Bobrow v. Bobrow

• Decision Date: 09 March 2017
• Docket Number: No. 1 CA–CV 15–0114 FC (Consolidated),No. 1 CA–CV 14–0806 FC,1 CA–CV 14–0806 FC,1 CA–CV 15–0114 FC (Consolidated)
• Citation: 391 P.3d 646
• Parties: In re the Marriage of: Pam Case BOBROW, Petitioner/Appellee/Cross–Claimant, v. Kenneth S. BOBROW, Respondent/Appellant/Cross–Claimant.
• Court: Arizona Court of Appeals

391 P.3d 646

In re the Marriage of: Pam Case BOBROW, Petitioner/Appellee/Cross–Claimant,

v.Kenneth S. BOBROW, Respondent/Appellant/Cross–Claimant.¹

No. 1 CA–CV 14–0806 FC

No. 1 CA–CV 15–0114 FC (Consolidated)

Court of Appeals of Arizona, Division 1.

FILED March 9, 2017

Dickinson Wright PLLC, Phoenix, By Steven D. Wolfson, Anne L. Tiffen, Counsel for Petitioner/Appellee/Cross–Claimant

Fennemore Craig, P.C., Phoenix, By Alexander R. Arpad, Co–Counsel for Respondent/Appellant/Cross–Claimant

Fromm Smith & Gadow PC, Phoenix, By Stephen R. Smith, Co–Counsel for Respondent/Appellant/Cross–Claimant

Judge Paul J. McMurdie delivered the opinion of the Court, in which Presiding Judge Diane M. Johnsen and Judge Jon W. Thompson joined.

OPINION

McMURDIE, Judge:

¶ 1 In these consolidated appeals, we resolve two issues of first impression in this state. The first issue is whether a divorcing spouse is entitled to reimbursement for paying community obligations while the petition for dissolution is pending, or whether a matrimonial presumption of a gift should apply. We hold there is no presumption of a gift once the petition for dissolution is filed. The second issue is whether the parties may stipulate to a prevailing-party standard for attorney's fees in a premarital agreement. We hold that such agreements violate public policy per se , and that courts should apply the statutory standards contained in Arizona Revised Statutes ("A.R.S.") section 25–324 (2016).²

¶ 2 Kenneth S. Bobrow ("Husband") and Pam Case Bobrow ("Wife") separately appeal from their decree of dissolution. Husband appeals the denial of his claim for reimbursement of community expenses he paid following the filing of the petition for dissolution. Wife appeals the denial of her request for attorney's fees.³

¶ 3 For the reasons stated below, we hold the superior court erred by finding that Husband's post-petition payments of community expenses constituted a gift, and remand to allow the superior court to determine the offset to which Husband is entitled. We affirm the denial of attorney's fees to Wife.

FACTS AND PROCEDURAL BACKGROUND

¶ 4 When the parties married in 2002, they entered into a premarital agreement ("Agreement"). Although the parties stipulated in the superior court the Agreement was valid and enforceable, they disputed how the Agreement should be applied. What was not in dispute, however, was that the Agreement provided, in the event of a dissolution, Wife would not receive spousal maintenance.

¶ 5 On October 7, 2013, Wife filed a petition for dissolution. Thereafter, Husband voluntarily made monthly loan payments due on Wife's vehicle and the marital residence.⁴ At trial, Husband requested an offset of approximately $77,000 for Wife's share of the community expenses he paid toward the marital residence. Husband also requested an offset for the monthly loan payments that he paid toward Wife's vehicle. The superior court denied both requests, holding the payments were "gifts," because Husband had voluntarily paid these expenses without an agreement for reimbursement.

¶ 6 The court found, given the totality of the decree, neither party was entitled to attorney's fees under the prevailing-party standard in the Agreement. The court later denied, without comment, Wife's motion for a new trial on the issue of attorney's fees, which also sought fees pursuant to A.R.S. § 25–324.

¶ 7 Both parties filed multiple amended notices of appeal from the decree and the denial of post-decree motions.⁵ The appeals were consolidated, and this court has jurisdiction pursuant to A.R.S. § 12–2101(A)(1), (5)(a).

DISCUSSION

A. Husband's Payments Toward Community Debt After the Filing of the Petition for Dissolution Were Not a Gift.

¶ 8 Matrimonial law in Arizona recognizes that, in certain circumstances, courts will treat a transaction between spouses as a gift unless contrary intent is evidenced at the time. For example, when real property is paid for with separate funds, but title is taken in the name of both spouses, a gift is presumed. Becchelli v. Becchelli , 109 Ariz. 229, 232, 508 P.2d 59 (1973), superseded on other grounds by statute, A.R.S. § 25–318, as recognized in Jord a n v. Jordan, 132 Ariz. 38, 39, 643 P.2d 1008 (1982). This presumption is based on the premise that "the [party] is discharging [his or her] legal duty to provide support for [the other spouse]." Becchelli , 109 Ariz. at 232, 508 P.2d 59. In order to overcome the presumption, the burden falls on the party claiming it is not a gift, and the evidence must be clear, satisfactory, and convincing. Blaine v. Blaine , 63 Ariz. 100, 108, 159 P.2d 786 (1945).

