Crutcher v. Crutcher

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE IN RE THE MARRIAGE OF: ) ) KIMBERLY KAY CRUTCHER, ) ) Petitioner/Appellee, ) ) v. ) ) PAUL HENRY CRUTCHER, ) ) Respondent/Appellant. ) ) DIVISION ONE FILED: 07-27-2010 PHILIP G. URRY,CLERK BY: DN 1 CA-CV 09-0399 DEPARTMENT C MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. FN2005-051694 The Honorable Alfred M. Fenzel, Judge REVERSED AND REMANDED The Murray Law Offices, P.C. By Stanley D. Murray Attorneys for Appellee Phoenix Law Office of Scott E. Boehm, P.C. By Scott E. Boehm Phoenix DePasquale & Schmidt, P.C. By Paul G. Schmidt Co-Counsel for Defendant-Appellant Phoenix K E S S L E R, Judge ¶1 Paul family Henry court s Crutcher denial of ( Husband ) his petition appeals to modify from his the $2500 monthly spousal maintenance payment pursuant to Arizona Revised Statutes ( A.R.S. ) section 25-327(A)(2007). For the following reasons, we reverse and remand this case for further proceedings consistent with this decision. FACTS AND PROCEDURAL BACKGROUND I. The Divorce ¶2 Kimberly Kay Crutcher ( Wife ) and Husband married in 1976. Wife, worked for who the had taken Paradise three Valley years of Schools college starting classes, in 1992. Husband, a high school graduate, began working as a mechanic in the parties community business, ( Crutcher Automotive ), in 1982. assets included Crutcher Crutcher Automotive L.L.C. The parties other community Properties, L.L.C. and a house in Automotive in Scottsdale.1 ¶3 2005. Husband earned $51,000 from Crutcher Wife filed a petition for dissolution on December 1, 2005 and requested spousal maintenance. At this point Husband had already started shopping to sell Crutcher Automotive. ¶4 The parties consent decree (the Decree ), filed on November 14, 2006, provides that Husband will pay Wife $2500 in monthly 1 maintenance starting on July 1, 2006 and continuing The parties had no minor children at the time of dissolution. 2 until either spouse dies or Wife remarries. It does not state that spousal maintenance is non-modifiable. ¶5 The agreement. Decree also incorporates a property settlement Exhibit A to the agreement estimates that Wife will receive $562,380 for her 60 percent share of the marital assets, and Husband will receive $374,920 for the remaining share, once the marital estate assets are sold. II. Post-Divorce Events ¶6 Husband had to borrow funds to meet Crutcher Automotive s business operating expenses in 2006 and 2007. By 2007, Crutcher Automotive had lost $53,995. ¶7 The parties sold (1) the vacant lot next to Crutcher Automotive in 2007, (2) the Crutcher Automotive business in 2007, and (3) the Crutcher Automotive building in July 2008. At the time of the divorce Wife received the marital home, valued at $450,000, and $19,000 worth of other property. She assumed a $137,500 mortgage on the home and $44,000 in other debt, leaving her a net $426,727.15 value in of $287,500. community asset Wife received proceeds after approximately the divorce, including proceeds from the vacant lot sale ($167,146.24), the business sale ($85,235.75), and the building sale ($174,345.16). Thus, Wife ($426,727.15 received and a total $287,500), or of $715,227.15 $152,847.15 more $562,380 the parties had projected she would receive. 3 in assets than the ¶8 Husband received $118,800 in assets and property at the time of the divorce and assumed responsibility for $44,000 in marital debt, for a net value of $74,800. Husband received $167,146.24 as his share of the sale of the vacant lot, with $23,778.96 paid directly to a parts supply bill and $143,367.28 being paid directly to Husband. from the business sale. share of the building Husband received $85,235.75 Husband received $134,302.78 as his proceeds, with $11,757.92 being paid directly to pay off a loan against a life insurance policy. Husband received a total of $425,928.03 after the divorce and sale of the business properties, $50,028.03 greater than the $374,920 that the parties anticipated he would receive at the time of the divorce. A. Husband ¶9 Husband remarried and purchased a California, using a down payment of $250,000. assets worth about $74,800 at dissolution $625,000 home in Husband received and applied amount to the down payment for the California house. that At the time of dissolution, Husband expected that he would find a job that would pay enough for him to cover his spousal maintenance payments and his $3000 monthly mortgage.2 2 Husband testified that the current value of his California house was $541,000 and he owed $417,000. 