Horst v. Horst

• Decision Date: 15 December 2020
• Docket Number: No. 1 CA-CV 20-0051 FC,1 CA-CV 20-0051 FC
• Parties: In re the Matter of: LORDA MARIE JUSTINN HORST, Petitioner/Appellee, v. RUSSELL CHARLES HORST, Respondent/Appellant.
• Court: Arizona Court of Appeals

In re the Matter of: LORDA MARIE JUSTINN HORST, Petitioner/Appellee, v. RUSSELL CHARLES HORST, Respondent/Appellant.

No. 1 CA-CV 20-0051 FC

ARIZONA COURT OF APPEALS DIVISION ONE

December 15, 2020

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Maricopa County

No. FN2018-093743

The Honorable Andrew J. Russell, Judge Pro Tempore

AFFIRMED

COUNSEL

David Miles McGuire Gardner, PLLC, Tempe

By Spencer Schiefer

Counsel for Petitioner/Appellee

Overstreet Law Office, Phoenix

By Eric L. Overstreet

Counsel for Respondent/Appellant

MEMORANDUM DECISION

Judge Paul J. McMurdie delivered the Court's decision, in which Presiding Judge James B. Morse Jr. and Judge Maria Elena Cruz joined.

McMURDIE, Judge:

¶1 Russell Horst ("Husband") appeals from the dissolution decree's property provisions concerning his marriage to Lorda Horst ("Wife"). For the following reasons, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 Husband and Wife married in August 1993. Shortly before their marriage, they purchased a home in Chandler (the "Chandler Home"), taking title as joint tenants with the right of survivorship. In 2011, Husband and Wife informally separated and began living apart, with Husband remaining in the Chandler Home. In August 2018, Wife petitioned for dissolution. Shortly after the dissolution proceedings commenced, the parties' focus narrowed to whether the Chandler Home should be characterized as joint or separate property. Wife asserted the Chandler Home's status as joint property never changed, she retained a one-half interest in the property as a result, and the property was subject to an equitable division.

¶3 On the other hand, Husband claimed that when the parties separated in 2011, they agreed otherwise (the "2011 Agreement"). In the 2011 Agreement, Husband claimed Wife agreed to transfer or relinquish her interest in the Chandler Home. In exchange, Husband would pay her share of the outstanding mortgage on the home and give her half the remaining equity—approximately $24,000. Husband asserted this agreement was enforceable, and the Chandler Home was, therefore, his separate property.

¶4 Before the trial, both parties submitted proposed factual findings and legal conclusions. The court held a one-day trial on the dissolution petition in October 2019. During the trial, the court admitted several exhibits into evidence, including: (1) a report estimating the Chandler Home's current value at $288,000; and (2) two email exchangesbetween Husband's father and Wife in late November and early December 2011.

¶5 In the November 2011 email exchange, Husband's father stated the following:

I do want to talk with you about your equity in the house. . . . As perhaps you are aware, the appraisal came in [at] only $117,000. Somehow I want you to get your share as soon as possible. In the meantime, I plan on paying off the mortgage via borrowing from my bank; that will get your name off the mortgage.

In the December 2011 email exchange, Husband's father stated that he had "gone thru[sic] the math on all the costs associated with paying . . . the mortgage[.]" After calculating the equity of the home and subtracting $5,150 in other debts Wife presumably owed, Husband's father stated:

Therefore, your share of equity(less above costs) equal[s] $23,811.16. However, I think we should round it off to $24,000. . . . We don't intend to charge you and [Husband] beyond the first year . . . . Please let me know if you agree to all of the above.

Wife responded: "If you think it's fair, go ahead."

¶6 The court heard testimony from both Husband and Wife concerning the 2011 Agreement. Wife testified (1) Husband's father had agreed to pay the mortgage on the Chandler Home as a loan to both parties; (2) she refused an offer of payment made by Husband in 2011 because it was conditioned on an agreement to co-sign a loan for her funds; and (3) she refused Husband's request to sign a quitclaim deed concerning the Chandler Home in 2014. For his part, Husband testified his father acted as his representative in the November and December 2011 email exchanges. He also testified his father paid the mortgage in full in 2011 as an advance on Husband's inheritance. However, Husband claimed he could not secure financing to pay Wife for the value of her share of the home's equity. Husband testified that he requested Wife co-sign a loan to furnish payment, but she refused. Neither party asserted that they engaged in actions concerning the 2011 Agreement from 2014 until Wife filed the dissolution petition. After the hearing, the court took the matter under advisement.

