer’s health care plan before the new year.
¶9 During a break in the testimony, the trial court had counsel
come back to its chambers “to chat.” When trial resumed, the parties
discussed matters pertaining to the parties’ real estate holdings, and Wife’s
counsel then examined Husband about his credibility, the couple’s income
and debts, and real property matters. At one point in the examination,
Husband’s counsel stated that Husband was waiving certain arguments
about the prenuptial agreement’s application to the real estate “based on
your ruling on the prenup earlier today,” but did not state what the trial
court’s ruling had been.
¶10 The trial court subsequently entered the Decree of Dissolution
of Marriage on February 19, 2020, recognizing the validity of the agreement
by denying Wife’s request for spousal maintenance and finding the legal
marriage date was January 16, 2016. The Court ordered an equal division
of the parties’ community property and debt. The court further determined
that while the retirement account was Husband’s, Wife was entitled to her
share of the community contributions and assigned an expert to prepare a
qualified domestic relations order (“QDRO”) to determine the community
interest in the account to be “equitably divided” between Husband and
Wife. Husband timely appealed. We have jurisdiction pursuant to
the Arizona Constitution, Article 6, Section 9, and Arizona Revised Statutes
(“A.R.S.”) section 12–2101(C) (2003).
¶11 After Husband appealed, Wife moved the trial court to
correct and clarify the marriage date as being December 28, 2013. The trial
court determined the motion to be untimely filed under Arizona Rule of
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Family Law Procedure 83, which requires motions to amend or alter a
judgment be filed within 25 days after the entry of judgment. The trial court
reasoned that
[b]ecause the issue here is the date of marriage in relation to
the QDRO, changing the date of marriage in the decree would
essentially change the judgment as it would have an effect on
the QDRO. Therefore, the Court cannot grant the motion on
this basis.
DISCUSSION
¶12 Husband argues that the court erred in finding a community
property interest in the account. We review the court's interpretation of the
prenuptial agreement de novo and apply principles of contract
interpretation. See Rand v. Porsche Fin. Servs., 216 Ariz. 424, 434 ¶ 37 (App.
2007).
¶13 We interpret a contract to reconcile and give meaning to all its
terms if reconciliation can be accomplished reasonably and will avoid
making language mere surplusage. Gfeller v. Scottsdale Vista N. Townhomes
Ass'n, 193 Ariz. 52, 54 ¶ 13 (App. 1998). The purpose of interpretation is to
determine the parties’ intent and enforce that intent, Grosvenor Holdings,
L.C. v. Figueroa, 222 Ariz. 588, 593 ¶ 9 (App. 2009), as reflected in the
contract’s language, see Harris v. Harris, 195 Ariz. 559, 562 ¶ 15 (App. 1999).
If the intention of the parties is clear and unambiguous in view of all
circumstances, we apply the plain meaning of the terms of the contract. Id.;
see also Earle Investments, LLC v. S. Desert Med. Ctr. Partners, 242 Ariz. 252,
255 ¶ 14 (App. 2017) (“[We] look to the plain meaning of the words as
viewed in the context of the contract as a whole.”). “A contract is not
ambiguous just because parties disagree about its meaning.” In re Estate of
Lamparella, 210 Ariz. 246, 250 ¶ 21 (App. 2005). Whether a contract “is
susceptible to more than one interpretation is a question of law, which we
review de novo,” Grosvenor Holdings, 222 Ariz. at 593 ¶ 9, but if it is
susceptible to more than one interpretation, we defer to the court’s findings
of fact, including any findings on the parties’ intent, see Chopin v. Chopin,
224 Ariz. 425, 428 ¶ 7 (App. 2010).
¶14 Absent parties’ express intent, employer and employee
contributions to a retirement account during marriage create a community
interest in those contributions. A.R.S § 25-211; see also Koelsch v. Koelsch, 148
Ariz. 176, 181 (1986) (holding that pension plans, as a form of deferred
compensation to employees for services rendered, are considered
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community property when earned through employment during marriage.).