4 ¶10 Husband distance in the initially summer of ran 2006, Crutcher during Automotive the pendency long of the divorce proceeding, earning $64,500 in 2006 and $69,000 in 2007. Husband s Automotive employment was sold ended (and in after October the 2007, divorce when was Crutcher finalized). Nevertheless, Husband remained current on spousal maintenance payments to Wife through May 2008. ¶11 Husband testified that he stopped paying spousal maintenance thereafter because he ran out of funds. He had $1000 in his checking account in June 2008. ¶12 In $122,544.86, July 2008, Husband representing Automotive building.3 a proceeds the received wire from transfer the of Crutcher He spent $63,000 of this amount on his carry-back mortgage, $33,000 on 2007 income taxes, and $20,000 to pay loans made to Crutcher Automotive. This left him with $6,544.86 for living expenses. ¶13 Husband business debts testified for Crutcher that he paid Automotive about using $53,000 his share in of community asset proceeds, another $15,000 in 2008 for taxes due to the Internal Revenue Service, and about $18,000 for his new wife s emergency heart surgery in November 2008. As of April 2009, Husband estimated that he had about $2500 left from the 3 Although an exhibit states this amount, Husband s testimony indicates the amount was $144,000. 5 sale of all community assets from his marriage to Wife. In February 2009, Husband and his new wife had taken out a $15,000 loan, were liquidating personal property, and had exhausted loans from the wife s relatives. ¶14 After about fifteen months of unemployment, Husband found a temporary position as a material analyst and began work about two hearing. $3500. for months prior to the April 28, 2009 evidentiary He was being paid $13.04 per hour and had earned about Prior to obtaining this position, Husband had applied thirty jobs in his town and outlying areas. He also testified that, based upon newspaper accounts and stay[ing] in touch with the automotive world, his job prospects would have been no better in Phoenix.4 B. Wife ¶15 as In 2006, the year of the divorce, Wife earned $19,000 a Paradise Valley health care benefits. clerk in March 2006. to $29,786, School District employee and received She also started a job as a Walgreen s Wife s employment income increased in 2007 including Walgreen s 4 commissions. In 2008, her Husband testified that he had done work on cars since the divorce mainly for family members and himself at no charge. Wife admitted on cross-examination that she had no proof that Husband had earned money from such work since their divorce. Wife also complained of Husband s post-divorce expenses, including charitable contributions, but even the family court acknowledged that these contributions had decreased. The family court also acknowledged that Husband had significant living expenses. 6 income exceeded three-quarters $30,000. of her This amount claimed represented annual living more than expenses of before the $36,646.76. ¶16 Wife quit the Walgreen s job one modification hearing, citing health reasons. month She testified that she currently works 32 hours per week for the school district at the rate of $13.15 per hour. ¶17 As noted above, Wife received approximately $426,727.15 in community asset proceeds after the divorce. turned $300,000 over to a financial adviser. She At the time of her deposition, Wife had paid taxes and wedding expenses for her daughter. III. The Contempt Petition ¶18 On July to Modify and Request 24, 2008, Husband to Find petitioned Husband in modify or to terminate spousal maintenance pursuant to A.R.S. § 25-327 and Rule 91 of the Arizona Rules of Family Law Procedure. The petition requested termination of or a substantial reduction in spousal maintenance. ¶19 Wife denied that Husband was eligible for modification and sought a contempt finding based upon his failure to pay spousal maintenance. of April and May Husband countered that he was current as 2008, and that contempt was because he had not willfully refused to pay. 7 not warranted See Ariz. R. Family L.P. 92(D).5 In the joint pre-trial statement, the parties contested whether Husband was entitled to modification pursuant to either A.R.S. § 25-327 or Rule 85(C) of the Arizona Rules of Family Law Procedure.6 ¶20 the After an evidentiary hearing, the family court denied modification petition and declined to find contempt in a signed order filed on May 4, 2009. a timely notice of appeal. Husband in Husband filed This Court has jurisdiction pursuant to Article 6, Section 9 of the Arizona Constitution and A.R.S. section 12-2101(B) (2003). 5 Husband had also blamed his circumstances on Wife s alleged failure to pay her share of community debts. He later withdrew his demand for payment after his counsel received a signed Expanded Settlement Agreement in which Husband had assumed responsibility for those debts. 6 Rule 85(C) provides in relevant part: 1. On motion and upon such terms as are just the court may relieve a party or a party s legal representative from a final judgment, order or proceeding for the following reasons: * * * e. the judgment has been satisfied, released, or discharged, or a prior judgment on which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or f. any other reason justifying relief from the operation of the judgment. 