Hammett v. Hammett

• Decision Date: 29 October 2019
• Docket Number: No. 1 CA-CV 18-0632 FC,1 CA-CV 18-0632 FC
• Citation: 247 Ariz. 556,453 P.3d 1145
• Parties: In re the Matter of: Michael E. HAMMETT Sr., Petitioner/Appellee, v. Ann Pearl Joy Cuizon HAMMETT, Respondent/Appellant.
• Court: Arizona Court of Appeals

247 Ariz. 556

453 P.3d 1145

In re the Matter of: Michael E. HAMMETT Sr., Petitioner/Appellee,

v.Ann Pearl Joy Cuizon HAMMETT, Respondent/Appellant.

No. 1 CA-CV 18-0632 FC

Court of Appeals of Arizona, Division 1.

FILED October 29, 2019

Lincoln & Wenk PLLC, Goodyear, By Michael Lincoln, Counsel for Petitioner/Appellee

DeRoon & Seyffer, Phoenix, By Charles R. Seyffer, Counsel for Respondent/Appellant

Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Chief Judge Peter B. Swann and Judge Diane M. Johnsen joined.

McMURDIE, Judge:

¶1 Ann Hammett ("Wife") appeals from the property distribution in the decree annulling her marriage to Michael Hammett ("Husband") and the superior court’s subsequent orders. We hold parties acquire community property and debt even during a marriage that results in an annulment; and, when terminating the marriage, the court must dispose of such assets and debt under Arizona Revised Statutes ("A.R.S.") section 25-318, to the extent applicable. Because the superior court and the parties assumed the couple had acquired no community property, we vacate the decree’s property disposition and remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL BACKGROUND

¶2 Husband met Wife while she lived in the Philippines. The couple married in Nevada in November 2009, after Wife obtained a fiancé visa. See 8 U.S.C. § 1101(a)(15)(K)(i) (2006). In November 2015, Husband, as the sole signatory, obtained a loan for $78,600, secured by a house that was his separate property (the "Loan"). That same month, Husband purchased a condominium for $58,000, titled in both spouse’s names as community property with the right of survivorship. Less than two weeks later, Husband petitioned for the dissolution of the parties’ six-year marriage.

¶3 In August 2016, Wife moved for a temporary order for spousal maintenance. She claimed that she was unable to work because of a car accident, Husband had been supporting the couple for the duration of their marriage, and he had ended all financial support earlier in the year. The court discussed Wife’s motion during a resolution management conference and ordered the parties to exchange financial affidavits. At the conference, Husband asserted—for the first time—that Wife was married to another man when the couple married.

¶4 After Wife submitted her financial affidavit, over Wife’s objection Husband moved to dismiss his petition for dissolution. He argued that the court must dismiss the dissolution action because of the "mutual fraud committed by both parties" and asserted that Wife was still married to her first husband. He alleged that before their marriage in 2009, the parties conspired to have a fake death certificate produced to allow Wife to enter the United States with a fiancé visa. Husband submitted emails between him and a third party from 2008 in which he expressed his frustration with the time and cost of an annulment in the Philippines, and solicited the help of the third party to either "find[ ] a judge and pay[ ] him off" or create a fake death certificate.

¶5 The court held an oral argument on Husband’s motion in February 2017—more than a year after Husband petitioned for dissolution. Because the parties presented evidence outside of the pleadings, the court treated the motion to dismiss as a summary judgment motion. See Ariz. R. Fam. Law P. 32(B) (2006) (repealed effective January 1, 2019, see now Ariz. R. Fam. Law P. 29 (2019)). Husband argued that because Wife’s marriage to her first husband had never been dissolved, their subsequent marriage was invalid. Husband asserted that even though Wife had unsuccessfully tried to locate her first husband for 19 years before she married Husband, she had failed to comply with the law in the Philippines to have her first husband presumed dead and the marriage dissolved. Accordingly, Husband argued Wife’s first husband "must be presumed to be alive."

¶6 The court dismissed the dissolution petition based on Wife’s admission that she failed to have her first husband presumed dead, and her previous marriage annulled. The court held Wife did not correctly dissolve her first marriage under Philippine law, which rendered her subsequent marriage to Husband invalid.¹

¶7 In March 2017, Husband petitioned for annulment. Before the resulting trial, the parties agreed that Husband’s house would remain his separate property and that each spouse would "keep their retirement accounts and bank accounts in their own names" and "the debts in their own names." The court found that the parties knowingly, intelligently, and voluntarily entered into a binding agreement that was fair and equitable under Arizona Rule of Family Law Procedure ("Rule") 69.

