Carroll v. Carroll

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:

JACQUELINE R. CARROLL,
Petitioner/Appellant/ Cross-Appellee/Appellee,

v.

ALEXANDER MICHAEL CARROLL,
Respondent/Appellee/ Cross-Appellant/Appellant.

No. 1 CA-CV 15-0351 FC
1 CA-CV 19-0482 FC
(Consolidated)
FILED 6-25-2020

Appeal from the Superior Court in Maricopa County
No. FN2012-092431
The Honorable Bethany G. Hicks, Judge, Retired

VACATED AND REMANDED

COUNSEL

Tiffany & Bosco, PA, Phoenix
By Amy D. Sells
Counsel for Petitioner/Appellant/ Cross-Appellee/Appellee
The Murray Law Offices, PC, Scottsdale
By Stanley D. Murray
Co-Counsel for Respondent/Appellee/ Cross-Appellant/Appellant

Deshon Laraye Pullen, PLC, Scottsdale
By DeShon Pullen
Co-Counsel for Respondent/Appellee/ Cross-Appellant/Appellant

MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge David D. Weinzweig and Judge Jennifer M. Perkins joined.

M O R S E, Judge:

¶1 Jacqueline Carroll ("Wife") appeals and Alexander Carroll
("Husband") cross-appeals from a decree of dissolution ("the decree"). They
each assert that the court erred in its allocation of property and in its award
of spousal maintenance to Wife. Because the superior court conflated the
allocation of property with the award of spousal maintenance, we vacate
those portions of the decree, and remand for reconsideration on the existing
record. We likewise vacate the superior court's order enforcing repayment
to Wife under the decree.

FACTS AND PROCEDURAL BACKGROUND

¶2 Husband and Wife married in Germany in 1994. They
returned to the United States in 2002. From 2002 to 2009 neither party held
full-time employment. Nevertheless, they funded their lifestyle by
borrowing against their increasingly dwindling real estate assets and
obtaining loans from Wife's parents. In 2009, Husband went back to work
and the couple moved to Arizona. In May 2011, Husband separated from
Wife. A year later, Wife petitioned for dissolution of marriage. Wife then
filed a motion for temporary orders and, after a hearing, was awarded
$5,000 per month in temporary spousal maintenance.

¶3 Following trial, the superior court entered a decree of
dissolution in which it held the parties jointly responsible for the debt to
Wife's parents and all unknown debts, but held Husband solely responsible
for all other debts and tax liabilities of the community. In consideration of

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the significant community debt assigned solely to Husband (roughly $1.5
million), the court reduced Wife's spousal maintenance award to $1,500 per
month, indefinitely. The court ordered an even split of the community's
retirement accounts and required Husband to make an equalization
payment to Wife for his purchase of a luxury car with community funds
while separated. The court then allocated a few items as sole and separate
property but awarded each party the remaining community property in
their possession because it was either comingled or concealed. The court
also awarded Wife some of her attorney fees.

¶4 Each party immediately challenged the decree. Husband
moved for reconsideration; Wife moved for a new trial. After both efforts
were denied, Wife appealed and Husband cross-appealed. Soon after, Wife
filed for bankruptcy and this court granted a stay of the appeal pending
resolution of the bankruptcy proceeding. During the stay, a dispute arose
over enforcement of the decree. Wife paid approximately $59,700 of the
joint debt owed to her parents, and pursuant to the terms of the decree,
petitioned the superior court to order Husband to pay the same amount.
Husband filed a motion to dismiss due to the ongoing bankruptcy
proceeding, which was denied. After trial, the superior court ordered that
Husband reimburse Wife for $29,606.05—half of her payment of the debt.
The court also awarded Wife most of her attorney fees. In June 2019,
Husband appealed from the superior court's order of repayment and award
of attorney fees.

¶5 Around this time, Wife's bankruptcy proceeding concluded
and this court lifted its stay of the original appeal. This court then
consolidated the appeals in August 2019. We have jurisdiction pursuant to
A.R.S. § 12-2101(A)(1).

DISCUSSION

I. Property Allocation.

¶6 Husband and Wife both contend that the superior court erred
when it allocated the community property and debts. The court evenly split
the few community assets and jointly allocated the debt held by Wife's
parents, but made Husband solely responsible for "all other debts and
income tax liabilities of the community." The court justified the unequal
allocation because "Husband's payment of Wife's portion of such
community debts shall be in lieu of spousal maintenance in those amounts."
We review the court's allocation of community property and debt for an
abuse of discretion. Boncoskey v. Boncoskey, 216 Ariz. 448, 451, ¶ 13 (App.

