Hiatt v. Hiatt

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SHEILA M. HIATT, Petitioner/Appellant/Cross-Appellee,

v.

JAMES A. HIATT, Respondent/Appellee/Cross-Appellant.

No. 1 CA-CV 22-0130 FC
FILED 11-1-2022

Appeal from the Superior Court in Maricopa County
No. FC2020-051879
The Honorable Lori Ash, Judge Pro Tempore

AFFIRMED

COUNSEL

Dickinson Wright, PLLC, Phoenix
By Leonce A. Richard, III
Counsel for Petitioner/Appellant/Cross-Appellee

Padish Law Group, PLLC, Scottsdale
By James E. Padish, Erica Padish Hoebing
Counsel for Respondent/Appellee/Cross-Appellant
 HIATT v. HIATT
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Maria Elena Cruz delivered the decision of the Court, in
which Judge Angela K. Paton and Judge Peter B. Swann joined.

C R U Z, Judge:

¶1 Sheila M. Hiatt (“Wife”) appeals the superior court’s
dissolution decree and its order altering or amending the decree. James A.
Hiatt (“Husband”) appeals the superior court’s order denying his motion
to alter or amend the judgment. For the following reasons, we affirm.

FACTUAL AND PROCEDURAL HISTORY

¶2 The parties were married in 2013 and entered into a
prenuptial agreement (“the Agreement”) before marrying. Under the
Agreement, the parties forfeited community and spousal property rights.
Paragraph 9 of the Agreement stated that “all property, real, personal or
mixed, which either [Husband] or [Wife] acquire using separate funds and
subsequently places in the parties’ joint, common or community names
shall retain its character as the separate property of the party who
purchased or acquired the property . . . .“ Paragraph 16 of the Agreement
provided:

Division of Community Property Upon Termination of
Relationship. Upon a dissolution, legal separation or
annulment of the parties’ marriage, each party shall be
awarded his or her own respective separate property. In the
event of divorce or legal separation, if there is any joint,
common or community property created for purposes other
than inheritance, then the net value of that property and any
joint, common and community obligations shall be divided
equally (although specific assets themselves need not be split)
after consideration of the fair Market value of any property at
the date of service of a petition for dissolution of marriage,
indebtedness against any property, and the tax consequences
which would arise if the property were sold for its fair market
value one day after the date of the divorce or legal separation.

(Emphasis added.)

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¶3 In 2016, the parties purchased a property in Dana Point,
California (“California home”) for $5,145,482. They paid cash from their
separate funds with Husband contributing 75% of the purchase price and
Wife contributing 25%. The parties took title to the California home as
tenants in common:

James Andrew Hiatt as to an undivided 75% interest and
Sheila Marie Hiatt, as to an undivided 25% interest, as
Husband and wife as tenants in common.

¶4 In 2020, Wife petitioned to dissolve the marriage. The parties
disputed how the California home should be valued and divided. After a
trial, the superior court entered a decree of dissolution awarding Husband
the California home, ordered the parties to obtain new appraisals of the
home, and ordered Husband to pay Wife 25% of the valuation of the home.

¶5 Husband filed a motion and amended motion to alter or
amend the decree pursuant to Arizona Rule of Family Law Procedure
(“ARFLP”) 83. After briefing, the superior court vacated the portion of the
decree dealing with the California home, awarded the home to Husband,
and found the value of the home on the date of the service of the petition,
May 28, 2020, was $6.825 million. The court found paragraph 16 was
ambiguous, and after considering the Agreement “and the credible
evidence,” the court rejected Wife’s argument that she was entitled to half
of the value of the home, reasoning that the parties did not own the
California home equally. The court found that Wife was entitled to 25% of
the value of the California home. Husband filed a second motion to alter
or amend the judgment pursuant to ARFLP 83, which the superior court
summarily denied.

¶6 Wife appealed the superior court’s dissolution decree and its
December 27, 2021 order altering or amending the decree. Husband
appealed the superior court’s order denying his second motion to alter or
amend the judgment. After entry of a final judgment, we have jurisdiction
pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1), (2).

