Garn v. Garn

• Decision Date: 25 June 1987
• Docket Number: CA-CIV,No. 1,1
• Citation: Garn v. Garn, 155 Ariz. 156, 745 P.2d 604 (Ariz. App. 1987)
• Parties: Patricia GARN, Petitioner-Appellee, v. Stacy GARN and Ada Garn, husband and wife, Added Parties-Appellants. 8987.
• Court: Arizona Court of Appeals

Page 604

745 P.2d 604

155 Ariz. 156

Patricia GARN, Petitioner-Appellee, v. Stacy GARN and Ada Garn, husband and wife, Added Parties-Appellants.

No. 1 CA-CIV 8987.

Court of Appeals of Arizona Division 1, Department C.

June 25, 1987.

Reconsideration Denied Sept. 4, 1987.

Review Denied Dec. 8, 1987.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, P.C. by Jolyon Grant, Scott E. Boehm and Christina L. Sundlof, Phoenix, for petitioner-appellee.

Gordon B. Giles and Sparks & Siler by Donald O. Loeb, Scottsdale, for added parties-appellants.

OPINION

MEYERSON, Presiding Judge.

This appeal arises from the settlement of a dissolution of marriage proceeding between petitioner-appellee Patricia Garn and her former husband, Stephen Garn. Appellants Stacy Garn and Ada Garn are Stephen's parents. They were added as parties pursuant to A.R.S. § 25-314(D). Appellants argue that the trial court improperly added them as parties and that portions of the dissolution decree that pertain to them should be set aside.

I. FACTS

Patricia and Stephen Garn were married in 1960. Shortly thereafter, with the financial help of Stephen's parents, they acquired property in Scottsdale, Arizona, for use as their family home. In 1961, Patricia and Stephen executed a quit claim deed to the property in favor of Stacy and Ada Garn. Title to the property continues to remain in the name of the parents as husband and wife. Patricia and Stephen resided on the property until their marital difficulties drove them apart. Stephen remained in possession of the family home and the family business after the separation.

This action was commenced in 1983 as a petition for legal separation; it was later converted into a dissolution proceeding by Patricia in 1984. One of the major issues raised in the litigation concerned the title to the family home. Patricia contended that the home was community property; Stephen contended that it belonged to his parents.

In the fall of 1985, Stephen's attorney made arrangements for Stacy and Ada Garn to be represented by attorney Thomas J. Novak. On October 15, 1985, Stacy Garn met with Novak for the first time and retained Novak to represent him. Novak testified in his deposition that he understood from the conversation that he was going to represent both Stacy and Ada Garn and their marital community in the proceedings. The record shows that Ada Garn was not present at this meeting. There was no written retainer agreement between Stacy Garn and Novak.

On October 8, 1985, Patricia filed a motion to add appellants as parties to the dissolution proceeding pursuant to A.R.S. § 25-314(D). She argued that it would be impossible for the court to divide and dispose of her community interest in the property without joining Stephen's parents. The motion was not served on the parents. Patricia withdrew her motion after the trial judge indicated that he would probably rule against it.

On October 22, 1985, Stephen filed his own motion to add his parents as parties. The motion was filed one day before the scheduled pretrial conference and two days before the case was scheduled to go to trial. Stacy and Ada were not properly served with copies of the motion.

On October 23, 1985, Patricia, her attorneys, Stephen, his attorney, Stacy Garn, and Novak participated in a lengthy settlement conference. An agreement was reached, and it was dictated into the record by counsel. The agreement provided, among other things, that the community residence would be awarded "to Stephen Garn, his father Stacy Garn, as they so choose." Stephen Garn was to pay Patricia $250,000 with a lump sum payment of between $150,000 and $175,000 raised from a loan secured by the residence. The balance of the settlement was to be paid in monthly installments over a specified period of time. Stacy and Ada were to personally guarantee the balance of the settlement payment. They were also required to cooperate in obtaining a mortgage on the residence. The trial court then granted the motion to join Stacy and Ada as parties "for the purpose of carrying out the terms of the settlement to which Stacy and Ada Garn have agreed through their counsel...." Shortly thereafter the trial court personally addressed Stacy Garn:

THE COURT: Mr. Stacy Garn, did you hear the agreement as it was dictated?

STACY GARN: Yes.

THE COURT: And do you understand the portions of it that provide--that apply to you and your wife, Ada Garn?

STACY GARN: Yes.

THE COURT: And do you agree to that?

STACY GARN: Yes.