¶ 9 This court has extended the gift presumption to a situation in which a spouse voluntarily uses separate property to pay community expenses during the marriage. Baum v. Baum , 120 Ariz. 140, 146, 584 P.2d 604 (App. 1978). In such a case, the spouse is entitled to reimbursement from the other spouse "[o]nly if there is an agreement to that effect." Id. We explained:

To rule otherwise would be to require all married persons to keep detailed accounts of all the money they spent during the marriage and of all community expenses. We do not believe this is the intent of the Arizona statutes regulating the distribution of assets in dissolution proceedings.

120 Ariz. at 146, 584 P.2d 604 ; but cf. Ivancovich v. Ivancovich , 24 Ariz.App. 592, 540 P.2d 718 (1975) (considering separate fund contributions in determining asset distribution based on the involuntary nature of the expenditures).

¶ 10 Arizona courts, however, have not universally applied a presumption of a gift during the marriage to an expenditure of separate funds. This court held the presumption of a gift does not apply when separate funds are used to improve jointly owned real estate. In re Marriage of Berger , 140 Ariz. 156, 161–62, 680 P.2d 1217 (App. 1983). Likewise, our supreme court held when a spouse's separate funds are deposited in a joint bank account, the marital relationship alone did not presume a gift. O'Hair v. O'Hair , 109 Ariz. 236, 239, 508 P.2d 66 (1973) ; Bowart v. Bowart , 128 Ariz. 331, 335, 625 P.2d 920 (App. 1980). The court in O'Hair noted that "[g]ifts from a husband to his wife are not presumed from the marital relationship but are governed by the same rules as gifts between strangers, namely, there must be an intention to part with the interest in and dominion over the property and there must be delivery of the property." 109 Ariz. at 239, 508 P.2d 66 (quoting Rasmussen v. Oshkosh Sav. & Loan Ass'n , 35 Wis.2d 605, 151 N.W.2d 730, 732 (1967) ). The court held that to be a gift, the donor must "manifest a clear intent to give to the party claiming as donee." Id. The burden is on the party claiming the action was a gift to establish the claim by clear and convincing proof. Id .

¶ 11 Determining whether a gift was made is a question of fact, which we review under a clearly erroneous standard. Hrudka v. Hrudka , 186 Ariz. 84, 92, 919 P.2d 179 (App. 1995), superseded by statute on other grounds , A.R.S. § 25–324, as recognized in Myrick v. Maloney , 235 Ariz. 491, 494, ¶ 8, 333 P.3d 818 (App. 2014). Therefore, we review the record before us to determine whether the gift finding was clearly erroneous. Berger , 140 Ariz. at 161, 680 P.2d 1217.

¶ 12 Husband argues he did not intend the amounts he paid to extinguish Wife's share of the post-petition community expenses to be a gift to Wife. Citing Baum , Wife contends "the spouse who voluntarily spends separate property on community expenses is entitled to reimbursement only if there is an agreement to that effect." Baum , 120 Ariz. at 146, 584 P.2d 604. On the circumstances presented here, we disagree with Wife's contention.

¶ 13 Each of the "presumption of gift" cases noted above arose in the context of a pre-petition payment or use of separate property. These cases do not resolve the issue we address here, which is the effect of a payment made after a spouse has filed a dissolution petition.

¶ 14 According to the Agreement, Husband had a contractual obligation to pay the parties' ordinary and necessary living expenses throughout the marriage. The obligation terminated, however, upon either party filing a petition for dissolution. Likewise, under the Agreement, Husband was not obligated to pay Wife spousal maintenance after the filing of the petition for dissolution.

¶ 15 Pursuant to A.R.S. § 25–211(A)(2), the marital community is deemed to have terminated upon the service of a petition that results in a decree of dissolution.⁶ The Agreement provided Husband was not obligated to pay the parties' expenses or provide any temporary support to Wife after a petition was filed. In the gift-presumption cases on which Wife relies, the payments and transfers took place during the marriage, while the community existed. The presumptions were adopted, in part, to alleviate the need for married parties to document transactions, and the belief that married people should support each other. Baum , 120 Ariz. at 147, 584 P.2d 604 ; Becchelli , 109 Ariz. at 231, 508 P.2d 59. Neither justification for such a rule exists after the petition for dissolution is filed and the community has ended. Accordingly, there was no presumption that Husband's post-petition payments toward the vehicle and the home were a gift. Absent the presumption, to defeat Husband's claim for reimbursement, Wife was obligated to prove by clear and convincing evidence Husband intended the payments for community expenses to be a gift. O'Hair , 109 Ariz. at 240, 508 P.2d 66.

¶ 16 Wife's argument, that the payments should be characterized as gifts, is based on her belief they were gifts and Husband made the payments voluntarily. Wife's belief the payments were a gift is irrelevant as it is the donor's intent, not the donee's, that is controlling. Berger, 140 Ariz. at 162, 680 P.2d 1217. Husband's payment without a legal obligation to do so, by itself, does not show an intent to gift.

¶ 17 Wife...