Meek v. Meek

• Docket Number: 1 CA-CV 23-0010 FC
• Decision Date: 14 November 2023
• Citation: 539 P.3d 920
• Parties: In re the Marriage of: Justin Gregory MEEK, Petitioner/Appellant, v. Jenna Lynn MEEK, Respondent/Appellee.
• Court: Arizona Court of Appeals

539 P.3d 920

In re the Marriage of: Justin Gregory MEEK, Petitioner/Appellant,

v.Jenna Lynn MEEK, Respondent/Appellee.

No. 1 CA-CV 23-0010 FC

Court of Appeals of Arizona, Division 1.

Filed November 14, 2023

Dickinson Wright PLLC, Phoenix, By Vail C. Cloar (argued), Dana M. Levy, Alexandra Crandall, & James T. Lawson, Counsel for Petitioner/Appellant

The Cavanagh Law Firm, P.A., Phoenix, By Philip C. Gerard (argued) & Nicholas J. Brown, Counsel for Respondent/Appellee

Judge Paul J. McMurdie delivered the Court's opinion, in which Presiding Judge D. Steven Williams and Judge Samuel A. Thumma joined.

McMURDIE, Judge:

¶1 Justin Meek ("Husband") appeals from the decree dissolving his marriage to Jenna Meek ("Wife"). He argues the marital separation agreement terms became unfair because of economic changes in the months between its execution and the superior court's approval. He also argues the court erred by excluding the evidence at the evidentiary hearing that would show that the agreement became inequitable after its execution.

¶2 We hold that a court need not divide the community assets equitably when the parties reach their own agreement. See A.R.S. § 25-317(A). We also hold that the time to review for unfairness under A.R.S. § 25-317(B) is at the time of the agreement's formation. Thus, we affirm because Husband makes no argument that the contract was unfair when the spouses mutually assented to it. See Alulddin v. Alfartousi , 255 Ariz. 436, 442, ¶ 20, 532 P.3d 1172, 1178 (App. 2023) (Defenses to contract formation such as coercion and unconscionability are subject to waiver unless raised in the superior court.).

FACTS AND PROCEDURAL BACKGROUND

¶3 Husband and Wife were married in 2016. Husband works in the mortgage industry, and in 2017, he became a member of a mortgage company, JFQ Lending, Inc. ("Company"). The marital community contributed around $180,000 to purchase a 30 percent interest in the Company.

¶4 In 2019, Husband petitioned to dissolve his marriage. During the divorce proceedings, both spouses retained experts to determine the Company's value. After receiving the valuation reports and consulting legal counsel, Husband and Wife attended a private mediation to discuss the division of the community assets. In September 2021, they signed a separation agreement under Arizona Rule of Family Law Procedure ("Rule") 69.

¶5 The relevant part of the Rule 69 agreement awarded Husband the community interest in the Company and Wife an equalization payment of $5 million, secured by a promissory note. The promissory note dictated the terms of the equalization payment and required Husband to pledge 7,500 shares of the Company as collateral to secure the note.

¶6 Once the parties reached their Rule 69 agreement, the superior court granted a joint request to vacate the scheduled trial. The parties stipulated to continue the matter on the inactive calendar "to finalize their complex settlement documents." The parties also deferred submitting the agreement to the court for approval. See Ariz. R. Fam. Law P. 69(b) ("An agreement under this rule is not binding on the court until it is submitted to and approved by the court as provided by law."); see also A.R.S. § 25-317(B) ("[T]he terms of the separation agreement, except those providing for the support, legal decision-making and parenting time of children, are binding on the court unless it finds ... that the separation agreement is unfair.").

¶7 By December 2021, the Company learned of the stock pledge component of the Rule 69 agreement and notified Husband he was prohibited from making such a pledge without the Company's supermajority consent. Husband then requested a status conference to determine whether the Company could participate in setting the terms of the stock pledge. The court held the conference in February 2022 and ruled in April 2022.

The Court was never presented with the parties[’] Rule 69 Agreement to review and approve pursuant to Rule 69(b). As such, to date, it has not been approved and adopted by this Court and, therefore, is not binding on this Court. In fact, this Court was unaware of the contents of the parties’ Rule 69 Agreement until it was attached to [Wife]’s Memo. However, neither party is asserting that the Rule 69 Agreement is not a valid and binding agreement between them.

As the agreement outlined, the court referred the parties to arbitration to resolve disputed language in the pledge and continued the matter on the inactive calendar until August 2022.

