Parmeley v. Carr

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

KATHLEEN A. PARMELEY, Plaintiff/Appellee,

v.

JENNIFER A. CARR, et al., Defendants/Appellants.

No. 1 CA-CV 19-0218
FILED 4-23-2020

Appeal from the Superior Court in Maricopa County
No. CV 2016-005865
The Honorable Christopher A. Coury, Judge

AFFIRMED

COUNSEL

Copeland Law Offices PLLC, Glendale
By Kirsten L. Copeland
Counsel for Defendants/Appellants

Law Office of Paul M. Briggs PLLC, Phoenix
By Paul M. Briggs
Co-Counsel for Plaintiff/Appellee

Sternberg & Singer Ltd, Phoenix
By Melvin Sternberg
Co-Counsel for Plaintiff/Appellee

PARMELEY v. CARR, et al.
Decision of the Court

MEMORANDUM DECISION

Acting Presiding Judge Jennifer B. Campbell delivered the decision of the
Court, in which Judge Kent E. Cattani and Judge Jennifer M. Perkins joined.

C A M P B E L L, Judge:

¶1 Frank Parmeley (“Decedent”) died during the pendency of a
marital dissolution proceeding. At issue in this matter is the distribution of
Decedent’s life insurance policy (“Policy”) and a bank account in his name.
The superior court awarded his widow Kathleen Parmeley (“Kathy”)
$58,561.50 of the insurance proceeds. The remainder of the insurance
proceeds were awarded jointly to his daughters Jennifer Carr (“Jennifer”)
and Kathleen Pascoe (collectively, “Daughters”). The superior court
assigned the disputed bank account solely to decedent’s daughter Jennifer.
We affirm.

BACKGROUND

¶2 In 1987, Decedent purchased a $100,000 term life insurance
policy from Metropolitan Life and listed Kathy as his “future wife” and
beneficiary. During his marriage to Kathy, from approximately 1993 to
2016, the insurance premiums were paid from community property, and
Kathy remained the sole beneficiary. At the time of the marriage, Kathy had
a son and Frank had two daughters from past relationships. In 1994, the
couple had a daughter together.

¶3 In February 2016, Kathy filed for dissolution of marriage in
the superior court and shortly thereafter received an order of protection in
the superior court based on domestic violence. The initial process server
found it difficult to serve Decedent. Kathy contacted Glendale Police to
have the order of protection served on March 10, 2016. The assigned officer
also served Decedent the dissolution packet, including a preliminary
injunction.

¶4 Decedent died before the dissolution was finalized. A probate
action was initiated, and Kathy was appointed the informal special
administrator. See PB2016-003525. Kathy filed the instant civil complaint
against the estate for breach of contract, injunctive relief, breach of duty of

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good faith and fair dealing, and fraud relating to Decedent’s changes to the
life insurance beneficiary designation.

¶5 This action proceeded with insurer Metropolitan Life naming
Daughters as parties in interest via interpleader. Daughters filed
crossclaims for declaratory judgment seeking to determine the parties’
respective rights to the Policy proceeds and to Decedent’s bank account.

¶6 A two-day bench trial was held in which Kathy, Jennifer, and
two witnesses related to the service of the documents testified. Kathy
testified regarding their finances as well as to the issue of marital waste,
specifically, Decedent’s serial refinancing of their real properties and his
gambling habits.

¶7 Evidence was introduced that Decedent had a community
property Bank of Arizona account, in his name only, with an approximate
value of $37,000. The day after Decedent was served the petition for
dissolution, he changed the death beneficiary on that bank account from
Kathy to Jennifer. Shortly thereafter, he changed the Policy beneficiary from
Kathy to Daughters. Kathy did not consent to either change of beneficiary.

¶8 Because the court was obligated to determine the total value
of the community property, it examined the entirety of the marital assets
and debts. The superior court awarded Kathy what it determined to be her
remaining share of the community property ($58,561.50), her attorney fees
of $20,000, pursuant to A.R.S. § 12-341.01, and taxable costs. Jennifer was
awarded the bank account, and the Daughters divided the remainder of the
insurance proceeds. Daughters timely appealed.

DISCUSSION

¶9 On appeal, Daughters argue (1) the court erred because Kathy
had already received at least half of the community property; (2)
insufficient evidence supported the court’s finding that the Decedent
wasted community resources; (3) the court erred by finding the Decedent
was served with the domestic relations preliminary injunction, and
therefore also erred by finding Decedent violated the injunction when he
changed his Policy; and (4) the court erred by awarding Kathy attorney fees.