¶7 In November 2019, the court issued the dissolution decree. In the decree, the court made the following findings and conclusions concerning the 2011 Agreement and the Chandler Home:

[A]n agreement was reached in 2011 whereby Husband's father would pay off the parties' mortgage and Wife would receive approximately $24,000. . . . Husband testified that his father's agreement to pay off the mortgage constituted an advance against Husband's inheritance. That money was indeed used to pay off the mortgage, but the parties never completed their agreement - Wife never received the $24,000 . . . .

Husband was unable to comply with the agreement's terms. The Court does not see a legal basis for terminating the joint ownership of the [Chandler Home] in 2011, because the terms of the parties' agreement were not satisfied. As such the 2011 agreement was not binding on these parties, Wife remains a co-owner of the [Chandler Home] and she is entitled to half of the equity in that property as of the date of service of the Petition for Dissolution.

The court found Wife's proposed division of assets in her pre-trial statement equitable and ordered: (1) Wife to keep her two retirement accounts, valued at approximately $85,000, (2) Husband to keep the Chandler Home as his separate property, and (3) Husband to pay Wife an equalization payment of $75,000 for her interest in the Chandler Home.

¶8 Husband subsequently filed a motion requesting a new trial under Arizona Rule of Family Law Procedure 83. The court summarily denied the motion, and Husband appealed from both the dissolution decree and the denial of the Rule 83 motion. We have jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

A. The Court Correctly and Equitably Divided the Parties' Property.

1. The Court Did Not Err by Refusing to Find the 2011 Agreement Extinguished Wife's Interest in the Chandler Home.

¶9 Husband first argues the court erred by concluding the 2011 Agreement was not binding on the parties. Husband asserts the court should have found the 2011 Agreement enforceable, determined that theChandler Home was Husband's separate property by operation of the agreement, and ordered that Wife was entitled to half the home's equity as of 2011, or approximately $24,000, plus interest. We review the validity and enforceability of a contract and the property characterization in a dissolution proceeding de novo. Buckholtz v. Buckholtz, 246 Ariz. 126, 129, ¶ 10 (App. 2019) (validity and enforceability of a contract); In re Marriage of Pownall, 197 Ariz. 577, 581, ¶ 15 (App. 2000) (characterization of property).

¶10 As an initial matter, we note our review of this issue is complicated because both the superior court and the parties on appeal assume the 2011 Agreement constituted a valid written contract concerning real property. There is certainly reason to doubt this assumption. For example, the writings Husband submitted as evidence of the written terms of the 2011 Agreement are between Husband's father and Wife and do not mention Husband either as a party or beneficiary to the agreement. See Savoca Masonry Co. v. Homes & Son Constr. Co., 112 Ariz. 392, 394 (1975) (for an enforceable contract to exist, there must be "an offer, acceptance, consideration, a sufficiently specific statement of the parties' obligations, and mutual assent"). But given the posture of this appeal, we will assume, without deciding, the 2011 Agreement was a valid written contract concerning real property. Under the agreement's terms, Husband's father promised to pay Wife's share of the mortgage and reimburse Wife for her share of the Chandler Home's equity, or approximately $24,000, in exchange for Wife's promise to relinquish her interest in the property.

¶11 Here, the undisputed facts and the court's factual findings established that from at least 2011 to 2014, Husband failed to perform or adequately offer to fulfill the promise to pay Wife for her share of the Chandler Home's equity. On this basis, the court concluded that the 2011 Agreement was not binding upon the parties.

¶12 If the 2011 Agreement constituted a contract, then the question presented is whether Husband's failure to adequately render or offer to fulfill the promise to pay Wife within a reasonable period constituted a material breach excusing Wife from her obligations under the 2011 Agreement. If it did, the court was correct to conclude the 2011 Agreement was unenforceable against Wife and the Chandler Home retained its status as joint property subject to equitable division.

¶13 "Ordinarily the victim of a minor or partial breach must continue his own performance, while collecting damages for whatever loss the minor breach has caused him; the victim of a material or total breach is excused from further performance." Zancanaro v. Cross, 85 Ariz. 394, 400(1959) (citation omitted). The Restatement (Second) of Contracts ("Restatement") § 241 (1981), however, also recognizes that even a material breach may not justify the discharge of the non-breaching party from a contract if the breaching party cures within an adequate time. See Restatement § 242 cmt. a ("Ordinarily there is some period of time between suspension and discharge, and during this period a party may cure his failure."). To determine whether Wife was...