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2007). "An abuse of discretion occurs when the court makes an error of law
in the process of reaching a discretionary conclusion." In re Marriage of
Williams, 219 Ariz. 546, 548, ¶ 8 (App. 2008).

¶7 While a court may sometimes order an unequal distribution
of property, see Inboden v. Inboden, 223 Ariz. 542, 547, ¶ 18 (App. 2010), it
cannot be based on reduced spousal maintenance, Koelsch v. Koelsch, 148
Ariz. 176, 182 (1986) ("[P]roperty division and spousal maintenance are two
separate and distinct considerations at dissolution."). Whereas the "interest
of a spouse in his or her share of the community property is immediate,
present and vested," an award of spousal maintenance is determined by the
separate factors of A.R.S. § 25-319 and "may vary from time to time with the
needs of the receiving spouse and the ability of the other to pay." In re
Marriage of Foster, 125 Ariz. 208, 210-11 (App. 1980). Conflating property
division and spousal maintenance creates a non-modifiable award of
spousal maintenance and allocates community property without statutory
authorization. Foster, 125 Ariz. at 211. Just as "increased spousal
maintenance cannot justify depriving a spouse of his or her property right,"
Koelsch, 148 Ariz. at 182, decreased spousal maintenance cannot justify an
unequal distribution of community debts, see Elliott v. Elliott, 165 Ariz. 128,
137 (App. 1990) ("Property settlements, spousal maintenance awards, and
child support awards involve distinct considerations.").

¶8 Here, the court decreased Husband's support obligation to
justify its unequal distribution of community debt and property that
favored Wife. This was error. Although the court found that Wife could
not pay her share of the community debt, it should have adjusted the
allocation of debts and assets to achieve an equitable result, rather than
reducing the award of spousal maintenance. See Caldwell v. Caldwell, 126
Ariz. 460, 462 (App. 1980) ("Assets and obligations are reciprocally related
and there can be no complete and equitable disposition of property without
a corresponding consideration and disposition of obligations.").
Accordingly, we vacate the part of the decree allocating debts and property
and remand for consideration of that issue consistent with this decision.1

¶9 Husband also contends that the court erred in determining
that the money owed to Wife's parents was a community debt. We address
this issue because it is likely to arise on remand. See State v. Abdi, 226 Ariz.

1 Because we vacate the entirety of the property allocation, we need
not consider Husband and Wife's numerous other challenges to the
allocation of assets, debts, and for procedural safeguards for repayment of
those debts.

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361, 366, ¶ 18 (App. 2011) (explaining that an appellate court may address
issues likely to arise on remand). During the marriage, Wife's parents
agreed to use their good credit rating to open numerous credit cards in their
own name to fund both Husband's and Wife's expenses. At trial, Wife
provided promissory notes as evidence of the creditor-debtor relationship,
which stated that Wife's parents agreed to make their lines of credit
available in exchange for the parties making the minimum payments until
those accounts were paid in full. Husband concedes this arrangement was
in place during the marriage and if the promissory notes are valid, the
superior court was within its discretion to find the existence of a community
debt. However, Husband alleges that Wife's parents never paid any money
on the credit cards and thus did not incur any detriment. Therefore, he
contends, the promissory notes that the court accepted as proof of the
community debt are invalid for lack of consideration.

¶10 A promissory note is a contract, Hogan v. Wash. Mut. Bank,
N.A., 230 Ariz. 584, 587, ¶ 10 (2012), and the validity of a contract is a mixed
question of law and fact that we review de novo, Buckholtz v. Buckholtz, 246
Ariz. 126, 129, ¶ 10 (App. 2019). An enforceable contract requires "an offer,
acceptance, consideration, a sufficiently specific statement of the parties'
obligations, and mutual assent." Id. (quoting Muchesko v. Muchesko, 191
Ariz. 265, 268 (App. 1997)). Husband only challenges a lack of
consideration for the promissory notes. "In Arizona, money is not always
required as consideration; instead, adequate consideration need only
consist of a benefit to the promisor and a detriment to the promisee." Keg
Restaurants Ariz., Inc., v. Jones, 240 Ariz. 64, 76, ¶ 43 (App. 2016). "A promise
exchanged for a promise is sufficient; consideration need not be of like or
identical value, and the court will not inquire into the adequacy of
consideration." Nickerson v. Green Valley Recreation, Inc., 228 Ariz. 309, 321,
¶ 29 (App. 2011). Here, Wife's parents made the promise to make their
credit lines available in exchange for the parties' promise to repay. The
detriment is that Wife's parents' credit lines were depleted, and they were
legally obligated to pay the debt if the parties did not. Therefore, the
promissory notes were supported by consideration and valid.

