Lazorcak v. Lazorcak

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

DANIEL EDWARD LAZORCAK, Petitioner/Appellant,

v.

SUZANNE PATRICIA LAZORCAK, Respondent/Appellee.

No. 1 CA-CV 24-0175 FC
FILED 12-24-2024

Appeal from the Superior Court in Maricopa County
No. FN2020-096003
No. FN2020-096012
The Honorable Michael Valenzuela, Judge
The Honorable Marvin L. Davis, Judge

VACATED AND REMANDED IN PART

COUNSEL

Gillespie, Shields & Taylor, Phoenix
By Mark A. Shields
Counsel for Petitioner/Appellant

Riley Law Firm PLC, Phoenix
By Daniel Riley
Co-Counsel for Respondent/Appellee

Swiren & Witzleb, Phoenix
By Amy Joy Witzleb, Sara A. Swiren
Co-Counsel for Respondent/Appellee
 LAZORCAK v. LAZORCAK
Decision of the Court

MEMORANDUM DECISION

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

C A M P B E L L, Judge:

¶1 Daniel Edward Lazorcak (Husband) appeals the superior
court’s characterization of Starbucks stock shares as community property
owned jointly with Suzanne Patricia Lazorcak (Wife). Because the court
applied an incorrect burden of proof and failed to engage in an
apportionment analysis, we vacate this portion of the dissolution decree
and remand for reconsideration.

BACKGROUND

¶2 Husband and (Wife) married in 1997. Husband petitioned for
dissolution in 2020. At the time the petition was served, an investment
account in Husband’s name held 1,352 shares of Starbucks stock.

¶3 According to Husband, all the shares are his separate
property because they were obtained in a pre-marital purchase. He testified
at trial that he bought 72 shares of Starbucks stock online sometime around
1995 or 1996 but no longer has the original documentation. He testified that
later two-for-one splits, plus dividend reinvestment, resulted in the initial
72 shares becoming the 1,352 shares.

¶4 According to Wife, all the shares are community property
because Husband acquired them during the marriage. At trial, she offered
a 2002 stock certificate showing a transfer of 288 shares to Husband. She
also testified, however, that Husband owned some Starbucks shares before
the marriage.

¶5 In the dissolution decree, the superior court held that all the
Starbucks shares were community property subject to equal division. The
court found that Husband had failed to prove the asset was separate
property “by clear and convincing evidence” because he provided no
evidence to corroborate his claim of a pre-marital purchase.

¶6 Husband moved to amend the court’s ruling, arguing that it
overlooked Wife’s admission that he owned some Starbucks stock before

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the marriage and incorrectly required him to produce clear and convincing
evidence to overcome a community presumption. Wife reasserted that
Husband had purchased 288 shares during the marriage. In his reply,
Husband included what he claimed was a missing page from the 2002 stock
certificate, which showed a transfer of 288 shares from one investment
account to another, not a purchase of additional stock during the marriage.

¶7 The superior court denied the motion to amend. Husband
timely appealed.

DISCUSSION

¶8 The parties dispute whether the superior court correctly
required Husband to provide clear and convincing evidence to overcome a
presumption that the shares were community property. “The appropriate
burden of proof is a question of law, which this court reviews de novo.”
Am. Pepper Supply Co. v. Fed. Ins. Co., 208 Ariz. 307, 309, ¶ 8 (2004). We also
review de novo the legal question of property’s classification as separate or
community. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4 (App. 2007).

¶9 Property takes on its character as separate or community at
the time of acquisition. Stock v. Stock, 250 Ariz. 352, 355, ¶ 10 (App. 2020).
“Once fixed, the property retains its character as separate or community
until changed by agreement of the parties or by operation of law.”
Sommerfield v. Sommerfield, 121 Ariz. 575, 578 (1979). Property a spouse owns
before the marriage is presumed to be the separate property of that spouse,
A.R.S. § 25-213(A), while property acquired during the marriage is
generally presumed to be community property, A.R.S. § 25-211(A).
Accordingly, before the court may apply a presumption, it must first
determine the date of acquisition. And only after a presumption is applied
must a party seeking to rebut it come forth with clear and convincing
evidence in support of his or her position. See Hatcher v. Hatcher, 188 Ariz.
154, 159 (App. 1996).

