Larchick v. Pollock

Decision Date09 December 2021
Docket Number1 CA-CV 19-0649 FC
Citation59 Arizona Cases Digest 4,503 P.3d 128
Parties In re the Matter of: Wendy Lynn LARCHICK, Petitioner/Appellee, v. Robert Johnston POLLOCK, Respondent/Appellant.
CourtArizona Court of Appeals

Berkshire Law Office PLLC, Tempe, By Keith Berkshire, Alexandra Sandlin, Counsel for Respondent/Appellant

Jardine Baker Hickman & Houston PLLC, Phoenix, By Amy H. Hoffman, Counsel for Petitioner/Appellee

Presiding Judge Jennifer B. Campbell delivered the opinion of the Court, in which Judge Lawrence F. Winthrop1 and Judge Samuel A. Thumma joined.

CAMPBELL, Judge:

¶1 Robert Johnston Pollock (Husband) appeals from a decree dissolving his marriage to Wendy Larchick (Wife). He challenges the family court's rulings on (1) the admissibility of expert testimony, (2) the division of property, and (3) a partial award of attorneys’ fees to Wife. For the following reasons, we vacate the decree in part and remand for further proceedings consistent with this opinion.

BACKGROUND2

¶2 Husband and Wife married in October 2016. Before the marriage, Wife started a real estate business (the Business). During the marriage, Wife created, and was the managing member of, a limited liability company (the LLC). In April 2017, the LLC purchased a building (the Office) in which to run operations for the Business.

¶3 Approximately ten months after the parties married, Wife served Husband with a petition for legal separation that she later converted into a petition for dissolution. At the resulting trial, over Wife's objection, Husband claimed a community interest in both the increased value of the Business during the marriage and the Office.

¶4 Following trial, the family court entered orders dividing certain property and dissolving the parties’ marriage. The court did not, however, address the allocation of the Business’ alleged increased value, nor did it determine whether the community had an interest in the Office. Instead, the court ordered a second trial to determine whether the Business increased in value during the marriage, and, if so, the cause of that increase.

¶5 Before the second trial, Husband timely disclosed a "calculation of value" report created by his expert, Don Bays, opining that the Business increased in value by $546,041 during the marriage. In his pretrial statement, Husband explained the methods Bays used to determine the increase. Wife, in turn, timely disclosed her expert's "full appraisal" report, stating that the Business increased in value by $93,000 during the marriage. Claiming Husband's "calculation of value" report was not as reliable as other, more complete types of valuation reports, Wife objected to the admission of Bays’ report and corresponding testimony under Arizona Rule of Evidence (Rule) 702.

¶6 Both experts were present at the second trial. Wife was allowed to voir dire Bays before the family court ruled on her objection to him testifying. In response to voir dire questioning, Bays stated that he had advised Husband in his initial engagement letter that he would be unable to testify to a calculation of value report. Bays also confirmed that he repeated the same disclaimer in the report itself: "[I]n the event that testimony is required, either at a deposition or trial, we require the calculation schedules be upgraded to a formal summary valuation report with a conclusion of value." (Emphasis added).

¶7 After the voir dire was completed, the family court sustained Wife's objection and excluded Bays’ opinion testimony. Noting that Bays admitted he did not expect his report would be admissible at trial, the court ruled his testimony was inadmissible because he failed to "follow all possible methods that an expert should be using, all reliable methodology."

¶8 Husband then attempted to call Wife's expert to testify as an adverse witness. Although both parties had listed Wife's expert as a trial witness and the expert was present in the courtroom, the family court sustained Wife's objection. The court ruled that because Husband had not subpoenaed Wife's expert, she was under no obligation to testify. After excluding Husband's expert and precluding Husband from calling Wife's expert, the court granted Wife's motion for a directed verdict because there was "no evidence presented ... that there was an increase in the business."

¶9 The family court then considered whether the community had any interest in the Office. Wife offered in evidence the purchase contract for the building, which named Wife and the Business as the buyer. She also offered a loan agreement to finance the purchase of the Office. That agreement named the LLC as the borrower, was signed by Wife in her capacity as the LLC's managing member, and identified Wife and the Business as guarantors. Wife asserted that she had paid the remainder of the purchase price with her "sole and separate funds." For his part, Husband pointed out that the marital community had also guaranteed the purchase loan. The court found that because there was never any default on the loan, the "marital guarantee," which was Husband's "only tie" to the Property, no longer existed. Accordingly, the court ruled that Husband had "no community claim" to the Property.

