Kumbera v. Manickam

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SANTOSH KUMBERA, Petitioner/Appellee,

v.

SUNDARI MANICKAM, Respondent/Appellant.

No. 1 CA-CV 21-0661 FC
FILED 01-30-2025

Appeal from the Superior Court in Maricopa County
No. FC2019-095961
The Honorable David E. McDowell, Judge

AFFIRMED IN PART; VACATED AND REMANDED IN PART

COUNSEL

Walneck Law, Scottsdale
By Edward J. Walneck
Counsel for Petitioner/Appellee

Pangerl Law Firm, P.L.L.C., Phoenix
By Regina M. Pangerl
Counsel for Respondent/Appellant
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MEMORANDUM DECISION

Judge Anni Hill Foster delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge Kent E. Cattani joined.

F O S T E R, Judge:

¶1 Sundari Manickam (“Mother”) appeals the superior court’s
decree of dissolution (“Decree”) dissolving her marriage to Santosh
Kumbera (“Father”) and other post-decree rulings. Mother challenges the
superior court’s orders related to the distribution of Mother’s stocks and
retirement accounts and to expenditures on the marital residence. She also
challenges legal decision making orders relating to their minor child
(“Child”). For the following reasons, this Court vacates in part and affirms
in part.

FACTS AND PROCEDURAL HISTORY

¶2 Mother and Father were married in 2006 and filed for
dissolution in 2019. Mother began working for Microchip Technology
Incorporated (“Microchip”) in 1999. As part of her employment
compensation, Mother received restricted stock units (“RSUs”). RSUs were
given to entice employees to remain with Microchip and had a delayed
vesting schedule. If Mother were to leave the company before the RSUs
fully vested, they would revert to the company.

¶3 Before marriage, Mother obtained approximately 544 RSUs.
These RSUs did not vest until after she was married. After the couple
married, Mother obtained another 5,147 RSUs. As of the date of service of
the dissolution, 3,799 units had vested and 1,348 had not.

¶4 Additional benefits of Mother’s employment included access
to employee stock purchase plan (“ESPP”) shares and participation in
401(k) retirement savings accounts. She purchased 3,363 ESPP shares of
Microchip stock during her employment, and she contributed to the two
401(k) accounts.

¶5 During the marriage the parties also started an Amway
business that was profitable, contributing income to the community estate.

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¶6 The couple owned their marital residence outright. Mother
voluntarily left the residence following a domestic violence altercation with
Father in April 2018. Father lived in the house but was not granted exclusive
possession by the court until temporary orders were entered in December
2019. Both parties expended money to maintain the house during the
proceedings: paying homeowners’ association fees, maintenance costs,
homeowner’s insurance and taxes.

¶7 The parties had one child together. Mother requested sole
legal decision making and less than equal parenting time for Father, while
Father requested joint legal decision making and equal parenting time.
Mother asserted that there was a significant history of domestic violence
perpetrated by Father, preventing Father from having joint legal decision
making or equal parenting time. In preparation for trial, the parties hired
Dr. Branton, a behavioral health professional, to provide legal decision
making and parenting time recommendations. Dr. Branton concluded there
was not significant domestic violence that would have any bearing on
Father’s ability to parent. Mother disagreed and requested that Dr. Branton
be ordered to refund the fees earned, claiming he violated court rules. She
also hired another expert to rebut Dr. Branton’s findings.

¶8 The court found Father had committed an act of domestic
violence but found that pursuant to Arizona Revised Statute § 25-403.03(E)
he rebutted the statutory presumption against joint legal decision by
completing domestic violence courses and parenting classes. Based on Dr.
Branton’s recommendations and there being no presumption against joint
legal decision making, the court ordered joint legal decision making for
Child. The court also ordered Mother to pay 75% of Dr. Branton’s fees.

¶9 The court encouraged the parties to appoint a parenting
coordinator to help them communicate. The court warned that a failure to
do so could affect future modification actions should they arise. The court
also limited communication between the parties, including by ordering the
parties not to criticize the other parent in Child’s presence.

¶10 Both parties requested attorneys’ fees—each claiming the
other took unreasonable positions, while Father also pointed to a disparity
of income. The court concluded that both parties took unreasonable
positions but found a financial disparity between the parties. The court
ordered Mother to pay $48,000 of Father’s attorneys’ fees.

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¶11 Mother timely appealed the superior court’s orders after a
final ruling on post-decree motions. This Court has jurisdiction under
A.R.S. § 12-2101(A)(1).