¶11 Beyond that, Husband presented no evidence to support his
claim that Wife's parents made no payments on the debt or that Wife's
parents' creditors released them from the debt. Therefore, even assuming
his legal argument has merit, he failed to meet his burden in disproving
both the presumption of consideration and a community obligation.
Dunlop v. Fort Mohave Farms, Inc., 89 Ariz. 387, 393 (1961) ("A written
contract imports a consideration. The burden of showing a lack or failure
of consideration is upon the party attacking it." (citation omitted)); see also

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In re Marriage of Flower, 223 Ariz. 531, 537, ¶ 24 (App. 2010) ("Because debt
incurred during marriage is presumed to be community in nature, the
spouse contesting this characterization must establish by clear and
convincing evidence that the debt is actually a separate obligation.").
Accordingly, we affirm the superior court's finding that the money owed to
Wife's parents was a community debt to be apportioned in the decree and
again on remand.

II. Spousal Maintenance.

¶12 The parties agree that Wife was entitled to spousal
maintenance under A.R.S. § 25-319(A). However, both parties challenge the
amount and duration of the award determined by the superior court under
A.R.S. § 25-319(B). This court reviews an award of spousal maintenance for
an abuse of discretion. Gutierrez v. Gutierrez, 193 Ariz. 343, 348, ¶ 14 (App.
1998). A family court abuses its discretion by making an error of law in
reaching a discretionary conclusion. Williams, 219 Ariz. at 548, ¶ 8.

¶13 Here, the court analyzed the factors in A.R.S. § 25-319(B) and
found "that in addition to Husband's payments of Wife's portion of the
community debts as and for spousal maintenance," Wife was entitled to an
award of $1,500 per month indefinitely. In making its determination the
court decreased Wife's award of spousal maintenance in consideration of
her unequal share of the community property. For the reasons stated
above, supra ¶ 7, this was error. Simply put, the amount of spousal
maintenance cannot be decreased to account for a community debt that was
not properly allocated. See also Elliott, 165 Ariz. at 137.

¶14 Moreover, as one of the factors in A.R.S. § 25-319(B), the court
must consider the financial circumstances of the spouse receiving an award
as a result of the property allocated to that spouse at dissolution. See A.R.S.
§ 25-319(B)(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." (emphasis added)).
However, this consideration is meant to occur after the allocation of
property has occurred, and not in unison, as the court did here. Therefore,
we likewise vacate the award of spousal maintenance. On remand the court
is instructed to separately consider, after its allocation of debts and
property, the amount and duration of the award of spousal maintenance
pursuant to the factors in A.R.S. § 25-319(B).

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III. Enforcement of the Decree.

¶15 In a separate action, consolidated with this appeal, Husband
challenges the superior court's decision ordering him to reimburse Wife for
one-half of her payment towards the joint community debt owed to Wife's
parents. In the years after the decree, Wife alleged she paid $59,700 of the
debt to her parents, while Husband paid none. She then brought an action
to enforce payment of that debt against Husband, claiming that the decree
required Husband to pay the same amount. In interpreting the decree, the
superior court held that Husband is jointly responsible for what was
"actually paid" by Wife towards that debt. The court then found Wife's
testimony credible that she paid $59,212.10 towards the debt and ordered
Husband to reimburse Wife for one-half that amount—$29,606.05.

¶16 Husband argues this was error because the decree does not
support ordering reimbursement. He contends that the total debt owed to
Wife's parents was $325,123.00 and, thus, each party had to pay their share
of this debt, or $162,561.50. Because Wife had not paid the entirety of her
share, he argues that the court could not order reimbursement. We review
de novo the trial court's interpretation of a decree of dissolution. Cohen v.
Frey, 215 Ariz. 62, 66, ¶ 10 (App. 2007). The decree does not support
Husband's position. The decree provided that "the parties shall be jointly
responsible for debts remaining due to Wife's parents . . . [and] neither party
shall be required to repay such debts in any amount in excess of the amount
actually paid by the other." The plain language of the decree provides for
equal payment of what is "actually paid" towards the debt, not for equal
payment of the entire debt. Here, the amount actually paid towards the
debt was $59,212.10 and there was no evidence that the parent's estate was
seeking further repayment of the debt. Moreover, contrary to Husband's
contentions, there is no requirement of a reimbursement agreement
between the parties; the decree alone provides authority for the court to
order this reimbursement payment.