¶8 The parties then presented evidence on the remaining unresolved claims—mainly, their interest in the condominium, the Loan, and Wife’s allegation that she contributed over $30,000 in repairs and improvements to the condominium after service of the dissolution petition. After the trial, the court ruled that "all community property rights and obligations acquired by marriage are void ab initio with respect to both parties as to all property, income, and liabilities received or incurred from the date of the annulled marriage." The court then ordered that the parties owned the condominium as tenants in common and directed Wife to buy out Husband’s one-half interest in the condominium by refinancing the loan in her name before August 19, 2018, or place the condominium on the market on or before September 1, 2018. The court further ordered Wife to pay any mortgage payments, HOA fees, and taxes so long as she continued to live in the condominium. The court declined to grant either party any additional funds from the proceeds of the condominium for improvements to it.

¶9 Husband moved the court to clarify its ruling concerning the condominium sale proceeds and the Loan. The court did not explain its decision until after the 90-day deadline passed for Wife to refinance the Loan. The court clarified that the condominium "sale proceeds shall first be applied to the [Loan]" and "any remaining proceeds shall be equally divided." The court again ordered Wife to "refinance the mortgage in her name alone" if she wanted to retain possession of the condominium. The balance of the Loan was $75,350.94, which exceeded the amount necessary to buy out Husband’s interest in the condominium.

¶10 Wife—unclear of the amount she was to refinance and the deadline to do so because of the court’s amended ruling—had not refinanced the home by the time set by the court, so eventually, Husband moved to sell it. Ultimately, the court ordered the condominium to be sold and ruled that from Wife’s share of the proceeds, she must pay Husband $3980 in attorney’s fees and costs and reimburse him for the taxes, mortgage, and HOA fees he had paid since service of the petition. The condominium sold in February 2019, yielding net proceeds of $33,793.81, all of which went to Husband after Wife made the required reimbursements to him out of her share. The sale proceeds were distributed according to the court’s order.

¶11 Wife filed a timely notice of appeal from the decree of annulment, and we have jurisdiction under A.R.S. § 12-2101(A)(2), Rule 78(c) (2019), and Arizona Rule of Civil Appellate Procedure 9(c).

DISCUSSION

¶12 The parties disagree whether the superior court had the power to order them to pay off the Loan from the proceeds of the condominium sale before splitting the remaining proceeds. Wife reiterates the superior court’s conclusion that the annulment voided the community and argues that Husband gifted her the interest in the condominium. She contends, however, that in an annulment proceeding, the court is only permitted to distribute property and may not divide debt.

¶13 The superior court’s characterization of property is a question of law that we review de novo . In re Marriage of Pownall , 197 Ariz. 577, 581, ¶ 15, 5 P.3d 911, 915 (App. 2000). We review the superior court’s division of assets and liabilities for an abuse of discretion. In re Marriage of Flower , 223 Ariz. 531, 535, ¶ 14, 225 P.3d 588, 592 (App. 2010). "A trial court abuses its discretion when it misapplies the law or predicates its decision on incorrect legal principles." State v. Jackson , 208 Ariz. 56, 59, ¶ 12, 90 P.3d 793, 796 (App. 2004).

¶14 Property acquired by either spouse during a marriage is community property. We hold that an annulment does not change the status of the community property, and, in such a case, the court must allocate the community property and debt just as it would in a dissolution proceeding. Because the superior court here based its decision on incorrect legal principles, we vacate the decree dividing the couple’s assets and liabilities and its orders for Wife to reimburse Husband for his separate expenses, attorney’s fees, and community expenses. We remand for the court to make a distribution considering the entirety of the community.

A. A Marriage that Results in an Annulment Still Creates a Community, and the Superior Court Must Equitably Divide the Community Assets and Debts When Dissolving the Marriage.

1. An Annulled Marriage Nonetheless Creates a Community.

¶15 "Superior courts may dissolve a marriage, and may adjudge a marriage to be null and void when the cause alleged constitutes an impediment rendering the marriage void." A.R.S. § 25-301. "If grounds for annulment exist, the court to the extent that it has jurisdiction to do so, shall divide the property of the parties ...." A.R.S. § 25-302(B). The issue we have to resolve is whether an annulment alters the community status of the property or debt created while the parties were married. We hold that it does not.

¶16 Distributing property and debt after marriage is a "statutory action, and the [superior] court has only such jurisdiction as is granted by statute." Weaver v. Weaver , 131 Ariz. 586, 587, 643 P.2d 499, 500 (1982). The...