DISCUSSION

I. The court erred in classifying the 401(k) as community assets.

¶12 Mother contends the superior court erred by classifying her
401(k) as community property and in dividing the parties’ other retirement
accounts. Father counters that Mother failed to provide ample evidence as
to the value of her separate property in the 401(k) accounts.

¶13 In dissolution proceedings, “property acquires its character as
community or separate depending upon the marriage status of its owner at
the time of acquisition.” Stock v. Stock, 250 Ariz. 352, 355, ¶ 10 (App. 2020)
(quotation omitted); accord A.R.S. §§ 25-211, -213. “[I]t is well settled in
Arizona and elsewhere that pension rights, whether vested or non-vested,
are community property insofar as the rights were acquired during
marriage, and are subject to equitable division upon divorce.” Johnson v.
Johnson, 131 Ariz. 38, 41 (1981) (emphasis added) (footnotes omitted). The
date of acquisition is a question of fact, and the party asserting that fact has
the burden of proving its truth. See Woerth v. City of Flagstaff, 167 Ariz. 412,
419 (App. 1990) (“Generally, the party asserting a claim for relief has the
burden of proving the facts essential to [the] claim.”). Thus, the court must
determine the classification of property before seeking an equitable division
of community property and apportioning assets and obligations between
the parties. A.R.S. § 25-318(A), (B); Neal v. Neal, 116 Ariz. 590, 593 (1977)
(“Regardless of its final award, the court must recognize the existence of the
separate property.”). This Court reviews the superior court’s classification
of property de novo but reviews the court’s distribution of property for an
abuse of discretion. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4
(App. 2007).

¶14 The superior court found that “both parties contributed to
retirement accounts during the marriage” but that “neither party submitted
sufficient evidence to this [c]ourt to determine the value of the retirement
accounts . . . or each party’s respective share of the other party’s account(s).”
While a party “could not sustain his burden by relying upon mere
speculation or insubstantial doubt regarding the material facts,” Woerth, 167
Ariz. at 419 (cleaned up), here, the record reflects that Mother began
employment in 1999 but was not married until 2006. Mother testified that
she contributed to the 401(k) accounts before marriage and that she

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continued to contribute to those accounts during the marriage. Father did
not dispute that Mother was entitled to her separate property portion of the
accounts and testified that he was only asking for the community property
portion of the 401(k). But the court found that “AS A MATTER OF LAW
these retirement accounts represent community assets and are subject to
equitable division.” In so doing, the court abused its discretion.
Accordingly, the superior court’s classification of the 401(k) accounts as
community property is vacated and remanded for a determination as to the
portions of the 401(k) accounts that are separate property and the value of
that separate property before engaging in the division of the community
property portion of the accounts. See Proffit v. Proffit, 105 Ariz. 222, 224
(1969) (a court “has no authority to compel either party to divest himself or
herself of Title to separate property”).

II. The court was not required to apply the present case value method
in dividing Mother’s retirement accounts.

¶15 Mother contends that the superior court erred in valuing the
retirement accounts because it failed to use the present cash value method.
Father asserts that the superior court is not limited to a particular valuation
method and that Mother failed to present sufficient evidence of the present
cash value of the accounts.

¶16 A trial court is not limited to the present cash value method
for valuing a retirement account when dividing community assets. Hoobler
v. Hoobler, 254 Ariz. 130, 138, ¶¶ 15–16 (App. 2022). “[T]he superior court
has wide discretion” when selecting a valuation date for community
property, but the resulting outcome must be fair and equitable. Meister v.
Meister, 252 Ariz. 391, 397, ¶ 18 (App. 2021). Error does not result simply
because a court chose one calculation method over another. The superior
court had discretion regarding which method to employ in valuing the
retirement accounts and did not abuse that discretion here. But, because
this Court is remanding for a determination of Mother’s separate property
interests, the superior court may revisit the calculation method in its
discretion when determining the value of the community’s interest in the
retirement accounts.

III. The court erred in apportioning the RSUs.

¶17 Mother next contends the superior court abused its discretion
in its classification and allocation of the RSUs, including by failing to
consider the tax implications of the allocation. The determination of a

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community interest in unvested stock options is reviewed de novo. See
Brebaugh v. Deane, 211 Ariz. 95, 97, ¶ 5 (App. 2005).