DISCUSSION

I. Ownership Interests in the California Home

¶7 We review the superior court’s interpretation of a prenuptial
agreement de novo and apply principles of contract interpretation. See Sw.
Non-Profit Hous. Corp. v. Nowak, 234 Ariz. 387, 393, ¶ 19 (App. 2014).
Whether a contract is ambiguous is a question of law which we review de

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novo. In re Est. of Lamparella, 210 Ariz. 246, 250, ¶ 21 (App. 2005) (citations
omitted). We review the superior court’s factual findings for clear error.
Ahwatukee Custom Ests. Mgmt. Ass’n v. Turner, 196 Ariz. 631, 634, ¶ 5 (App.
2000).

¶8 The primary function of a court when interpreting a contract
is “to enforce the meaning intended by the contracting parties.” Taylor v.
State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 154 (1993). “It is axiomatic that
a contract must be construed as a whole, and each and every part must be
read in the light of the other parts.” Goodman v. Newzona Inv. Co., 101 Ariz.
470, 473 (1966) (citation omitted). We will “interpret a contract in such a
way as to reconcile and give meaning to all of its terms, if reconciliation can
be accomplished by any reasonable interpretation.” Gfeller v. Scottsdale
Vista N. Townhomes Ass’n, 193 Ariz. 52, 54, ¶ 13 (App. 1998). “The court
must decide what evidence, other than the writing, is admissible in the
interpretation process, bearing in mind that the parol evidence rule
prohibits extrinsic evidence to vary or contradict, but not to interpret, the
agreement.” Taylor, 175 Ariz. at 152.

¶9 Wife argues the superior court erred in interpreting the
Agreement and concluding she was entitled to 25% of the value of the
California home rather than 50%. Wife points to the language in paragraph
16 of the Agreement that states the net value of the parties’ “joint, common
or community property” should be divided equally in the event of a
divorce. She disagrees with the superior court’s conclusion that paragraph
16 was ambiguous.

¶10 “Language in a contract is ambiguous only when it can
reasonably be construed to have more than one meaning.” Lamparella, 210
Ariz. at 250, ¶ 21. Here, the superior court found paragraph 16 was
ambiguous because the first sentence of the paragraph provided that “each
party shall be awarded his or her own respective separate property,” in the
event of divorce or legal separation, but the second sentence of the
paragraph stated that joint, common, or community property was to be
“divided equally.” In addition, the court found a latent ambiguity (one not
apparent from the face of the document) existed because the parties held
the California property as tenants in common with Husband owning an
undivided 75% interest and Wife owning an undivided 25% interest. See In
re Est. of Zilles, 219 Ariz. 527, 530, ¶ 9 (App. 2008).

¶11 We find no error in the superior court’s determination that
paragraph 16 was ambiguous, and its consideration of the undisputed
evidence that the parties took title to the California home as 75%/25%

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tenants in common, using their separate funds. Because the superior
court’s interpretation of the Agreement was consistent with the intent of the
parties, as evidenced by their forfeiting of their respective community and
spousal maintenance rights in the Agreement itself, the court correctly
decided that the parties were each entitled to receive their sole and separate
interests in the California home. See Taylor, 175 Ariz. at 154; Justus v.
Clelland, 133 Ariz. 381, 383 (App. 1982) (property of a co-tenant is separate
in character).

II. Valuation of California Home

¶12 In his cross-appeal, Husband argues the superior court
abused its discretion by valuing the California home at $6.825 million rather
than $5 million because the $6.825 million valuation was not supported by
the evidence.

¶13 “An abuse of discretion exists when the record, viewed in the
light most favorable to upholding the trial court’s decision, is devoid of
competent evidence to support the decision.” Hurd v. Hurd, 223 Ariz. 48,
52, ¶ 19 (App. 2009) (citation omitted). “We must give due regard to the
trial court’s opportunity to judge the credibility of the witnesses.” Id. at
¶ 16. “Our duty on review does not include re-weighing conflicting
evidence . . . .” Id. “Even though conflicting evidence may exist, we affirm
the trial court’s ruling if substantial evidence supports it.” Id. We will not
substitute our discretion for that of the trial judge. Cook v. Losnegard, 228
Ariz. 202, 205, ¶ 11 (App. 2011).