8 DISCUSSION ¶21 A family court may modify a spousal maintenance award upon a showing of changed circumstances that are substantial and continuing. A.R.S. § 25-327(A); see Schroeder Schroeder, 161 Ariz. 316, 323, 778 P.2d 1212, 1219 (1989). v. The party seeking modification bears the burden of proving these changed circumstances by a preponderance of the evidence. Van Dyke v. Steinle, 183 Ariz. 268, 278, 902 P.2d 1372, 1382 (App. 1995). Whether circumstances within the has family a substantial occurred court s is a sound and continuing factual question discretion. change which Schroeder, of lies 161 Ariz. at 323, 778 P.2d at 1219 (quoting Fletcher v. Fletcher, 137 Ariz. 497, 497, 671 P.2d 938, 938 (App. 1983)). We will not reverse the family court s determination as to the sufficiency of such a change absent an abuse of discretion. Linton v. Linton, 17 Ariz. App. 560, 563, 499 P.2d 174, 177 (1972). In general, a court commits an abuse of discretion when the record fails to substantially support its decision or the court commits an error of law in reaching the decision. State v. Cowles, 207 Ariz. 8, 9, ¶ 3, 82 P.3d 369, 370 (App. 2004)(quoting Files v. Bernal, 200 Ariz. 64, 65, ¶ 2, 22 P.3d 57, 58 (App. 2001)). ¶22 One factor potentially affecting review is whether a party requested findings of fact and conclusions of law after trial pursuant to Rule 82(A) of the Arizona Rules of Family Law 9 Procedure. Father made such a request prior to the modification hearing. When Rule 82 is invoked, this court will not infer that the family court has made the additional findings necessary to sustain its judgment. Elliott v. Elliott, 165 Ariz. 128, 135, 796 P.2d 930, 937 (App. 1990) (analyzing the analogous Rule 52 of the Arizona Rules of Civil Procedure). Father, however, was obliged to object to any deficiency in the findings and conclusions prior to appeal opportunity for correction. to afford the family court an Id. at 134, 796 P.2d at 936 (citing Green v. Geer, 720 P.2d 656 (Kan. 1986)). I. Husband s Period Of Unemployment Did Not Disqualify from Seeking to Modify His Maintenance Obligation. Him ¶23 substantial and years the The continuing family change had court found occurred in that no over two since Decree was filed because Husband voluntarily chose to move to California: Respondent entered into an agreement at the time of the Dissolution and voluntarily chose to relocate to California. He purchased a $650,000 home on 27 acres of land and can no longer afford it. He moved from Arizona under no job prospects. Respondent testified that he believed that he could find a job that would enable him to meet his spousal maintenance obligations as well as his personal expenses. Under these circumstances, the Court cannot find that there have been substantial and continuing circumstances to warrant a modification of spousal maintenance. 10 We read the court s conclusion to mean that Husband s decision to move to California without a job awaiting him disqualified him from successfully obligations.7 ¶24 It seeking to modify his maintenance We disagree. was undisputed that Husband had not worked for about fifteen months after the divorce and had only found a temporary earned position as extent, a this that mechanic may be paid for less than Crutcher because of the half of what he had Automotive. To a large economic meltdown which occurred in 2007 and 2008. This development can constitute a substantial change and continuing of circumstances. See Fletcher, 137 Ariz. at 498, 671 P.2d at 939 (holding that a onehalf reduction in the husband s income warranted a reduction in child support). The family court did not find otherwise; rather, it faulted Husband for liquidating a failing business and trying to start over elsewhere. 7 At the end of the evidentiary hearing, the trial court listed and summarized the factors and some of the evidence to be considered in granting spousal maintenance found in A.R.S. § 25319(B), without stating how any of the relevant factors might affect its decision. It then issued its minute entry quoted above. This record supports Wife s argument that the court held Husband failed to show a substantial and continuing change of circumstances to merit modification of the prior award. We disagree with the superior court on that latter conclusion. Thus, Husband did not waive the argument the court failed to make sufficient findings under § 25-319 by not filing a motion for new trial because the court never reached any determination based on those statutory factors. 11 ¶25 Given the court s reasoning, it did not consider other aspects of the alleged changed circumstances, such as the unexpected increase in Wife s share of the community property proceeds. 1234, See Cooper v. Cooper, 167 Ariz. 482, 490-91, 808 P.2d 1242-43 maintenance, (App. even 1990) though (upholding the a husband s reduction income in had spousal increased, because husband s expenses had also increased and the wife would start receiving her share of retirement benefits and no longer had to care for minor children); cf. Jarvis v. Jarvis, 27 Ariz. App. 266, 268, 553 P.2d 1251, 1253 (1976) (holding that the wife s success in obtaining employment supported a reduction of her spousal maintenance and child support). ¶26 Wife nevertheless argues that the here were not substantial and continuing. changes at issue We disagree. losses experienced by Husband are significant and ongoing. The He was out of work for more than a year, and could find only temporary work at a fraction of his prior salary. See Fletcher, 137 Ariz. at 497-98, 671 P.2d at 938-39 (holding that a one-half reduction in the husband s income warranted a reduction in child support). These are not the speculative future losses rejected as modification grounds in Scott. See Scott v. Scott, 121 Ariz. 492, 494, 591 P.2d 980, 982 (1979) (holding that the temporary present losses from a division s 12 inaugural year and the speculative future income losses for an aging broadcaster are insufficient to support modification). ¶27 Wife additionally contends that the spousal maintenance award should not be modified because the parties had the changed circumstances in mind at the time of the Decree. See Linton, 17 Ariz. App. at 563, 499 P.2d at 177 (declining to modify because all of these facts were available to the parties at the time they executed the settlement agreement). disagree. and We Arizona courts have consistently found a substantial continuing change in circumstances when the change was generally known but significant details were unknown. ¶28 For example, Hornbaker v. Hornbaker reversed a superior court s denial of a spousal maintenance modification because the wife s new employment as a teacher and acquisition of tenure status was a substantial and continuing change in circumstances. (1976). At 25 the Ariz. time App. of the 577, 578, divorce 545 P.2d decree 425, the 426 parties contemplated that wife would become a teacher when she completed her education. she would be Id. able However, the parties were not certain that to find the anticipated employment, what salary she would earn, whether she would succeed as a teacher, or that she would eventually receive tenure. Id. Because so much uncertainty relating to wife s eventual status as a teacher existed when the decree was entered, the superior court abused 13 its discretion in not finding that the changes in the wife s income justified modification. ¶29 Similarly, Jorgenson v. Jorgenson affirmed the superior court s modification of a child support decree based on the mother s substantial increase in income. 272-73, 640 P.2d 202, 203-04 (App. 1982). 131 Ariz. 271, In Jorgenson, the parties anticipated that the mother would have a substantial increase in income student when the expected that graduation. because decree she Id. would she was was an entered, obtain full unemployed university and reasonably time they employment upon However, mother was able to earn an unusually high amount of money and the parties could not have anticipated the size of her salary. Id. at 273, 640 P.2d at 204. Therefore, the court affirmed modification of support based on the mother s increase in income. ¶30 By contrast, Linton v. Linton reversed a superior court s finding that the husband had experienced a substantial and continuing change in circumstances because of his transition to inactive status at his law firm. P.2d at 179. 17 Ariz. App. at 565, 499 Because the fact of the husband s retirement and resultant decrease in income were certainly known at the time of the divorce decree, the diminution in the husband s income was not a changed spousal maintenance. circumstance justifying a diminution Id. at 563-64, 499 P.2d at 177-78. 14 of ¶31 Husband s financial difficulty here was like the unforeseeable events in Hornbaker and Jorgensen that constitute a substantial and continuing change in circumstances. The evidence does not show that the parties anticipated Husband s need to spend fifteen months seeking employment only to find a position that paid less than half his former salary because of the severe economic downturn which plagued the nation. The mere foreseeability of Husband s need to locate new employment does not prevent the unusual length of his job search and inability to earn his former income from continuing change in circumstances. being a substantial and See Jorgensen, 131 Ariz. at 272-73, 640 P.2d at 203-04. II. The Facts Do Not Support Basing Husband s Alleged Earning Capacity. ¶32 Spousal Maintenance On Wife further argues that Husband was not entitled to voluntarily reduce his income modification as a result. and assert a claim for She also speculates, in the absence of findings, that the family court could have justifiably also found that Husband had voluntarily chosen to be underemployed and could have attributed income to him at his past earning capacity. Even assuming that the family court attributed income, the undisputed evidence fails to support that decision. ¶33 Whether or not a court can appropriately attribute greater income to a party is an issue we review de novo. 15 Pullen v. Pullen, 223 Ariz. 293, 295, ¶ 9, 222 P.3d 909, 911 (App. 2009) (quoting Hall v. Lalli, 194 Ariz. 54, 57, ¶ 5, 977 P.2d 776, 779 (1999)). In Pullen, we identified five factors relevant to this determination: (1) [t]he reasons asserted by the party whose conduct is at issue; (2) [t]he impact upon the obligee of considering the actual earnings of the obligor; (3) [w]hen the obligee s conduct is at issue, the impact upon the obligor of considering the actual earnings of the obligee and thereby reducing the obligor s financial contribution to the support order at issue; (4) [w]hether the party complaining of a voluntary reduction in income