Nitsch v. Klavuhn

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:
MICHELLE NITSCH, Petitioner/Appellant,
v.
KURT GUSTAVE KLAVUHN, Respondent/Appellee.
No. 1 CA-CV 20-0622 FC
FILED 7-27-2021
Appeal from the Superior Court in Maricopa County
No. FC2016-006272
The Honorable Kerstin G. LeMaire, Judge
AFFIRMED
COUNSEL
Law Offices of John R. Zarzynski, Phoenix
By Georgia A. Wilder
Counsel for Petitioner/Appellant
Berkshire Law Office, PLLC, Tempe
By Keith Berkshire, Alexandra Sandlin
Counsel for Respondent/Appellee
NITSCH v. KLAVUHN
Decision of the Court
MEMORANDUM DECISION
Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Cynthia J. Bailey and Judge Jennifer M. Perkins joined.
C R U Z, Judge:
¶1 Michelle Nitsch (“Wife”) appeals from the court’s entry of the
qualified domestic relations order (“QDRO”) awarding Kurt Gustave
Klavuhn (“Husband”) credit for contributions he made to his retirement
account after the termination of the marital community, as well as gains
attributed to those contributions. For the following reasons, we affirm.
FACTUAL AND PROCEDURAL HISTORY
¶2 Husband and Wife were married for about fifteen years when
Wife filed for legal separation in 2016. The matter was later converted to a
dissolution action.
¶3 Husband and Wife both had retirement accounts that existed
before their marriage, and both alleged that they could trace premarital,
separate property funds in their accounts. During the dissolution
proceedings, the superior court found that neither party provided sufficient
evidence that their premarital retirement accounts maintained their
separate nature. As a result, the court appointed “a special master to divide
the community portion of [the] parties’ retirement benefits after
determining which portion of the accounts (if any) is a party’s sole and
separate property.”
¶4 After the special master conducted a hearing, he found that
neither party was able to trace their premarital funds and prove they
maintained their sole and separate character. However, the special master
noted that Husband had continued to make contributions to one of his
retirement accounts after termination of the marital community, and he
should be credited for those contributions:
By stipulation of the parties, Husband was to receive credit
for his proven contributions from July 1, 2016 [the date after
Wife petitioned for legal separation], to the date of division.
No gains or losses will be attributable to those contributions.
Accordingly, the account balance on the date of division of
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NITSCH v. KLAVUHN
Decision of the Court
TIAA-Pittsburgh will be reduced by the total amount of
Husband’s contributions between July 1, 2016, and the date of
division (and affirmed to Husband as his separate property),
and the balance remaining divided equally.
¶5 Neither party filed an objection to the special master report,
and the court adopted the same in a minute entry order. Husband
subsequently lodged a QDRO that allocated the retirement benefits
between the parties and credited Husband for the contributions he made
following July 1, 2016, adjusted for gains and losses. Wife objected to the
QDRO, arguing the special master’s report indicated Husband was not
entitled to gains or losses on his post-petition contributions. Shortly after,
the court entered the QDRO, and wife appealed.
¶6 We have jurisdiction pursuant to Arizona Revised Statutes
(“A.R.S.”) section 12-2101(A)(1).
DISCUSSION
I. Waiver and Jurisdiction
¶7 Wife argues that the court erred in entering the QDRO,
because it awards Husband investment gains on the contributions he made
to his retirement account after the termination of the community, but the
special master’s report expressly stated that Husband would not receive
credit for these gains.
¶8 Wife contends that Husband waived his claim to investment
gains by failing to timely object to the special master’s report. However,
neither the special master’s report nor the court’s order adopting the special
master’s report were final orders. Husband was not required to object to
them to preserve this issue. The parties were on notice that a QDRO would
be issued after the special master rendered his report, and the court
expressly stated it “shall reserve jurisdiction to enter any QDRO(s) or other
orders relating to the special master’s work.” See Boncoskey v. Boncoskey, 216
Ariz. 448, 451, ¶ 12 (App. 2007) (finding the court’s order adopting the
special master’s report was not a final order of the court, because the
superior court “contemplated the later preparation and entry of the
[QDRO]”); see also Choy Lan Yee v. Yee, 251 Ariz. 71, 76, ¶¶ 13-14 (App. 2021)
(“Although a special order made after final judgment in family court does
not require a Rule 78 statement of finality to be appealable, the family court
must have fully resolved all issues raised in a post-decree motion or petition
before an appeal can be taken . . . .”).
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¶9 Similarly, contrary to Wife’s argument, the superior court did
not violate principles of res judicata or collateral estoppel by entering the
QDRO. Under the doctrine of res judicata, a final judgment on the merits
bars a second lawsuit involving the same parties based on the same cause
of action. Norriega v. Machado, 179 Ariz. 348, 351 (App. 1994). Similarly,
collateral estoppel prevents a party from relitigating an issue or fact, but
only if a final judgment was entered on that issue or fact. See Chaney Bldg.
Co. v. City of Tucson, 148 Ariz. 571, 573 (1986). Here, neither theory applies
because the special master’s report and the court’s order adopting the
report were not final orders. The QDRO was also not a “collateral attack”
on the court’s prior order because the minute entry order was not a final
judgment and the court expressly retained jurisdiction to enter “any
QDRO(s)” related to the special master’s report. See Cox v. Mackenzie, 70
Ariz. 308, 312-13 (1950).
