Stedman v. Polomski

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

CINDY J. STEDMAN, Plaintiff/Appellant,

v.

EDWARD POLOMSKI, Defendant/Appellee.

No. 1 CA-CV 19-0297
FILED 1-30-2020

Appeal from the Superior Court in Maricopa County
No. CV 2017-051053
The Honorable James D. Smith, Judge

VACATED AND REMANDED

APPEARANCES

Craig Collins Law Office LLC, Sun City West
By Craig E. Collins
Counsel for Plaintiff/Appellant

Edward Polomski, Litchfield Park
Defendant/Appellee
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Decision of the Court

MEMORANDUM DECISION

Judge Jennifer B. Campbell delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Kent E. Cattani joined.

C A M P B E L L, Judge:

¶1 Cindy Stedman appeals from the superior court’s order
compelling a partition sale of real property owned jointly with Edward
Polomski. “[T]he rule is well settled that, where one of two obligors equally
bound pays off and discharges the obligation, he is entitled to recover from
the other the proportion that he was obligated to pay.” Brown v. Brown, 58
Ariz. 333, 336 (1941). Because the partition order fails to fully reimburse
Stedman for the separate funds she expended to maintain the property and
discharge its encumbrance, we vacate the court’s ruling and remand for
proceedings consistent with this decision.

BACKGROUND

¶2 In 2005, Stedman began residing with Polomski in his home
(“the property”). During the years that followed, the parties engaged in a
series of property-related transactions: (1) in 2007, Polomski conveyed the
property to himself and Stedman as tenants in common through a warranty
deed and the parties encumbered the property with a $225,000 loan (First
Deed of Trust); (2) in 2009, Polomski conveyed his interest in the property
to Stedman through a warranty deed, and Stedman encumbered the
property with a $246,000 loan (Second Deed of Trust), a portion of which
was used to pay off the First Deed of Trust; (3) in 2010, Stedman conveyed
the property to herself and Polomski as joint tenants with the right of
survivorship; and (4) in 2013, Stedman used her inheritance proceeds to pay
off the Second Deed of Trust.

¶3 In 2017, Stedman filed a complaint seeking partition and
reimbursement for her separate contributions to maintain the property and
remove the encumbrance. As outlined in her requested relief, Stedman
asked the superior court to: (1) order the property sold, (2) divide the sale
proceeds equally between the parties, and (3) award Stedman $392,641.73
from Polomski’s share to compensate for her separate contributions.

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¶4 After a one-day bench trial, the superior court found that: (1)
both parties expended substantial resources toward improving the
property, but neither side submitted evidence quantifying the value of
those improvements; and (2) Stedman paid a disproportionate share of
expenses to maintain the property (insurance, taxes, and
mortgage―$312,228.13), with no offsetting contributions by Polomski.
Accordingly, the court found that Stedman was entitled to reimbursement
for one-half of those contributions ($156,114.07) from the sale proceeds.

¶5 Arguing the superior court’s ruling “effectively result[ed]” in
Polomski contributing only 25 percent to the property’s maintenance and
encumbrance obligations, Stedman moved to amend. She asked the court
to order that: (1) she receive $312,228.12 in reimbursement from the net sale
proceeds, with the remainder divided equally, or (2) the parties divide the
net sale proceeds equally, with Polomski paying her $156,114.07 from his
one-half share. The court denied the motion to amend, reasoning it would
result in a “windfall” to Stedman. Stedman timely appealed.

DISCUSSION

¶6 Stedman contends the superior court failed to fully reimburse
her for the separate funds she expended on the property. In making this
argument, Stedman does not challenge any of the court’s factual findings,
only its application of the law to those findings.

¶7 We review the denial of a motion to amend a judgment for an
abuse of discretion. See Mullin v. Brown, 210 Ariz. 545, 547, ¶ 2 (App. 2005).
We review questions of law, however, de novo. City of Phoenix v. Ariz. Rent-
A-Car Systems, Inc., 182 Ariz. 75, 77 (App. 1995).

¶8 The right of partition is an incident of common ownership
authorized explicitly by statute. Occhino v. Occhino, 164 Ariz. 482, 484 (App.
1990). Under A.R.S. § 12-1211(A), the owner of any interest in real property
may seek partition between herself and other owners of the property. After
a jointly-held property is sold, the proceeds are generally divided among
the owners “according to their respective interests.” A.R.S. § 12-1218(C).
But, when one party has paid an obligation owed equally by another party,
she is entitled to recover from the other for his respective share. See In re
Marriage of Berger, 140 Ariz. 156, 161–62 (App. 1993) (explaining a party is
entitled to reimbursement for separate funds expended on the jointly-held
property).

¶9 As stated in its order denying the motion to amend, the
superior court deemed Stedman’s right to reimbursement as substantially

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Decision of the Court

similar to an obligation owed to any third party. Working from that
premise, the court concluded that the reimbursement funds should be
subtracted from the net sale proceeds before the proceeds are divided
between Stedman and Polomski. The third-party analogy is incorrect,
however. While Stedman, as co-owner, would owe one-half of a property-
related debt to a third party, she does not owe any portion of the
reimbursement to herself. Stated differently, the reimbursement owed to
Stedman ($156,114.07) is an obligation held by Polomski alone, not by the
parties as joint tenants. Therefore, only Polomski’s interest in the sale
proceeds should be reduced to fund the reimbursement.

¶10 Because the partition order failed to reimburse Stedman for
her expenditures fully, the court abused its discretion by denying her
motion to amend. To wholly reimburse Stedman for the separate funds she
expended on behalf of the jointly-held property, the net sale proceeds
should be divided equally between the parties and Stedman should be
awarded $156,114.07 from Polomski’s share.

CONCLUSION

¶11 For the foregoing reasons, we vacate the partition order and
remand for proceedings consistent with this decision.

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

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