Ferrill v. Ferrill
| Decision Date | 30 June 2022 |
| Docket Number | 1 CA-CV 21-0553 FC |
| Citation | 73 Arizona Cases Digest 25,514 P.3d 292 |
| Parties | In re the Marriage of: Wendy N. FERRILL, Petitioner/Appellant/Cross-Appellee, v. Gerald W. FERRILL, Respondent/Appellee/Cross-Appellant. |
| Court | Arizona Court of Appeals |
Horne Slaton Roebuck PLLC, Scottsdale, By Thomas C. Horne, Esq., Co-Counsel for Plaintiff/Appellant/Cross-Appellee
Voegele Anson Law, LLC, Omaha, NE, By Heather Voegele Anson, Pro Hac Vice Counsel, Co-Counsel for Plaintiff/Appellant/Cross-Appellee
Morse Law Group, P.C., Phoenix, By Judith A. Morse, Esq., Counsel for Respondent/Appellee/Cross-Appellant
Presiding Judge Paul J. McMurdie delivered the Court's opinion, in which Vice Chief Judge David B. Gass and Judge Angela K. Paton joined.
¶1 Wendy Ferrill ("Wife") appeals from the superior court's dissolution decree denying her request for reimbursement for payments she made toward a community mortgage after service of the dissolution petition. Gerald Ferrill ("Husband") cross-appeals, arguing the court abused its discretion by failing to grant his request to enter the marital home to inventory property and refusing to award his attorney's fees and costs under A.R.S. § 25-324(A).
¶2 We hold that when a party occupying a community residence seeks reimbursement1 for community mortgage payments paid with separate funds after service of the dissolution petition, the court has the discretion to offset the reimbursement by up to one-half of the home's fair rental value under equitable principles, but only if the occupying spouse ousted the other. In this case, the court erroneously denied Wife's reimbursement claim because it found Wife benefitted from living "alone" in the home pending the dissolution without applying other equitable principles. Thus, we reverse and remand for the court to apply the equitable principles discussed in this opinion to resolve Wife's reimbursement claim. We otherwise affirm.
¶3 The parties were married in 1990. In July 2019, Husband moved out of the marital home. In October 2019, Wife petitioned to dissolve the marriage but remained in the home, serving Husband with the petition that same month. She then made monthly payments with her separate funds for the community mortgage on the home, totaling about $74,000 in principal and interest.
¶4 In April 2021, Husband moved for a discovery order to permit him to enter the marital home to inventory the community's personal property. Wife objected, claiming that Husband had retrieved some of his personal property from the house shortly after moving out and returned to collect more of his belongings in January 2020. The court did not rule on the motion, and Husband did not reenter the home. See State v. Hill , 174 Ariz. 313, 323, 848 P.2d 1375, 1385 (1993) ().
¶5 At the trial, Wife requested reimbursement for paying the community mortgage with her separate funds while the dissolution proceedings were pending. Husband countered that any credit to Wife for paying the mortgage should be offset because she had exclusive possession of the home while paying the mortgage.2 Husband also requested attorney's fees, arguing Wife earned more than three times his salary and had taken unreasonable positions throughout the case.
¶6 The superior court entered a dissolution decree (1) denying Wife reimbursement for the mortgage payments she made with separate funds because she had exclusive use of the home, (2) ordering the parties to cooperate to make a complete list of all household community property before alternately selecting items to be awarded as separate property, and (3) denying Husband's request for attorney's fees.
¶7 Wife appealed, and Husband cross-appealed. We have jurisdiction under A.R.S. § 12-2101(A)(1), -120.21(A)(1), and Arizona Rule of Family Law Procedure 78(c).
¶8 Without an abuse of discretion, we will not disturb the superior court's discovery rulings, Johnson v. Provoyeur , 245 Ariz. 239, 241–42, ¶ 8, 426 P.3d 1218, 1220–21 (App. 2018), division of property, Hammett v. Hammett , 247 Ariz. 556, 559, ¶ 13, 453 P.3d 1145, 1148 (App. 2019), or denial of attorney's fees under A.R.S. § 25-324, Hefner v. Hefner , 248 Ariz. 54, 57, ¶ 6, 456 P.3d 20, 23 (App. 2019). We view the facts in the light most favorable to upholding the superior court's ruling. Ball v. Ball , 250 Ariz. 273, 275, ¶ 1, n.1, 478 P.3d 704, 706 (App. 2020).