The court ultimately found that the marriage of Patricia and Stephen Garn was irretrievably broken and ordered Patricia's attorney to prepare a Decree of Dissolution of Marriage.

The record does not indicate that Ada Garn was consulted concerning her joinder as a party to the action. The first direct contact between Ada and Novak was not until December 31, 1985.

Stacy and Ada subsequently filed a motion to vacate or amend the decree. The court denied this and other post-trial motions; this appeal followed. Stephen Garn has not appealed in this action.

II. JOINDER OF ADA GARN

Appellants first contend that Ada Garn was improperly joined as a party to these proceedings. Whether an attorney retained by the husband may, without the wife's knowledge and consent, stipulate to join her as a party to a lawsuit is an issue of first impression.

The California Court of Appeals has considered, however, whether an attorney may appear and defend an action without the consent of the client. Lofberg v. Aetna Casualty & Sur. Co., 264 Cal.App.2d 306, 70 Cal.Rptr. 269 (1968). In Lofberg, the plaintiff was injured when the unknown person who was driving him home from a bar drove the plaintiff's car into a telephone pole. Plaintiff filed an action against the unknown driver but was unable to serve process. Plaintiff then sought declaratory relief against his insurance company after it refused to provide coverage under the policy's uninsured motorist provisions. He requested the court to order the insurance company to appear and defend on behalf of the unknown and unserved driver. The court rejected the plaintiff's arguments and held: "An attorney may not appear in an action without authority from the party on whose behalf he appears." Id. at 307, 70 Cal.Rptr. at 270. Cf. Spudnuts, Inc. v. Lane, 139 Ariz. 35, 676 P.2d 669 (App.1984) (service of process on husband insufficient to permit jurisdiction on wife who was not served).

Patricia argues that the legislature has provided that either spouse has the power to contract debts and otherwise act for the benefit of the community. A.R.S. §§ 25-214(B), -215(D). She argues that because both spouses have that power, either spouse may bind the community to an agency relationship with an attorney. Because either spouse may bind the community to the attorney-client relationship, Patricia argues that either spouse may therefore authorize the attorney to enter an appearance in court on behalf of the other spouse. We disagree with this analysis. Although one spouse may consult with or retain an attorney to protect community property without the approval of the other spouse, we perceive a fundamental difference between binding the community to a contract with an attorney to represent the community and submitting the other spouse and his or her interest in community property to the jurisdiction of a court. See, e.g., Geronimo Hotel & Lodge v. Putzi, 151 Ariz. 477, 728 P.2d 1227 (1986) (spouses must be sued jointly in action on community debt).

A married person's interest in community property is a substantial property interest. For many people, most, if not all, of their assets are community property. It is well settled in Arizona that the respective interests of the husband and the wife in the community property are equal. Hatch v. Hatch, 113 Ariz. 130, 547 P.2d 1044 (1976). Each spouse owns his or her own separate, undivided, one-half interest in the community property which is immediate, present, and vested. Id. at 132, 547 P.2d at 1046.

Elementary principles of due process require that before any person may have a valid judgment entered against him, that person must have reasonable notice and an opportunity to appear and defend. Cravens, Dargan & Co. v. Superior Court, 153 Ariz. 474, 737 P.2d 1373 (1987). The same considerations exist in the context of one's community property. Because both spouses have their own, separate interest in the community property both spouses have their own, separate right to reasonable notice and an opportunity to be heard before a valid judgment against the community may be entered. Allowing a husband to authorize his attorney to join his wife as a party to a lawsuit without the wife's knowledge or consent circumvents the wife's right to an opportunity to appear and defend her own interest in the community property and in her separate property. At stake here is something more than mere litigation tactics or strategy--fundamental property rights. We hold, therefore, that an attorney for one spouse may not stipulate to join the other spouse as a party to a lawsuit without that spouse's consent.

There is no evidence on the record that Ada Garn was consulted by Novak or by her husband before the hearing of October 23, 1985, when the settlement was negotiated and counsel stipulated to join her as a party to the divorce action. The first communication between Ada Garn and Novak was on December 31, 1985, more than two months after she was joined as a party. There was no written retainer agreement between Novak and Stacy and Ada Garn. Ada Garn was not served with process. She was not consulted about being made a party to the litigation and had no notice or opportunity to appear and defend before she was joined as a party and the stipulation was entered on the record. Ada Garn and her marital community were not properly joined to this litigation.

III. THE STIPULATED SETTLEMENT

Ada Garn next argues that even if she...