¶10 Thus, we find that Husband did not waive his claim to
investment earnings on his post-dissolution retirement contributions and
that this issue is properly before this court.
II. Division of Husband’s Retirement Account
¶11 Wife contends the superior court erred in entering the QDRO
because it awards her share of community earnings on community
property to Husband. We review the superior court’s division of marital
property for an abuse of discretion, but we review de novo the
characterization of property as separate or community. In re Marriage of
Flower, 223 Ariz. 531, 535, ¶ 14 (App. 2010); Schickner v. Schickner, 237 Ariz.
194, 199, ¶ 22 (App. 2015).
¶12 “Property that is acquired by a spouse after service of a
petition for dissolution of marriage, legal separation or annulment is also
the separate property of that spouse if the petition results in a decree of
dissolution of marriage, legal separation or annulment.” A.R.S. § 25-213(B).
It is undisputed that Husband made contributions to his retirement account
after service of Wife’s petition for legal separation in June 2016. These
contributions are Husband’s separate property. This would include any
gains on the contributions.
¶13 Wife argues the retirement accounts are “entirely community
property in nature” and the “increases, rents, and profits from community
assets are community property.” But the retirement accounts cannot be
“entirely” community property if they contain Husband’s post-petition
contributions, which she admits are his separate property. Wife cites no
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Decision of the Court
legal authority for the proposition that the increases and profits from
Husband’s separate property should be categorized as community
property. See A.R.S. § 25-213(A)-(B). There is nothing in the record to
indicate—and Wife does not allege—that the increase in value of
Husband’s separate property was due to the efforts of the community. See
Cockrill v. Cockrill, 124 Ariz. 50, 53-54 (1979). And in her reply brief, Wife
concedes that the gains from Husband’s separate property would
ordinarily also be categorized as his separate property. She instead argues
that Husband agreed to award Wife a portion of this separate property, and
“[a]bsent Husband’s stipulation, Husband would have necessarily been
entitled to all contributions made to his retirement account after service of
the Petition for Dissolution and all investment earnings thereon.”
¶14 However, the record is devoid of evidence of any such
stipulation between the parties. She claims the special master’s report
alone, which states “[b]y stipulation of the parties,” is sufficient evidence of
Husband’s agreement. But the party’s decree awards “to each party half of
the community portion of the retirement plans identified as either a
community asset or containing assets that belong to the community. The
community portion is defined as assets acquired from the date of marriage
until the date of termination of the community.” (Emphasis added.) To the
extent the special master’s report may conflict with the terms of the QDRO,
it attempts to award Wife more than her half of the community portion of
the retirement accounts.
¶15 Additionally, the parties’ pretrial statement includes a
stipulation that “[e]ach party claims that a portion of their respective
retirement accounts represents his sole and separate premarital assets
which should be awarded to him or her as sole and separate property.” In
her proposed resolution statement, Wife stated that “[e]ach party should be
awarded his or her sole and separate property, including any post-petition
earnings.” The evidence demonstrates that the parties stipulated that both
Husband and Wife would be awarded their sole and separate property, not
that Husband would concede any portion of his separate earnings to Wife.
¶16 The superior court did not err in awarding Husband the gains
on his post-petition contributions to his retirement account. Although the
special master found that Husband should not be awarded gains or losses
on these contributions, given the lack of evidence of any stipulation by the
parties, it would have been error for the court to incorporate that finding as
part of its final QDRO, thereby divesting Husband of this separate
property. Proffit v. Proffit, 105 Ariz. 222, 224 (1969) (“[T]he divorce court, in
pronouncing a divorce decree, has no authority to compel either party to
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Decision of the Court
divest himself or herself of [t]itle to separate property.”); Weaver v. Weaver,
131 Ariz. 586, 587 (1982) (“[The superior court’s] jurisdiction with respect to
separate property is limited to assigning to each spouse his or her separate
property . . . .”). The special master was appointed to determine which
portion of the retirement accounts was a party’s sole and separate property,
and it exceeded its authority when it attempted to award Wife the separate
property of Husband, a mistake which was corrected in the superior court’s
final orders. To the extent the superior court considered Wife’s objection to
Husband’s QDRO, we deem the court’s decision to adopt Husband’s
version of the QDRO as a factual determination that no stipulation ever
existed. We will not disturb the court’s factual determinations unless they
are clearly erroneous. Danielson v. Evans, 201 Ariz. 401, 406, ¶ 13 (App.
2001). Wife failed to prove the court’s factual finding was clear error.
¶17 The court did not improperly award Wife’s share of
community earnings to Husband. The investment gains on Husband’s
contributions are his sole and separate property, not community property,
and there is no evidence the parties stipulated otherwise. We find no error.
CONCLUSION
¶18 For the foregoing reasons, we affirm. Both parties request an
award of their attorneys’ fees on appeal. We have considered the relative
financial resources of the parties and the reasonableness of the positions
asserted on appeal. A.R.S. § 25-324(A). In the exercise of our discretion, we
grant Husband his reasonable attorneys’ fees in addition to his costs on
appeal upon compliance with ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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