¶9 Wife argues she is entitled to reimbursement from Husband for his share of the mortgage payments she made with her separate money after the service of the dissolution petition. See Bobrow v. Bobrow , 241 Ariz. 592, 596, ¶ 19, 391 P.3d 646, 650 (App. 2017). Husband argues that it was within the superior court's discretion to offset any reimbursement due to Wife by the value of the benefit Wife received by having exclusive possession of the marital home. We agree that a court has the discretion to offset a reimbursement claim, but such an allocation must be based on the fair market rental value of the home, not an indeterminate exclusive-use value.
¶10 When one spouse uses separate property to pay community debt during the marriage, we presume the payment is a gift to the community. Baum v. Baum , 120 Ariz. 140, 146, 584 P.2d 604, 610 (App. 1978). But we do not assume that post-service payments toward community debt with separate funds are a gift to the community. Bobrow , 241 Ariz. at 596, ¶¶ 15, 19, 391 P.3d at 650. Thus, when a party voluntarily makes post-service payments toward community debt with separate funds, the superior court must account for the payments in its equitable property distribution. Id.
¶11 A paying spouse is generally entitled to reimbursement for the expenditure of separate funds on community debt. The reimbursement claim exists even if the paying spouse continues to occupy the marital property post-service. Yet a spouse who left the marital property may be entitled to an offset against such a reimbursement claim, but only if the occupying spouse ousted the leaving spouse from the marital property. If there was an ouster, the leaving spouse is entitled to an offset toward the reimbursement claim up to one-half of the fair market rental value of the home. But if there was no ouster, the leaving spouse is not entitled to an offset.
¶12 In a dissolution decree, the superior court must "divide the community, joint tenancy and other property held in common equitably, though not necessarily in kind, without regard to marital misconduct." A.R.S. § 25-318(A). This equitable distribution means "all forms of jointly held marital property are treated alike." In re Marriage of Flower , 223 Ariz. 531, 535, ¶ 15, n.4, 225 P.3d 588, 592 (App. 2010). "Arizona has long recognized that the general rules of joint tenancy apply between husband and wife." Valladee v. Valladee , 149 Ariz. 304, 309, 718 P.2d 206, 211 (App. 1986) ; but see , Toth v. Toth , 190 Ariz. 218, 220, 946 P.2d 900, 902 (1997) (); id. at 224, 946 P.2d at 906 (Moeller, J., dissenting) (). And under the general rules of joint tenancy, a tenant has a right to reimbursement from a cotenant for expenditures or obligations made to benefit the property held as joint tenants. Valladee , 149 Ariz. at 309, 718 P.2d at 211. But before a joint tenant can claim a right to reimbursement, it must appear that a common obligation or liability existed among the joint tenants when the contributing tenant made the expenditure or incurred the debt. Id .
¶13 Under these equitable principles, a spouse claiming reimbursement must prove that he or she made payments toward maintaining or improving the community property with separate funds. Here, Wife made the mortgage payments on a community asset with separate funds after serving the dissolution petition. Husband does not dispute the character of the funds or that the mortgage debt was a community obligation. Thus, Wife met her burden for reimbursement.
¶14 Ouster is a defense to a reimbursement claim. See Morga v. Friedlander , 140 Ariz. 206, 209–10, 680 P.2d 1267, 1270–71 (App. 1984). Occupation of the whole property by one joint tenant standing alone is never presumed to be adverse to the other joint tenant. Id. at 208, 680 P.2d at 1269. A tenant can prove ouster through any facts establishing that an occupying joint tenant "has claimed as an individual more than his due" as a joint tenant. Id. at 208, 680 P.2d at 1269.
¶15 Similarly, each spouse generally retains the right to use community assets after the service of a dissolution petition. A.R.S. § 25-211(B)(1), (B)(3) (). Because parties have a right to use community property, one party's use of the property alone does not provide a basis for denying that party's right to reimbursement for paying a community debt with separate funds. See Nuss v. Nuss , 65 Wash.App. 334, 828 P.2d 627, 630 (1992) (). This rule aligns with A.R.S § 25-315(A)(1)(a), which permits parties to use community property to provide for the necessities...
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