I. Standard of Review

¶10 In reviewing a bench trial, we view the facts in the light most
favorable to upholding the court’s rulings. Bennett v. Baxter Group, Inc., 223
Ariz. 414, 417, ¶ 2 (App. 2010). The superior court had the opportunity to

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judge the credibility of witnesses, and we will not set aside its findings
unless they are clearly erroneous. Castro v. Ballesteros-Suarez, 222 Ariz. 48,
51, ¶ 11 (App. 2009). Where substantial evidence supports a finding of fact,
that finding is not clearly erroneous, even if there may be substantial
conflicting evidence. Id. at 51–52, ¶ 11.

¶11 While we do not reweigh the evidence, we review de novo the
court’s legal conclusions, including the characterization of property. In re
Marriage of Pownall, 197 Ariz. 577, 581, ¶ 15 (App. 2000). “A trial court
abuses its discretion when it misapplies the law or predicates its decision
on incorrect legal principles.” State v. Jackson, 208 Ariz. 56, 59, ¶ 12 (App.
2004).

II. The Role of Community Property

¶12 All property acquired during the marriage is presumed to be
community property, except property a spouse acquires by gift, devise, or
inheritance. A.R.S. § 25–211(A). Upon the death of one spouse, the
community dissolves with half of the value of community assets going to
the surviving spouse and the other half passing as designated by the
deceased spouse. Gaethje v. Gaethje, 7 Ariz.App. 544, 549 (1968).

¶13 Generally, a spouse may designate a non-spouse beneficiary
regarding an asset, so long as the surviving spouse still receives half of the
overall community property and other circumstances do not make the
distribution fraudulent or unjust. In re Kirkus, 231 Ariz. 334, 337, ¶ 14 (2013)
(discussing a retirement account). When the spouses use community funds
to pay life insurance premiums, as Kathy and Decedent did here, the
surviving spouse has an interest in the proceeds. See In re Estate of Alarcon,
149 Ariz. 336, 338–39 (1986).

¶14 Because Decedent and Kathy were married at the time of his
death, the court was obligated to examine the pool of community property
before determining who was entitled to the life insurance proceeds and
bank account at issue.

III. The Surviving Spouse’s Share

¶15 Daughters first argue the court erred in its determination of
the value of the community, leading to an erroneous determination of what
constituted half of the community. Part of this error, they allege, was
excluding the net value of the residence and Kathy’s approximately $12,000
each year in survivor benefits from Decedent’s Arizona State Retirement

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System (“A.S.R.S.”) pension. We disagree. As a matter of law, both were
properly excluded from the community.1

¶16 Kathy’s testimony and documents in evidence support the
finding that the residence was not community property. The residence was
purchased by Decedent, Kathy, and Kathy’s mother as joint tenants with
rights of survivorship. A basic tenet of community property law is that
property acquires its character at the time of acquisition. Potthoff v. Potthoff, 128 Ariz. 557, 561 (App. 1981). Once the status of the property becomes
fixed, “it retains that character until changed by agreement of the parties or
by operation of law.” Id. Here, the property was acquired as joint tenancy
with the right of survivorship. Just as the joint tenancy passed to Decedent
and Kathy after the death of her mother free from any claim from her
mother’s estate, the residence automatically passed to Kathy by virtue of
Decedent’s death free from any claim of the deceased. See A.R.S. § 33-431(B);
In re Estelle’s Estate, 122 Ariz. 109, 111 (1979).

¶17 The character of the residence did not change from joint
tenancy to community property. This is not a situation like In re marriage of
Flowers, where the joint tenancy occurred as a result of an interspousal gift.
223 Ariz. 531 (App. 2010). Upon Decedent’s death, the residence was
Kathy’s separate property free from any claim from the Decedent’s estate.
See A.R.S. § 25-211(A); A.R.S. § 33-431(B); Estelle’s Estate, 122 Ariz. at 111.

¶18 Decedent also received an A.S.R.S. pension for employment
undertaken during the marriage. It was a matured and vested pension
right, which included a survivor’s benefit. The surviving spouse of a
deceased retired member, when married for greater than two years, is
entitled to the survivor’s benefit in the form of a pension. A.R.S. § 38-846(A).
The death benefit ensures that a surviving spouse receives the deferred
compensation that the community would have received but for the death.
Here, Decedent and Kathy were married from 1993 to 2016, well beyond

1 Daughters briefly attempt to equate jointly owned assets and
community owned assets. We note that the court indicated that the three
vehicles were jointly owned and also community property. Property
acquired during the marriage, with community funds, regardless of the title
of the property, is presumed to be acquired as community property, with
exceptions not relevant to these vehicles. A.R.S § 25-211(A). We find that as
all vehicles were purchased during the marriage, the vehicles were
properly community property. Other than those which have been
specifically mentioned, Daughters do not claim that any particular item or
account was Decedent’s separate property.

