Olson v. Olson, Jr.

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

THERESA M. OLSON, Petitioner/Appellee/Cross-Appellant,

v.

THOMAS R. OLSON, JR., Respondent/Appellant/Cross-Appellee.

No. 1 CA-CV 19-0300 FC
FILED 6-4-2020

Appeal from the Superior Court in Maricopa County
No. FN 2017-091406
The Honorable Joshua D. Rogers, Judge

AFFIRMED

COUNSEL

Scott L. Patterson PLLC, Tempe
By Scott L. Patterson
Counsel for Respondent/Appellant/Cross-Appellee

Davis Miles McGuire Gardner PLLC, Tempe
By Douglas C. Gardner
Counsel for Petitioner/Appellee/Cross-Appellant

OLSON v. OLSON, JR.
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Michael J. Brown delivered the decision of the Court, in
which Judge Kenton D. Jones and Judge D. Steven Williams joined.

B R O W N, Judge:

¶1 Thomas Olson Jr. (“Husband”) appeals from the superior
court’s decree of dissolution of his marriage to Theresa Olson (“Wife”). He
argues the court erred in characterizing an insurance policy as community
property and by finding it was equitable to divide the policy’s cash value
as an offset for Wife’s separate property contribution to jointly-owned
property. He also challenges the court’s denial of his post-trial motions
addressing those issues.1 For the following reasons, we affirm.

BACKGROUND

¶2 Husband and Wife were married in May 2007 in Indiana. In
2003, Husband purchased a home in Indiana, and title was later transferred
into both Husband and Wife’s names. Eventually the parties decided to sell
the Indiana home, intending to use the proceeds for a down payment on a
home in Scottsdale, Arizona. However, because the Indiana home took
longer to sell than anticipated, Husband and Wife each contributed their
separate funds for the down payment on the Scottsdale home: Husband
obtained a loan from the cash value of his Northwestern Mutual Life
Insurance policy (“Northwestern policy”) in the amount of $64,000, and
Wife withdrew roughly $31,000 from her money market account.

¶3 Husband obtained the Northwestern policy before the
marriage as his sole and separate property. During the marriage, Husband
paid a portion ($2,983.47) of the policy premiums with community funds.
He paid the remaining premiums with the cash value of the policy, which
Wife does not dispute. After sale of the Indiana home, Husband repaid the
loan from his Northwestern policy, plus interest, but Wife was not repaid
the funds she contributed toward the down payment on the Scottsdale

1 Wife filed a cross-appeal relating to the trial court’s distribution of
debts; however, she concedes that issue is moot.

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home. The parties dispute whether there was an agreement that Wife
would be reimbursed for her $31,000 contribution.

¶4 Wife filed for dissolution in May 2017. In the joint pretrial
statement, Wife asserted she should be awarded half of any community
portion of the Northwestern policy, but Husband claimed it was his sole
and separate property. At trial, both Husband and Wife testified as to the
amount of Wife’s contribution to the down payment for the Scottsdale
home, and Wife testified the parties agreed to reimburse Wife’s
contributions as well as repay Husband’s loan.

¶5 In its decree, the superior court found in part that after
allocation of the real and personal property, it was appropriate to give Wife
an offset of $20,014.14, which accounted for half the cash value of the
Northwestern policy in the amount of $43,964.79, but subtracted additional
offsets granted to Husband that are not relevant to this appeal. In doing so,
the court determined the cash value of the insurance policy was community
property, given that “during the marriage premiums were paid with
community funds” and the offset was “equitable in light of Wife’s separate
property portion of the down payment made on [the Scottsdale] home not
being reimbursed upon the sale of the Indiana home.” The court also
directed Husband to reimburse Wife $30,000 for a portion of her attorneys’
fees, plus $1,216.50 in costs.

¶6 Husband then filed motions to alter/amend and clarify the
decree. In particular, Husband argued the Northwestern policy was his
sole and separate property and that no portion of the policy should be
equalized upon dissolution. Husband also argued that Wife did not raise
the issue of reimbursement for her separate contribution to the Scottsdale
home in the joint pretrial statement, nor did she support her claim with
exhibits during the trial. In ruling on the motion, the court clarified that by
determining the policy should stay in Husband’s name, it was awarding
the policy “as [Husband’s] sole and separate property,” but that the cash
value was community in nature and half of it should be accounted for on
equalization. The court otherwise denied Husband’s remaining arguments,
and this timely appeal followed.