¶10 After trial, the family court awarded Wife a portion of her attorneys’ fees and costs, finding that Husband's "unreasonableness" in failing to prepare and present admissible testimony at trial outweighed "the substantial disparity that [W]ife earns more." Husband unsuccessfully moved to alter or amend the court's resulting final judgment and then timely appealed.

DISCUSSION

¶11 As an initial matter, we address the family court's decision to dissolve the parties’ marriage while retaining jurisdiction to subsequently decide property issues.

¶12 Under Arizona's statutory scheme, property-allocation issues must be resolved concurrent with dissolution. Section 25-312(4) provides that "[t]he court shall enter a decree of dissolution of marriage if ," among other things, "[t]o the extent it has jurisdiction to do so, the court has considered, approved and made provision for ... the disposition of property." (Emphasis added). Similarly, A.R.S. § 25-318(A) provides that, when dissolving a marriage, "the court shall assign each spouse's sole and separate property to such spouse ... [and] it shall also divide the community, joint tenancy and other property held in common equitably." (Emphasis added). See also Dole v. Blair , 248 Ariz. 629, 633, ¶ 12, 463 P.3d 849, 853 (App. 2020) (" A.R.S. § 25-318 is clear in its mandate that community property must be divided on dissolution of the marriage."); A.R.S. § 25-327(A) (contemplating inclusion of property-division provisions in decree).

¶13 Here, the family court erred by bifurcating its rulings. But the error did not void the dissolution, which neither party appealed. See Porter v. Estate of Pigg , 175 Ariz. 194, 196-97, 854 P.2d 1180. 1183-83 (App. 1993) (holding that A.R.S. § 25-312 ’s command regarding property disposition did not void a pre-disposition dissolution, which was merely correctable by timely appeal), approved by 175 Ariz. 303, 856 P.2d 796 (1993) ("The use of separate judgments to resolve issues of marriage dissolution and property distribution is error," but "such judgments are not void."); see also A.R.S. § 25-318(D) (providing for automatic imposition of tenancy in common for commonly held property "for which no provision is made in the decree"). Nor does the error deprive us of jurisdiction to consider the appeal from the post-dissolution property rulings. See Cooper v. Cooper , 167 Ariz. 482, 487, 808 P.2d 1234, 1239 (App. 1990) (holding that wife had right to bring action to divide property that parties knew about at time of decree but that was omitted from decree); see also Rinegar v. Rinegar , 231 Ariz. 85, 88, ¶ 12, 290 P.3d 1208, 1211 (App. 2012) (recognizing that party may seek allocation of property omitted from decree either by separate civil action or by motion to reopen dissolution). Having jurisdiction in this matter, we now turn to the issues raised on appeal.

I. The Family Court Erred by Precluding Bays’ Testimony.

¶14 Husband argues the family court erred by deciding that Bays could not testify that the Business had increased in value because his calculation did not employ "all possible methods" of valuation. Wife argues the court did not err because Bays himself had stated that his summary valuation would not be admissible.

¶15 We review a family court's ruling on the admissibility of expert testimony under Rule 702 for an abuse of discretion. See Vanoss v. BHP Copper Inc. , 244 Ariz. 90, 96, ¶ 13, 418 P.3d 457, 463 (App. 2018). Under Rule 702, a witness "who is qualified as an expert" by knowledge or experience may render opinion testimony if the witness’ "specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue." Although Rule 702 "recognizes that trial courts should serve as gatekeepers" to ensure expert evidence is reliable (and helpful) to the finder of fact, this "gatekeeping function is not intended to replace the adversary system." State v. Bernstein , 237 Ariz. 226, 229, ¶ 14, 349 P.3d 200, 203 (2015) (citing Ariz. R. Evid. 702 cmt.). Rather, "cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence ." Id . (citation omitted) (emphasis added).

¶16 Nothing in Rule 702 requires an expert to account for "all possible methods" of assessment, which would be an impossible standard in practice. To the extent the family court excluded Bays’ testimony because he "did not follow all possible methods," it erred. In excluding the testimony, the court improperly deferred to Bays’ understanding of what evidence would be admissible on the matter. Bays’ statements reflected his personal view that in creating the "calculation of value" rep...

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