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the two-year statutory requirement, and therefore, the survivor’s benefit
became effective upon Decedent’s death. That benefit is properly Kathy’s
separate property.

¶19 The court correctly determined that neither the residence nor
the pension benefits should be included in a determination of the value of
the community property. Therefore, we affirm the court’s determination.

IV. Marital Waste

¶20 Daughters next argue the superior court erred as a matter of
law by allowing Kathy’s claim for marital waste outside of a dissolution
proceeding, which resulted in Kathy receiving a disproportionate share of
the community property. We disagree.

¶21 In determining community property, “[i]n most cases . . . an
equal distribution . . . will be the most equitable. However, there may be
sound reason to divide the property otherwise.” Toth v. Toth, 190 Ariz. 218,
221 (1997). An unequal division of property may be equitable in the event
of “excessive or abnormal expenditures” by one spouse. A.R.S. § 25-318(C).
We review a court’s determination of marital waste for an abuse of
discretion. See Kline v. Kline, 221 Ariz. 564, 573, ¶ 35 (App. 2009).

¶22 Kathy claimed marital waste based on Decedent’s gambling
and serial refinancing of their real properties in the dissolution action. The
superior court determined that Kathy established $27,447 of her claim for
marital waste. Of that amount, charges made in casinos accounted for
$17,947, and the remaining $9,500 reflected the sum of three unexplained
checks written on their joint account. Kathy testified she had no access to
their financial accounts or information during the marriage. She did not
have an ATM card, checks, or the passwords to their joint accounts. She
explained that she only gained access to the financial information after
Decedent died and, for example, did not know the Bank of Arizona account
existed until the bank called. She went on to testify that Decedent was
gambling heavily in 2014 as he was retired at the time. Regarding the
checks, Kathy gave “credible testimony that she [was] unaware of these
expenses, and that no documentary evidence” existed to explain them.
Decedent withdrew a large amount of money without her knowledge and
spent it without her knowledge and she never saw any resulting benefit to
the community.

¶23 Therefore, the value of the wasted property should be added
to the value of the existing marital property for purposes of allocation.
Martin v. Martin, 156 Ariz. 452, 458 (1988). Daughters have cited no Arizona

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law to support their conclusion that a waste claim may not, as a matter of
law, be raised in a probate matter when considering the value of the
community. There is evidence in the record to support the court’s findings
related to Decedent’s marital waste, and for that reason, we affirm this
finding.

V. Kathy Can Recover Against the Policy and Bank Account

¶24 Daughters next assert that even if there was a valid claim for
waste, it could not be offset from either the life insurance or the Bank of
Arizona account because neither were ever part of Decedent’s estate. Both
assets were non-testamentary and, they argue, unavailable to creditors. See
A.R.S. §§ 20-1131(A), 14-6101(A). We are not persuaded.

¶25 Kathy was not a creditor. Her community interest began at
the time of the marriage. In In re Monaghan’s Estate, the court stated that the
survivor takes one-half of the community property in her own right as
owner and not an heir. 71 Ariz. 334, 337 (1951).

VI. Whether Kathy Brought a Timely Action

¶26 Daughters alternatively argue that even if a determination of
waste was legally available and recoverable against these assets, Kathy’s
claim is barred. Under A.R.S. §§ 14-3803(A)(1) and -3108, the presentation
of a claim must be made against an estate within two years of a decedent’s
death.

¶27 When the informal probate was initiated, Kathy, as
Decedent’s wife, was named the informal special administrator. She also
filed a complaint against and accepted service for the estate in PB2016-
003525. She then sought a default judgment against the estate in this case.

¶28 The court denied the default, finding that Kathy had not
named Daughters as parties in this case. Daughters filed a motion in the
probate proceeding to have Kathy removed as an informal special
administrator, citing a breach of her fiduciary duties. The probate court, sua
sponte, not only removed Kathy as the special administrator but declared
her not to be a “proper person” for that appointment and determined that

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all of her actions in that matter were “void.”2 Daughters never sought the
replacement or appointment of a personal representative.