DISCUSSION

¶7 We review the trial court’s distribution of property for an
abuse of discretion, but we review the classification of property as separate
or community de novo. Bell-Kilbourn v. Bell-Killbourn, 216 Ariz. 521, 523
(App. 2007). We view the evidence in the light most favorable to upholding

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OLSON v. OLSON, JR.
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the trial court’s decision and will not disturb factual findings unless clearly
erroneous. Walsh v. Walsh, 230 Ariz. 486, 490, ¶ 9 (App. 2012). “We will
defer to the trial court’s determination of witnesses’ credibility and the
weight to give conflicting evidence.” Gutierrez v. Gutierrez, 193 Ariz. 343,
347, ¶ 13 (App. 1998). Further, we may affirm for any legal reason
supported by the record. Pettit v. Pettit, 218 Ariz. 529, 531, ¶ 4 (App. 2008).

¶8 In dividing marital property at dissolution, courts must
“assign each spouse’s sole and separate property to such spouse” and
“divide the community, joint tenancy and other property held in common
equitably, though not necessarily in kind.” A.R.S. § 25-318(A). All property
acquired during marriage is presumed to be community property, except
property a spouse acquires by gift, devise, or descent. A.R.S. § 25-211(A).
Generally, all community property “should be divided substantially
equally unless sound reason exists to divide the property otherwise.” Toth
v. Toth, 190 Ariz. 218, 221 (1997).

¶9 Property acquired before the marriage is generally considered
separate property. See A.R.S. § 25-213(A). Property obtains its character
depending upon the marriage status of the owner upon acquisition, and the
property’s status continues until changed by agreement of the parties or
operation of law. Potthoff v. Potthoff, 128 Ariz. 557, 561 (App. 1981).
Nevertheless, “the profits or the increase in value of that property during
marriage . . . may become community property as a result of the work effort
of the community.” Cockrill v. Cockrill, 124 Ariz. 50, 52 (1979).

¶10 “In determining an equitable division, the family court has
broad discretion in the specific allocation of individual assets and
liabilities.” In re Marriage of Flower, 223 Ariz. 531, 535, ¶ 14 (App. 2010)
(citation omitted). Under A.R.S. § 25-318(C), consideration may be given to
(1) excessive or abnormal expenditures and (2) the destruction,
concealment, or fraudulent disposition of property. “But the family court’s
attempt to achieve an equitable division is not limited by these statutory
factors; instead, the court may consider other factors that bear on the
equities of a particular case.” Flower, 223 Ariz. at 535, ¶ 14. “In balancing
such equities, courts might reach different conclusions in similar cases
without abusing their discretion.” Id. Thus, we will not disturb a court’s
ruling absent a clear abuse of discretion. Gutierrez, 193 Ariz. at 346, ¶ 5.

¶11 Husband argues the cash value of the Northwestern policy is
his sole and separate property and should not have been equalized upon
dissolution. Husband acquired the policy long before the marriage, and
because no operation of law or agreement of the parties has converted the

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OLSON v. OLSON, JR.
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policy itself to community property, it is separate property. The superior
court’s findings regarding the policy are unclear as to whether the property
was categorized as separate or community property. To the extent the court
did not initially categorize the property as separate, the court erred, as it
should have clarified that the policy was Husband’s sole and separate
property throughout the marriage. The court should have also found that
Wife’s only right to a portion of the policy’s cash value depended on
whether the increase during the marriage occurred at least in part because
of community efforts. Thus, the court erred in finding that the entire cash
value of the policy was community property, given that the policy’s
approximate value was $50,000 when the parties married. We may still
affirm, however, if the court’s ruling did not affect Husband’s right to
receive an equitable distribution of property. See Ariz. R. Fam. Law P. 86
(“Unless justice requires otherwise, an error . . . by the court . . . is not
grounds for . . . disturbing a judgment” and a court “must disregard all
errors and defects that do not affect a party’s substantial rights.”).

¶12 In support of his argument that the cash value of the
Northwestern policy should not have been accounted for on equalization,
Husband argues that Everson v. Everson, 24 Ariz. App. 239 (1975), stands for
the principle that a life insurance policy, purchased before the marriage and
considered separate property, can only be accounted for upon dissolution
if the community payments on the policy cause an increase in the cash value
of the policy. But this misconstrues Everson. In that case, two life insurance
policies were at issue, one purchased before the marriage and one after. Id.
at 244. The court determined the life insurance policy purchased before the
marriage was separate property and should not have been categorized as
community property by the trial court. Id. On remand, we instructed the
trial court to determine “whether the premiums for the policies obtained after
marriage were paid by separate or community funds.” Id. (emphasis
added). Thus, nothing in Everson alters what we have held elsewhere—an
increase in value of separate property due to the effort of the community
may convert a portion of the value of that property to community property.
See Cockrill, 124 Ariz. at 52.