Under the agreement’s Clause a, “[e]ach party shall have an equal interest
in all property acquired by either party during the course of marriage
(except property that is merely the result of an increase in the value of
property . . .).” Clause a’s plain terms state that Wife has an interest in all
property acquired during the marriage, which includes Husband’s
employee and employer contributions to the account.
¶15 Husband nonetheless argues that the agreement grants him
the entire account, including the portions contributed during marriage and
the increases from those contributions. Husband relies on the parenthetical
portion of Clause a, which states (except property that is merely the result
of an increase in the value of property . . . ),” and Clause b which states that
the account “shall remain the separate property of that party who brought
such property into the marriage, including any appreciation, income, or
other increase in property.” While “increases” includes appreciation
growth during the time of marriage, see Cockrill v. Cockrill, 124 Ariz. 50, 52
(1979), an increase by its plain meaning does not include something added
to it from an external and independent source, such as community labor
and contributions, see id. Employee and employer contributions are
“additions” to the account from an independent source or labor and not
“increases” to Husband’s sole and separate property. Because the
contributions are from an external source, they are not contemplated in
Clause b or the parenthetical of Clause a and are community property.
¶16 The trial court therefore correctly ruled that Wife was entitled
to her share of the contributions to the account from community property.
The parties express some confusion because the Decree does not identify
the portion of the account that is community property and state how that
portion is divided. But the Decree is clear that “an equal division of
community property is appropriate to achieve equity” in this case and that
the account must be “equitably” divided by the QDRO expert. Although
the Decree does not state what portion of the account is community
property, the Decree orders that the parties shall cooperate with the QDRO
expert "to provide all plan statements necessary to perform any required
calculations to divide the plan(s) as called for in this order.”
Uncontroverted evidence at the hearing showed that Husband and his
employer contributed identified amounts to the account during Husband
and Wife’s marriage, and from the plan statements, the QDRO expert will
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be able to determine the portion of the account that constitutes community
property to be divided equally.1
¶17 Wife argues that the court found that the community
contributions transmuted the entire account to community property subject
to equitable division. But this is not true. Wife waived all right to the
properties enumerated in Exhibit A held before marriage and their
increases under the terms of the agreement. Wife conceded that Exhibit A
included the account. The agreement further stated that all “retirement
accounts, and all property listed on the attached schedules as separate
property . . . shall remain the separate property of that party who brought
such property into the marriage including any appreciation, income, or
other increase to such property.” The agreement unambiguously states that
the amount of the account at the time of marriage and appreciation, income,
and increases to it during the marriage shall remain Husband’s sole and
separate property on dissolution.
¶18 Wife also argues, for the first time on appeal, that the account
was not properly listed on Exhibit A and therefore Husband cannot rely on
the agreement to rebut the presumption that the account is entirely
community property. Wife conceded, however, that at the time of signing
the agreement, she knew Exhibit A referred to the account, that Husband
was entitled to what was in the account before marriage and all increases
to that amount during marriage and cannot now argue otherwise. See Clark
Equip. Co. v. Ariz. Prop. & Cas. Ins. Guar. Fund, 189 Ariz. 433, 439 (App. 1997).
¶19 Wife further argues that the agreement is invalid because she
signed it under duress and it was otherwise unconscionable. But the trial
court found the agreement valid because it denied the parties any spousal
maintenance based on the agreement’s terms that no spousal maintenance
would be awarded if the parties divorced, and Wife did not cross-appeal
that ruling. We therefore have no jurisdiction to consider any claims that
the agreement was invalid. Engel, 221 Ariz. at 510 ¶ 17.
1 Wife asks this Court to recognize that the parties’ marriage date as
December 23, 2013. We have no jurisdiction to do so. The trial court found
as fact that the parties were married on January 16, 2016, the evidence
supports that finding, and Wife did not appeal that finding. Because finding
that the parties were married at an earlier date would enlarge her rights and
lessen Husband’s rights under the Decree, Wife was required to cross-
appeal the Decree if she wished appellate review of the trial court’s finding.
Engel v. Landman, 221 Ariz. 504, 510 ¶ 17 (App. 2009).
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CONCLUSION
¶20 For the reasons stated, we affirm the trial court’s judgment.
AMY M. WOOD • Clerk of the Court
FILED: AA
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