¶18 There were three categories of RSUs obtained: first, 544 RSUs
(pre-marriage); second, 3,799 RSUs that were obtained and vested during
the marriage (community) and 1,348 RSUs that were obtained during the
marriage but had not yet vested. The superior court found that none of the
pre-marriage RSUs were Mother’s separate property because they had not
vested by the time the parties married. The court then found that 4,343
units, including the pre-marriage RSUs, became community property
because they vested during the marriage. Finally, the court determined the
remaining 1,348 RSUs that had not vested during the marriage, but were
granted before the date of separation, should be divided by applying the
Nelson formula.1

¶19 Father argues that based on conflicting testimony, the
superior court made sufficient findings to support its division of the RSUs.
But the superior court found that the RSUs obtained, but not vested prior
to marriage, were community property. Because the court failed to give
Mother any separate property credit for the 544 RSUs she earned before she
got married, the court’s characterization of the RSUs is unsupported by the
facts and the law.

¶20 Mother additionally argues that the superior court “failed to
issue any orders regarding future capital gains taxes on the RSUs.” Citing
Koelsch v. Koelsch, 148 Ariz. 176, 186 (1986), Father argues that future tax
obligations are speculative and therefore not appropriate for the court to
decide. But Koelsch addressed retirement accounts that would mature in the
future, not RSUs. 148 Ariz. at 178–79. This case is more analogous to
Biddulph v. Biddulph, 147 Ariz. 571 (App. 1985), where the parties argued
over the allocation of stock and the tax implications. 147 Ariz. at 572–73 .
There, the court held that “[c]osts which necessarily result from dividing
the community estate in an otherwise equal manner should be borne
equally by the parties. However, the spouse having ownership and control
over an item of property should bear the risks associated with its future

1 The Nelson formula is used when the benefit is used to entice future

performance and is calculated as follows: “the numerator of the fraction is
‘the number of months from the date of grant of each block of options to the
date of the couple’s separation, while the denominator [is] the period from
the time of each grant to its date of exercisability.’” Brebaugh, 211 Ariz. at
100, ¶ 21 (alternation in original) (quoting In re Marriage of Nelson, 177 Cal.
Rptr. 790, 793 (App. 1986)).

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disposition.” Id. at 573. Here, the court ordered the parties to “equally share
the transfer expenses and cost of preparing whatever paperwork is
required” for transfer of the RSUs but failed to address tax consequences
that will result at the time of the transfer.

¶21 The superior court’s allocation of the RSUs is vacated and the
issue is remanded for the court to consider Mother’s separate property
interest in the RSUs and each party’s share of the tax liability resulting from
the transfer of the RSUs.

IV. The court did not err in its award of Mother’s ESPP shares.

¶22 Mother also alleges that the court erred by awarding 3,363
ESPP shares as community property because some of them were separate
property. But Mother’s own expert identified 3,289.5 or 6,700.6 of combined
RSUs and ESPP shares as community property, based on alternative
calculation methods. Father asserted, and his expert testified, that 3,363
ESPP shares “were all acquired during the marriage and paid for using
community earnings.” The court found that 3,363 shares were community
property and awarded half to Father. This Court “defer[s] 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). This
Court will not reweigh conflicting evidence or a trial court’s credibility
assessments on appeal. See Lehn v. Al-Thanayyan, 246 Ariz. 277, 284, ¶ 20
(App. 2019). The evidence supports the court’s classification of the ESPP
shares and the finding that they are community property.

¶23 Mother contends the superior court abused its discretion by
failing to consider tax implications of the transfer of the ESPP shares. The
court determined that because the ESPP shares were not subject to vesting
at a later date, they were subject to immediate division and could be
divided equitably without regard to formulas used for unvested benefits.
But the court did not address the tax liability, if any, that would result at
the time of this division and transfer. On remand, the court should address
any such tax implications.

V. The court did not err in valuing and then dividing the Amway
business.

¶24 Mother contends the superior court abused its discretion by
valuing the Amway business without having sufficient evidence. But
Mother did not provide evidence to support her proposed valuation of the
business. The court did not abuse its discretion by valuing the Amway
business and dividing it based on the evidence presented. See Reed v. Reed,

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82 Ariz. 168, 172 (1957) (“If appellant was dissatisfied with the state of the
record, it was his duty to further enlighten the court.”).