acquiesced in the conduct of the other party; and (5) [t]he timing of the action in question in relation to the entering of a decree or the execution of a written agreement between the parties. Id. at 297, ¶ 15, 222 P.3d at 913 (citing Lewis Becker, Spousal and Child Support and the Voluntary Reduction of Income Doctrine, 29 U. Conn. L. Rev. 647, 675-76 (1997)). ¶34 Applying these factors, Pullen concluded that husband had left his job at FedEx and moved to Washington for personal reasons. Id. at 298, ¶ 19, 222 P.3d at 914. These reasons included a desire to make a go of it with his girlfriend and possibly to avoid criminal prosecution. Id. Using actual income to determine maintenance would have a detrimental impact upon the payments, wife, and who the could wife s not support conduct was herself not at without issue. the Id. Finally, the wife did not acquiesce to the change in employment 16 and the husband had left his job maintenance proceedings were pending. while Id. the divorce and In light of these factors, we held that the court appropriately considered the husband s earning capacity, not his actual income, to determine spousal maintenance. ¶35 Id. at ¶ 20. This case is largely distinguishable. Like the Pullen husband, Husband left Arizona for personal reasons. Husband differs from the Pullen husband, however, because he did not refuse possible employment in his chosen field. Rather, Husband attempted to find employment in his industry in California and there is evidence he would not have fared any better in Phoenix. ¶36 Furthermore, the impact on Wife of using an actual income calculation would not be as detrimental as in Pullen, because Wife had acquired a larger than anticipated return from the parties community property sales. Wife had also been working two jobs and earning more than $30,000 in 2008, which was almost enough to meet her own needs. Moreover, Wife had agreed to the sale of Crutcher Automotive, she had notice that it was losing money, and Husband did not seek modification until twenty months unemployment. after the divorce and during a period of Finally, Husband continued to run the business after the divorce, made reasonable efforts to obtain work in California, and paid spousal maintenance 17 for a time while unemployed. Accordingly, Pullen is distinguishable and does not support attribution to Husband of earning capacity income. ¶37 In conclusion, we hold that the family court erred in applying A.R.S. § 25-327(A) to hold that Husband could not pursue a change in his maintenance obligation because he had moved to California without a job offer. not disqualify Husband from seeking This, by itself, did modification because it ignores that his inability to find comparable employment may have been meltdown.8 caused by the unexpected factor of the economic On remand, the family court should determine whether spousal maintenance should be modified in light of all relevant factors found in A.R.S. § 25-319(B). The family court may simply weigh the factors it has already heard evidence on or, if it feels it is necessary, hold an additional evidentiary hearing relating to any one or more of those factors. court may ultimately reach the same Although the conclusion that no modification is called for, it may not disqualify Husband from modification solely based on his voluntary move to California. This holding obviates the need to consider whether Husband is 8 The family court did not mention Husband s arrearages in its ruling. It is settled that Wife has a vested right to receive the maintenance previously ordered and that on remand the family court may not modify maintenance retroactively. See Cooper, 167 Ariz. at 491, 808 P.2d at 1243. 18 also entitled to relief under Rule 85(C) of the Arizona Rules of Family Law Procedure. III. Attorneys Fees On Appeal ¶38 Wife requests an award of attorneys fees on appeal pursuant to A.R.S. § 25-324(A) (Supp. 2009). Husband does not request an award, but disputes Wife s right to fees on appeal. ¶39 Section 25-324(A) grants courts the discretion to order one party to pay a reasonable amount of the other party s costs and considering expenses, the including financial attorneys resources of both fees, parties after and the reasonableness of the positions each party has taken throughout the proceedings. Id. In the exercise of our discretion, having considered the parties resources and their positions on appeal, we deny Wife s request. CONCLUSION ¶40 We reverse the family court s ruling and remand this case for reconsideration in light of Husband s petition in light of all relevant factors. In accordance with this decision, the family court shall consider all relevant factors in A.R.S. § 25319(B), including the post-divorce proceeds allotted to Wife and Husband s ability to provide for Wife s needs as well as his own. Finally, we award Husband his costs on appeal, see A.R.S. 19 § 12-341 (2003), subject to his compliance with Rule 21 of the Arizona Rules of Civil Appellate Procedure. /S/ DONN KESSLER, Judge CONCURRING: /S/ PATRICK IRVINE, Presiding Judge /S/ MICHAEL J. BROWN, Judge 20

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