¶14 Sufficient evidence supported the $6.825 valuation.
Husband’s real estate appraiser, Rodney Hefington, valued the California
home at $5 million as of May 28, 2020. Wife’s real estate appraiser, Andrew
Duncan, a specialist in appraising ocean front properties in Southern
California, appraised the California home and estimated the property’s
value was $6.825 million as of July 2, 2020. When asked whether his
valuation of $6.825 million was also valid for May 28, 2020 (the date of the
service of the petition), Duncan answered in the affirmative, because based
on the analysis contained in his report, “the market was stable during the
period between May 28th and July 2nd.”

¶15 John Stanland, the real estate broker who brokered the
parties’ purchase of the California home in 2016, testified he was very
familiar with the California home and its surrounding neighborhood, and
that if he had listed the home on May 28, 2020, he would have listed it for
$8 million plus and would expect it to sell for close to that amount, based

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on sales in the neighborhood. Stanland testified that he never would have
listed the home for $5 million on May 28, 2020, because that price would be
“[d]ramatically” less than market value.

¶16 The superior court found Hefington’s testimony was less
credible than that of Duncan and Stanland, and we defer to that credibility
determination. See Hurd, 223 Ariz. at 52, ¶ 16. When viewed in the light
most favorable to upholding the superior court’s decision that the value of
the California home was $6.825 million, the record supports that decision.
See id. at ¶ 19.

III. Expenses and Taxes

¶17 Husband next argues the superior court erred as a matter of
law by failing to include an offset for expenses and taxes in the amount he
was required to pay Wife for her 25% interest ($1,706,250). In the parties’
pretrial statement, Husband claimed that the total amount in expenses he
had paid for the California home was $122,913, and “Wife’s proportionate
responsibility for these expenses is $30,728.” The superior court found that
under the Agreement, any expenses paid by Husband or Wife were a gift
and not subject to reimbursement. Paragraph 11 of the Agreement
provided:

Unless they otherwise agree in writing before a notary,
neither [Husband] nor [Wife] shall be entitled to any interest
in or claim against the property . . . of the other as
compensation or reimbursement for:

...

B. Contributions or payments which he or she may have
made or which they may make on behalf of the other or for
the benefit of the other’s separate property[.]

Because Husband’s payment of expenses was not subject to reimbursement
under the Agreement, we find no error in the superior court’s decision not
to reduce Husband’s payment to Wife for her interest in the California
home.

IV. Attorneys’ Fees in Superior Court

¶18 Finally, Husband argues the superior court erred by
awarding Wife $10,000 in attorneys’ fees. We review an attorneys’ fees
award for an abuse of discretion. Iverson v. Nava, 248 Ariz. 443, 450, ¶ 27

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(App. 2020). The superior court awarded Wife attorneys’ fees pursuant to
A.R.S. § 25-324(A) and paragraph 29 of the Agreement, which provides:

In the event either party is required to bring legal action
against the other party to enforce any of his or her rights
under this Agreement, or either party attempts to challenge
or set aside any term of this Agreement, the prevailing party
shall be entitled to recover from the other all reasonable costs
and expenses incurred in bringing such an action, including,
but not limited to, reasonable attorneys’ fees.

(Emphasis added.) The court declined to make a finding about financial
disparity under A.R.S. § 25-324 because no affidavit of financial information
for Husband had been admitted into evidence, and it found that Husband
acted unreasonably in offering Wife less than what she had paid for the
California home. The court declined to award Wife fees relating to the
parties’ parenting plan, because those fees could not be awarded under the
Agreement and Husband’s position regarding the parenting plan had been
reasonable. The $10,000 attorneys’ fees award was less than one-third of
the fees Wife requested. To the extent Wife was the prevailing party on the
valuation issue but not the issue about the parties’ interests in the home, the
attorneys’ fees award was reasonable. We find no abuse of discretion.

V. Attorneys’ Fees and Costs on Appeal

¶19 Without citation to authority, Husband requests attorneys’
fees on appeal. We deny the request. See ARCAP 21(a)(2). Wife requests
attorneys’ fees and costs on appeal pursuant to A.R.S. § 25-324(A). In our
discretion, we deny the request. Each party shall bear their own costs on
appeal.

CONCLUSION

¶20 For the foregoing reasons, we affirm.

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

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