¶25 Mother also contends that the court erred in not finding a
binding Rule 69 agreement regarding the Amway business. Father asserts
there was never mutual assent and therefore the parties were unable to
reach an agreement. “[This Court] view[s] the evidence in the light most
favorable to sustaining the trial court’s findings and will uphold them
unless they are clearly erroneous or unsupported by the evidence.” In re
Marriage of Priessman, 228 Ariz. 336, 337, ¶ 2 (App. 2011) (quotation
omitted). “No agreement or consent between parties or attorneys in any
matter is binding if disputed, unless it is in writing, or made orally in open
court, and entered in the minutes.” Murray v. Murray, 239 Ariz. 174, 178,
¶ 13 (App. 2016) (quotation omitted). Mother did not establish the existence
of a signed agreement, and the court did not err by finding no binding Rule
69 agreement.

VI. The findings of fact do not support the court’s failure to award
rent.

¶26 Mother asserts “that equity required the trial court here to
either order Father to pay Mother one-half the home’s rental value; or order
to pay all home expenses during his exclusive use; or to otherwise more
equitably balance the assets and debts.”

¶27 In In re Marriage of Pownall, 197 Ariz. 577 (App. 2000), the
husband paid the mortgage on the marital residence, which was his
separate property, while the wife lived there alone, rent-free. 197 Ariz. at
582–83, ¶¶ 23–24. This Court remanded the case for a determination of the
community’s interest in the residence and directed the superior court to
offset that interest by the rental value the wife received. Id. at 583, ¶ 24.
Similarly, in Ferrill v. Ferrill, 253 Ariz. 393 (App. 2022), this Court concluded
that the superior court could order an offset for wife’s post-service
possession if husband was ousted from the marital residence, and the case
was remanded for findings as to whether ouster had occurred. 253 Ariz. at
396, 398, ¶¶ 9, 11, 19. This Court also determined that reimbursement, if
warranted, could be “valued at up to one-half the reasonable rental value
of the marital home.” Id. at 398, ¶ 21.

¶28 Here, the house was owned mortgage-free by the community.
The superior court only analyzed the separate contributions made by each
party and determined them to be equitable. The court did not weigh the
benefit Father received from living rent-free after the entry of the temporary

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orders awarding him exclusive use of the residence. Nor did the court
consider the converse detriment to Mother in having to pay for a new place
to live over the same period. Accordingly, the superior court’s ruling is
vacated and remanded for the court to determine an appropriate offset for
the value received by Father while in exclusive possession of the marital
home.

VII. The court did not err by denying Mother’s reimbursements.

¶29 Mother argues the court abused its discretion by not
awarding her post-service payments of community debt paid with her
separate funds.

¶30 The court heard testimony and took evidence from Mother
and Father about expenses paid post-separation. The court then found that
“both parties expended community funds to maintain the residence after
their separation and prior to the date of [s]ervice” and that “Mother did not
produce sufficient evidence to carry the burden of proof that she expended
more funds than Father to maintain the property.” The record supports the
superior court’s findings and it did not abuse its discretion. See Goats v. A.
J. Bayless Mkts., Inc., 14 Ariz. App. 166, 169–71 (1971).

VIII. Warning the parties of consequences for not using a parenting
coordinator did not result in reversible error.

¶31 Mother argues the court abused its discretion by warning the
parties that if one parent does not agree to use a parenting coordinator to
assist with future communication, it may consider that refusal if there is a
subsequent modification hearing. The court stated, “[p]ursuant to [Ariz. R.
Fam. Law P.] 74, the [superior] [c]ourt does not have the ability to appoint
a parenting coordinator for these parties, but the [c]ourt STRONGLY
ENCOURAGES them to engage and use a parenting coordinator” and
failure to do so “may be taken into consideration.” Any argument regarding
what a court may or may not do in the future if one of the parties does not
agree to use a parenting coordinator is premature. See Mills v. Ariz. Bd. of
Tech. Registration, 253 Ariz. 415, 423, ¶¶ 23–24 (2022) (courts restrain from
resolving unripe issues to avoid issuing advisory opinions on hypothetical
or abstract questions). Mother has not established reversible error.

IX. It was not an abuse of discretion for the court to restrict the parties’
communication.

¶32 Mother argues the communication orders were too restrictive
but acknowledges the court has authority to issue appropriate boundaries

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regarding parental communications. Here, the court found “both parents
are very quick to blame the other and neither accepts responsibility for their
own role in this conflict.” These findings support the court’s order
prohibiting the parties from using the words “always” or “never” in their
email communications or the use of “absolute terms.” See A.R.S. § 25-
403.02(B), (C)(7) (court is required to adopt a parenting plan consistent with
child’s best interests and that provides for communication between the
parties). The court did not abuse its discretion by encouraging parties to
communicate about Child in a more productive way.