¶10 Because the parties disputed when Husband bought some of
the shares, the superior court had to resolve this factual dispute before any
presumption applied. See Stock, 250 Ariz. at 355, ¶ 10 (community- or
separate-property character determined at the time of acquisition). On this
preliminary fact question, each party had the burden of proving their
assertion. See Troutman v. Valley Nat’l Bank of Ariz., 170 Ariz. 513, 517 (App.
1992) (“The party who asserts a fact has the burden to establish that fact.”).

¶11 Though a party seeking to rebut a property-characterization
presumption must do so by clear and convincing evidence, Hatcher, 188

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Ariz. at 159, we see no reason to require one party to carry a heavier burden
than the other when proving the acquisition date of an asset. The cases
addressing rebuttal of a presumption of an asset being community or
separate do not address the burden for this preliminary fact issue
establishing the presumption. See Cooper v. Cooper, 130 Ariz. 257, 259–60
(1981) (resolving dispute over the nature of account holding commingled
premarital funds and earnings during the marriage); Hatcher, 188 Ariz. at
159 (resolving dispute over the purpose of disability payments paid during
the marriage); In re Marriage of Cupp, 152 Ariz. 161, 163–64 (App. 1986)
(same). Similarly, the cases Wife cites do not involve a factual dispute about
when the spouse acquired the property. See Cockrill v. Cockrill, 124 Ariz. 50,
52 (1979) (addressing how to characterize an increase in value of separate
property during the marriage); Bender v. Bender, 123 Ariz. 90, 91–92 (App.
1979) (resolving the effect of disclaimer deed on property acquired during
the marriage). The superior court erred by requiring Husband to show clear
and convincing evidence that he bought the stock before the marriage when
that preliminary factual issue was disputed with respect to some of the
shares.

¶12 Wife asks this court to infer the superior court accepted her
argument that the 2002 stock certificate showed that Husband acquired all
shares during the marriage, thereby establishing a presumption of
community property. We cannot make this inference for two reasons. First,
it overlooks the erroneous burden of proof the court placed on Husband.
See supra ¶¶ 9–11. Second, it ignores Wife’s undisputed testimony that
Husband bought at least some shares before the marriage. Without more
findings from the court, we cannot disregard the testimony from both
parties that Husband bought some Starbucks shares before the marriage.
Based on the undisputed evidence, which the superior court did not
address, at least part of the asset was Husband’s separate property. See
A.R.S. § 25-213(A). And given that, the court was first required to determine
the extent of the separate-property portion. See Kim v. Pak, 1 CA-CV 23-0409,
2024 WL 4886976, at *4, ¶¶ 17–18 (Ariz. App. Nov. 26, 2024). The court erred
by ignoring this allocation step entirely. See id.

¶13 We vacate the order finding that all shares of the Starbucks
stock are community property. We remand for the court to determine how
much of the stock Husband purchased before the marriage and how much
of the stock he purchased during the marriage, if any. In making these
determinations, the court should apply a preponderance of the evidence
standard so that neither party is forced to meet a higher burden of proof
than the other. See Kent K. v. Bobby M., 210 Ariz. 279, 284, ¶ 25 (2005)
(explaining that the preponderance standard “essentially allocates the risk

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of error equally between the parties involved”). After applying this burden
of proof, if the court determines that some of the stock is community
property, it must engage in an apportionment analysis to give Husband
credit for his separate-property portion. We express no opinion on the
weight of the evidence.

ATTORNEYS’ FEES AND COSTS ON APPEAL

¶14 Both parties request an award of attorneys’ fees and costs on
appeal under A.R.S. § 25-324. Although neither party took unreasonable
positions, the financial affidavits filed in April 2024 reflect that Husband
has far greater financial resources than Wife. In the exercise of our
discretion, we award Wife a portion of her reasonable attorneys’ fees upon
compliance with ARCAP 21. But because we are remanding for
reconsideration, we cannot yet determine whether either party is entitled to
costs under A.R.S. § 12-342(A). We instruct the superior court to award
costs on appeal consistent with this statute on remand.

CONCLUSION

¶15 We vacate the order finding that all shares of Starbucks stock
are community property, and remand for reconsideration consistent with
this decision.

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

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