¶8 In May 2022, Husband requested an evidentiary hearing in a "Motion to Determine Fairness of Rule 69 Agreement Pursuant to A.R.S. § 25-317(B)." He claimed that "in the eight (8) months since the parties’ entered the Agreement (and one (1) year since the last valuation report for [the Company] was prepared) material subsequent events have occurred that have resulted in a significant devaluation of the community's interest in [the Company]." Citing "rising interest rates and general economic changes," Husband alleged that the Company had lost substantial value, so the Rule 69 agreement was now "unfair and inequitable" and must "be deemed unenforceable." Husband also identified that the Rule 69 agreement "only contains specific values for four (4) assets" and therefore the agreement does not "contain enough information to enable the Court to make [a] fairness determination." Husband concurrently requested a stay of the arbitration because "[i]t would be improper and a waste of resources to conduct an arbitration hearing until the enforceability of the parties’ agreement is resolved."

¶9 Wife responded by arguing that the court did not have the authority to stay the arbitration and did not have to hold an evidentiary hearing to determine the agreement's fairness because the parties already agreed it was fair. Wife also moved to enforce the Rule 69 agreement.

¶10 Based on the dispute, the court stayed the arbitration referral and scheduled an evidentiary hearing about the fairness of the agreement and Wife's motion to enforce it. See A.R.S. § 25-317(B). Husband asked the court "to clarify ... with regard to the date the Court will evaluate the parties’ Rule 69 Agreement." He elaborated:

Husband argues that the Court ... must consider all evidence that exists at the time of the Court's review, including events subsequent to the entry of the Agreement. Wife argues that the Court must evaluate the fairness of the Agreement as of the date it was entered in September [2021] and that it may not consider any subsequent events.

[footnote omitted.]. Husband also requested an extended disclosure period, to continue the hearing for at least 60 days, and to extend the duration of the hearing. Wife opposed the requests and argued that, under Buckholtz v. Buckholtz , the superior court could only consider the evidence available around the execution date of the Rule 69 agreement. 246 Ariz. 126, 133, ¶ 24, n.5, 435 P.3d 1032, 1039 (App. 2019) ("We note that on remand, when determining whether the Agreement is unfair, the superior court must look at the time the Agreement was entered.").

¶11 Citing Buckholtz and Ertl v. Ertl , 252 Ariz. 308, 315, ¶ 22, 502 P.3d 466, 473 (App. 2021), the superior court ruled that the proper standard was to "look to whether the Rule 69 Agreement was fair as of the date the parties entered into the agreement." The court denied Husband's requests for a continuance, extended disclosure, and more hearing time.

¶12 After the August 2022 evidentiary hearing, the court found that the parties agreed on all issues when they entered into the Rule 69 agreement:

In light of the Court's [ruling] ... rejecting Husband's position that the Court should evaluate the fairness of the parties’ Rule 69 Agreement as of the date of attempted enforcement, Husband concedes that the dispute regarding fairness of the parties’ Rule 69 Agreement[ ] is no longer a justiciable issue before this Court.

The court also noted that "by conceding the foregoing points, Husband is not in any way waiving, but expressly reserves, his right to contest the Court's ruling in its [order] ... including his right to an appeal of the Court's ruling." The court found that the parties had entered into a fair and valid Rule 69 agreement, approved it, and ordered Wife's counsel to draft a formal decree incorporating it.

¶13 The court entered the decree, and Husband appealed. We have jurisdiction under A.R.S. §§ 12-120.21(A)(1), 12-2101(A)(1), and Rule 78.

DISCUSSION

¶14 Husband appeals from a consent decree. With limited exceptions, such as mistake or fraud, a party cannot appeal from a judgment to which it consented. ARCAP 1(d) ("Any party aggrieved by a judgment may appeal.") (Emphasis added.); Duwyenie v. Moran , 220 Ariz. 501, 506, ¶¶ 16-18, 207 P.3d 754, 759 (App. 2009) (A party consenting to a judgment waives arguments on appeal challenging it or incorporated interlocutory orders.); Cofield v. Sanders , 9 Ariz. App. 240, 242, 451 P.2d 320 (1969) (A party that consents to a judgment is not aggrieved and thus may not appeal from it.).

¶15 It is clear from Husband's motions and the August 2022 minute entry that Husband disagreed with the superior court's ruling about when to determine whether the agreement was unfair, and the parties have thoroughly briefed the issues on appeal. As a result, we decline to apply the waiver doctrine and instead address the merits of the arguments. See Reid v. Reid , 222 Ariz. 204, 208, ¶ 16, 213 P.3d 353, 357 (App. 2009) (Waiver is discretionary, not "an unalterable rule."); see also City of Tucson v. Clear Channel Outdoor, Inc. , 209 Ariz. 544, 552, ¶ 33, n.9, 105 P.3d 1163, 1171, n.9 (2005) (Waiver is a "rule of prudence, not of jurisdiction.").

¶16 We review the superior court's approval of a separation agreement for an abuse of discretion. See Hutki v. Hutki , 244 Ariz. 39, 42, ¶¶ 13-14, 417 P.3d 804, 807 (App. 2018). But we review the superior court's interpretation of statutes and rules de novo . Id. ...