X. The finding of no significant history of domestic violence was
supported by the record.

¶33 Mother argues the superior court erred by concluding there
was insufficient evidence to deviate from the presumption favoring joint
legal decision making and by ordering joint legal decision making. Mother
asserts the court did not adequately consider her testimony regarding
numerous instances of domestic violence.

¶34 An order addressing legal decision making is reviewed for an
abuse of discretion. DeLuna v. Petitto, 247 Ariz. 420, 423, ¶ 9 (App. 2019). If
the court finds domestic violence has occurred, it must determine whether
it constituted (1) “significant domestic violence pursuant to § 13-3601,” or
(2) “a significant history of domestic violence.” A.R.S. § 25-403.03(A);
DeLuna, 247 Ariz. at 423, ¶ 11. The Legislature did not define “significant
domestic violence” or “significant history of domestic violence,” leaving
the superior court with “discretion to weigh the evidence and determine
the degree of the domestic violence’s ‘significance’ for the purpose of § 25-
403.03(A).” DeLuna, 247 Ariz. at 424, ¶ 15. If the court finds neither
“significant domestic violence” nor “a significant history of domestic
violence,” a rebuttable presumption against awarding joint legal decision
making exists if the court finds an act of domestic violence occurred. A.R.S.
§ 25-403.03(D). To determine if a parent has rebutted the statutory
presumption against joint legal decision making, the court is required to
consider specified factors under § 25-403.03(E), such as completion of
counseling programs or parenting classes.

¶35 Here, the court did not find “significant domestic violence” or
a “significant history of domestic violence.” The court found one domestic
violence incident had occurred. But it also found that Father completed a
domestic violence course and a parenting class, rebutting the statutory
presumption that sole legal decision making was in Child’s best interests.

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A.R.S. § 25-403.03(D), (E). The court also found that Father had never
engaged in any abuse or neglect of Child.

¶36 Mother contends the superior court ignored or failed to give
credit to much of her evidence. But this Court will not reweigh the evidence
and will affirm the superior court’s ruling if it is supported by the record.
Lehn, 246 Ariz. at 284, ¶ 20; Pettit v. Pettit, 218 Ariz. 529, 531, ¶ 4 (App. 2008).
Here, the superior court’s ruling is supported by the record, and the court
did not abuse its discretion.

XI. The court did not abuse its discretion in awarding fees.

¶37 Mother argues the court abused its discretion by awarding
attorneys’ fees to Father under § 25–324(A), which authorizes an award of
fees after considering both parties’ financial resources and the
reasonableness of their positions throughout the proceedings. An award of
attorneys’ fees is reviewed for an abuse of discretion. Myrick v. Maloney, 235
Ariz. 491, 494, ¶ 6 (App. 2014).

¶38 Citing Magee v. Magee, 206 Ariz. 589, 592, ¶ 17 (App. 2004), the
superior court considered several factors before awarding attorneys’ fees
including: the financial resources of each party, the financial disparity
between the parties and the ratio of fees owed to the assets and income of
each party. The court also considered the reasonableness of each party’s
positions. See Myrick, 235 Ariz. at 494, ¶ 9.

¶39 The court made specific findings as required by § 25-324—
that a financial disparity existed between the parties with Father earning
significantly less than Mother and that some of Mother’s expenses were
exaggerated. Additionally, while the court found that both parties took
unreasonable positions at times, it found some of Mother’s positions were
not supported by evidence. For example, Mother requested Dr. Branton
refund the fees earned, claiming he violated court rules. She also hired an
expert to rebut Dr. Branton’s findings, even though both parties agreed to
appoint Dr. Branton as the family evaluator. Also, the court found Mother
failed to comply with discovery and disclosure rules.

¶40 The superior court did not abuse its discretion under § 25–
324(A). Nevertheless, on remand, the court may revisit this issue to assess
the reasonableness of the attorneys’ fees award in light of its new rulings.

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CONCLUSION

¶41 For the foregoing reasons, this Court vacates in part and
affirms in part. The case is remanded with directions to address the
classification and award of RSUs and the determination of the rental value
of the residence offset by Father’s benefit. Both parties seek attorneys’ fees
and costs under § 25-324 and Arizona Rule of Civil Appellate Procedure 21.
After considering the reasonableness of the positions each party has taken
and their financial resources, this Court denies both requests.

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

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