¶13 The parties do not contest that community funds in the
amount of $2,983.47 were used to pay a portion of the premiums on the life
insurance policy. Husband argues the premiums went toward the death
benefit only. But the record before us does not definitively establish that
point, and Husband concedes that “the Northwestern Mutual records do
not specifically state that they are for a death benefit only.” He argues
nonetheless that his trial testimony establishes “the premium payments
during the marriage were for a death benefit only,” but cites nothing in the

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OLSON v. OLSON, JR.
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record to support this argument. Husband’s assertions, without more, are
insufficient to establish this fact. See ARCAP 13(a)(7). Moreover, it was the
superior court’s role to evaluate the credibility of Husband’s testimony on
this point, and the court’s distribution of property is necessarily predicated
on a determination that the premiums paid increased the cash value. See
Gutierrez, 193 Ariz. at 347, ¶ 13. In any case, Husband has not shown that
the court’s overall property division was an abuse of discretion because the
record before us does not clearly illustrate how the increase in the cash
value occurred.

¶14 Though the superior court arguably erred in basing its
equalization finding on the community funds used to pay the premiums of
the Northwestern policy and attendant cash increase, the court also relied
on the fact that Wife was not repaid for her $31,000 down payment on the
Scottsdale home. It was within the court’s discretion to consider the down
payment in dividing the parties’ property interests. Husband suggests
Wife’s claim that the couple agreed to reimburse Wife’s down payment
should have been precluded because it was not included in the joint pretrial
statement. See Leathers v. Leathers, 216 Ariz. 374, 378, ¶ 19 (App. 2007)
(noting that a joint pretrial statement controls the subsequent course of the
litigation). However, “division of an asset is not automatically waived
when one or both of the parties fails to list the asset in a pretrial statement,
if exhibits are admitted and testimony regarding the asset is given at trial.”
Nold v. Nold, 232 Ariz. 270, 274, ¶ 20 (App. 2013) (distinguishing Leathers).
Thus, Wife’s claim was not precluded. Though Husband argues Wife’s
testimony was not supported by exhibits, we do not reweigh evidence on
appeal. We therefore presume the court found Wife’s testimony more
credible on the issue of whether the parties had agreed she would be
reimbursed for her down payment on the Scottsdale home.

¶15 Husband argues the superior court erred in using the policy’s
cash value as the mode for equalizing property distribution. The primary
question, however, in addressing the court’s distribution of property, is
whether Wife was entitled to a reimbursement of her $31,000 down
payment. Because the court found Wife’s testimony on this point credible
and persuasive, Wife was entitled to a reimbursement. To be sure, the
decree of dissolution creates confusion because it combined the questions
of Wife’s down payment on the Scottsdale home and the community
interest of Husband’s separate Northwestern policy. Nonetheless, the
court’s decision properly focused on attempting to divide property and
allocate the debts in an equitable manner. In doing so, the court exercised
its discretion in determining how to line up the many different figures on
each side of the ledger.

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OLSON v. OLSON, JR.
Decision of the Court

¶16 Finally, in arguing the superior court should not have
accounted for Wife’s equitable claim, Husband cites In re Marriage of
Inboden, 223 Ariz. 542, 545, ¶ 11 (App. 2010). But Inboden stands for the
proposition that jointly held property may be divided unequally in certain
circumstances. Id. Here, the court was empowered to consider other
“relevant factors” and had broad discretion to determine what distribution
of property was equitable under the unique circumstances of this case. Id.
at 544–45, ¶¶ 7, 9, 11. For example, Husband borrowed $64,000 from the
cash value of the Northwestern policy to pay a portion of the Scottsdale
house down payment. The loan was paid back with community funds—
proceeds from the sale of the Indiana home—and Husband earned 8%
interest on the loan in the amount of nearly $9,000. Not only did Wife not
receive interest on her down payment, but she also was not repaid any
principal. That evidence was but one of several factors the court could
properly consider in deciding an appropriate equalization of the parties’
property interests. We conclude the court acted within its discretion when
it accounted for the equitable nature of Wife’s claims relating to the
community’s interest in the insurance policy’s cash value and her personal
property interest in the $31,000 used toward the purchase of the Scottsdale
home.

CONCLUSION

¶17 We affirm the trial court’s distribution of property upon
dissolution. In our discretion, we deny both parties’ requests for attorneys’
fees made pursuant to A.R.S. § 25-324, but award taxable costs to Wife
subject to compliance with ARCAP 21.

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

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