¶17 Husband also challenges the court's factual finding that Wife
actually paid $59,212.10 towards the debt. He alleges the payment in that
amount was impossible while Wife reported earnings of roughly $60,000
per year on her W-2s during that time. If there is any credible evidence to
support the family court's factual findings, this court must accept those
findings as true. In re Marriage of Berger, 140 Ariz. 156, 162 (App. 1983).
Here, the court credited Wife's testimony that she earned more income than
reported on her W-2s. In support, Wife testified that she worked numerous
side jobs during this time, for which she was paid in cash. Further, Wife
provided evidence of her repayment in the form of receipts signed by her

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Mother for loan repayment, copies of checks paid to her Mother, and
deposit records for all those payments in the parents' bank accounts.
Accordingly, we affirm the superior court's factual finding that Wife paid
$59,212.10 towards the community debt owed to her parents.

¶18 Because the superior court's decision was based on the
allocation of property and debts that we have vacated, we must also vacate
the superior court's decision ordering Husband to reimburse Wife pursuant
to the terms of that part of the decree. On remand, the court may consider
its prior finding that Mother has paid $59,212.10 towards the community
debt and take that finding into account in constructing an equitable
allocation of property and debts on remand.

IV. Attorney Fees

¶19 Husband contends that the superior court abused its
discretion by awarding Wife her attorney fees in both the dissolution decree
proceeding and the litigation concerning enforcement of the decree. We
review an award of attorney fees for an abuse of discretion. Lee v. ING Inv.
Mgmt., LLC, 240 Ariz. 158, 161, ¶ 11 (App. 2016). Under A.R.S. § 25-324 the
superior court can award attorney fees "after considering the financial
resources of both parties and the reasonableness of the positions each party
has taken throughout the proceedings."

¶20 Husband concedes he has greater financial resources. The
record also supports the superior court's finding that Husband took
unreasonable positions throughout both proceedings. In the dissolution
decree, the Special Master appointed to facilitate discovery found that
Husband's "lack of any verification of the truthfulness or completeness of
his responses" caused significant delay in the proceeding. He also noted
that Husband continued to evade discovery even after the Special Master
intervened. As a result, the Special Master recommended "civil contempt"
and that "fees and costs" should be awarded against him. Similarly, in the
enforcement proceeding, Husband filed a counter-petition alleging that
certain community property could not be considered because it was not
identified at the time of the dissolution proceeding. After considerable
discovery on the issue, it was revealed that Husband had repeatedly
acknowledged the disputed property during the dissolution proceeding.
The record therefore supports an award of attorney fees in both instances.

¶21 Husband also contends that the superior court erred in the
amount of attorney fees awarded to Wife in the enforcement proceeding.
He contends that Wife was only supposed to be awarded a "portion" of her

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fees but was eventually awarded $9,000 of a possible $10,706.58. Because
$9,000 is a portion of $10,706.58 we affirm.

¶22 Both parties have requested attorney fees and costs on appeal.
In November 2015, the court stayed this appeal due to the automatic stay in
Wife's bankruptcy proceeding. Wife was instructed to inform the court
within ten days when either the bankruptcy stay was lifted, or the
bankruptcy proceeding was dismissed. In November 2018, the bankruptcy
was discharged. Wife filed interim reports in February and June of 2019
stating that the bankruptcy was ongoing and she did not inform the court
of the discharge until August 2019. For this, Husband sought sanctions,
which were denied without prejudice for this panel to consider sanctions in
awarding attorney fees. After review of the record we grant Husband's
request for sanctions and award Husband his fees on appeal incurred
before August 29, 2019, as a result of the delay in lifting the stay and the
request for sanctions, upon compliance with Arizona Rules of Civil
Appellate Procedure 21. After consideration of the parties' economic
resources and positions pursuant to A.R.S § 25-324, we grant Wife's request
and award her fees incurred on appeal after August 29, 2019, in an amount
to be determined upon compliance with Arizona Rules of Civil Appellate
Procedure 21. Wife also is awarded her taxable costs on appeal upon
compliance with Arizona Rules of Civil Appellate Procedure 21.

CONCLUSION

¶23 For the foregoing reasons, we vacate the allocation of
property and the award of spousal maintenance in the decree and remand
for consideration consistent with this decision. We likewise vacate the
superior court's order requiring reimbursement based on the terms of the
decree.

AMY M. WOOD • Clerk of the Court
FILED: AA

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