¶29 Daughters essentially assert that the removal of Kathy as the
personal representative and voiding of all her actions in the probate matter
has the practical effect of there never being a representative for the estate
who could be named in the complaint or accept service. Further, they argue
any attempt to appoint a personal representative now would put Kathy’s
waste claim outside the two-year statute of limitations.

¶30 “[P]rocedural defects are waived if not raised and preserved
in the trial court.” Medina v. Ariz. Dep’t. of Transp., 185 Ariz. 414, 418 (App.
1995). A “general appearance by a party who has not been properly served
has exactly the same effect as a proper, timely and valid service of process.”
Montano v. Scottsdale Baptist Hosp., Inc., 119 Ariz. 448, 452 (1978). Further,
Daughters subjected themselves to the superior court’s jurisdiction for a
determination of the distribution of the probate assets by filing an answer
and counterclaim. See Austin v. State ex rel. Herman, 10 Ariz.App. 474, 476
(1969) (“For a judgment to be valid and binding the party affected must
have been legally serve[d] with process or must have voluntarily
appeared.”). We do not find that any of the procedural defects raised by
Daughters alter the result.

VII. The Preliminary Injunction/Insurance

¶31 On appeal, Daughters argue that there is no substantial
evidence to support the finding that Decedent had actual notice of the
preliminary injunction. Alternatively, even if he had notice, A.R.S. § 25-315
does not prohibit the changing of life insurance beneficiaries.

¶32 The superior court found credible the Glendale police officer
who testified he personally delivered a package of court documents to
Decedent on March 10, 2016, at Decedent’s home. The dissolution package
included, among other things, the preliminary injunction and petition for
dissolution. The court found Decedent had actual notice of the preliminary
injunction.

2 Kathy asserts that the probate commissioner erred in his determination
that she had no legal authority on behalf of the estate and decision to void
her letters of appointment. The probate matter was never appealed or
raised by special action and is not at issue in this appeal.

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¶33 The officer testified he specifically recalled the event and was
cross-examined about his service of the documents in detail. As further
evidence of service, a police record was entered into evidence showing the
officer was dispatched on March 10, 2016, to receive the documents from
Kathy for service. On the stand, the officer explained why there had been a
delay in filing an affidavit of service for the superior court. Given the
evidence in the record for Decedent’s actual notice of the preliminary
injunction, we find no error in this factual finding.

¶34 Daughters assert that changing a life insurance beneficiary is
not precluded by the plain language of A.R.S. § 25-315(A) and such an
interpretation is inconsistent with the scope and purpose of the injunction.
That section reads in pertinent part:

A. In all actions for dissolution of marriage . . . the court shall
. . . issue a preliminary injunction in the following manner:

1. The preliminary injunction shall be directed to each party
to the action and contain the following orders:

(a) That both parties are enjoined from transferring,
encumbering, concealing, selling or otherwise disposing of
any of the joint, common or community property of the
parties. . . .

(b) That both parties are enjoined from . . .

(iii) Removing or causing to be removed the other party or the
children of the parties from any existing insurance coverage,
including medical, hospital, dental, automobile and disability
insurance.

¶35 Ultimately, however, we need not reach the issue of whether
a preliminary injunction prevented the change of life insurance
beneficiaries, because Kathy was entitled by law to 50 percent of the marital
community, including the life insurance benefit, thereby rendering a
determination of the preliminary injunction issue superfluous.

VIII. Attorney Fees Below

¶36 Daughters assert that the superior court abused its discretion
in awarding Kathy a portion of her attorney fees under A.R.S. § 12-341.01.
Kathy requested nearly $90,000 in attorney fees from the superior court.
Daughters objected, arguing, in part, Kathy was not the successful party,

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and the fees requested were “grossly unreasonable.” After a detailed
analysis, the court awarded Kathy $20,000 in fees.

¶37 The grant or denial of attorney fees is within the discretion of
the superior court, and this Court will not overrule such a decision if the
record reasonably supports it. West v. Salt River Agric. Imp. and Power Dist.,
179 Ariz. 619, 626 (App. 1994). Having affirmed the superior court’s
community property findings, we find Kathy was the successful party. The
award of attorney fees below is affirmed.

IX. Attorney Fees and Costs on Appeal

¶38 The parties request attorney fees and costs on appeal
pursuant to A.R.S. § 12-341.01 and ARCAP 21. As the prevailing party, we
award Kathy her reasonable attorney fees and costs in an amount to be
determined after compliance with ARCAP 21.

CONCLUSION

¶39 For the above stated reasons, we affirm.

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

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