Rosenthal v. Rosenthal

Annotate this Case

Download PDF

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: ) ) ELAINE ROSENTHAL, ) ) Petitioner/Appellee, ) ) v. ) ) STEPHEN ROSENTHAL, ) ) Respondent/Appellant. ) _______________________________) DIVISION ONE FILED: 10/26/10 RUTH WILLINGHAM, ACTING CLERK BY: DLL No. 1 CA-CV 09-0624 DEPARTMENT D MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. FC2008-052680 The Honorable Michael D. Gordon, Judge AFFIRMED Jaburg & Wilk, P.C. By Kathi Mann Sandweiss Roger L. Cohen Laurence B. Hirsch Attorneys for Petitioner/Appellee Phoenix The Cavanagh Law Firm, P.A. By Keith A. Berkshire Attorneys for Respondent/Appellant Phoenix W I N T H R O P, Presiding Judge ¶1 Stephen Rosenthal ( Husband ) appeals from a decree of dissolution. The court concluded that Husband was not entitled to reimbursement mortgage court on marital erred community. for in the separate community finding the funds property. payments he used Husband were a to pay the argues the gift to the For the following reasons, we affirm. FACTS AND PROCEDURAL BACKGROUND ¶2 Husband October 16, 1994. and Elaine Rosenthal ( Wife ) married on In September 1995, the parties purchased a house in Paradise Valley as husband and wife for $761,000, using $152,200 of Husband s separate funds as a down payment, and obtaining a joint mortgage in the amount of $608,800. 1 ¶3 In December 1995, the parties refinanced the house. Husband paid $108,000 of his separate funds toward the mortgage and the parties obtained a new joint mortgage in the amount of $500,000. In February 1996, the parties refinanced the house a second time. Husband paid $40,000 of his separate funds toward the mortgage and the parties obtained a new joint mortgage in the amount of $460,000. In April 1996, Husband paid off the entire balance of the joint mortgage with his separate funds. The parties and their children resided in this house throughout their marriage. 1 The parties stipulated that the down payment was a gift to the community, and that the subject real property is a community asset. 2 ¶4 2008. Wife filed a petition for dissolution in September Husband asserted he was entitled to reimbursement for the $608,800 of his separate funds used to pay off the mortgage indebtedness. ¶5 After a trial, the court made the following findings: 6. The Court agrees that the $608,[8]00 was a gift to the community. The circumstantial evidence suggests that there was an absence of an enforceable agreement to the contrary. 7. That Wife is on the title (or not on the deed) is not dispositive, but one factor. The Court will equitably divide the property. The evidence does not support a finding that the parties agreed to keep the monies separate. It was a gift. In re Marriage of Berger, 680 P.2d 1217 (Ariz. Ct. App. 1983) (placing the burden of proof on the recipient). Here, there is not a preponderance of evidence (or, of course, clear and convincing evidence) that there was an agreement for reimbursement. [Husband] has failed to meet the burden of proof. Even if [Wife] had the burden of proof to prove it was a gift, the Court finds she met her burden of proof. 8. There was no agreement otherwise, and there cannot be an equitable lien. Baum v. Baum, 584 P.2d 604 (Ariz. Ct. App. 1978). 9. This is because there is a dearth of credible evidence that would otherwise reach the standard of proof that there was such an agreement regarding the property. According to [Husband], which the Court finds credible, that he subjectively believed that [Wife] should have known that the payment of the $608,[8]00 lien was not a gift. The Court finds equally credible that there was no meeting of the minds. Thus, while [Husband] might have subjectively believed otherwise, the evidence is insufficient to support that [Wife] also agreed. 3 10. Accordingly, the Court finds that Father s request for a lien on the Community Marital Residence in the amount of $608,[8]00 must be denied and the house will be divided 50%/50%. The court ordered the house to be divided equally. Husband timely Arizona appealed. We have jurisdiction pursuant to Revised Statutes ( A.R.S. ) section 12-2101(B) (2003). DISCUSSION ¶6 On appeal Husband contends the court erred 1) by concluding that his expenditure of $608,800 of separate funds was a gift to the community, and 2) by failing to impose an equitable lien to reimburse him for his expenditures. I. Finding of a Gift ¶7 This case presents both factual and legal questions. Determining whether a gift has been made is a question of fact which we review under a clearly erroneous standard. Chirekos v. Chirekos, 24 Ariz. App. 223, 227, 537 P.2d 608, 612 (1975); see also Hrudka v. Hrudka, 186 Ariz. 84, 94, 919 P.2d 179, 189 (App. 1995) ( The question of reimbursement is a factual issue of gift and subject to the clearly erroneous standard ). court applied reimbursement the is a correct legal standard question we to the review de Whether the question novo. of See Mobilisa, Inc. v. Doe, 217 Ariz. 103, 107, ¶ 9, 170 P.3d 712, 716 (App. 2007). 4 ¶8 Husband relies on the family court s finding that his subjective belief that his expenditure of separate property was not a gift was credible, and argues that the court misapplied the law by determining that, despite his intent, expenditures were presumed to be a gift under Baum. Baum, 120 Ariz. (determining that 140, a 146, 584 spouse who P.2d 604, [e]lects See Baum v. 610 (App. to the expend 1978) separate property on community expenses is entitled to reimbursement from the community or separate property of the other spouse [o]nly if there is an agreement to that effect ). Husband contends that after determining that he lacked the subjective intent to make a gift to the community, the court should have applied the analysis in Armer, found that no gift had been made and ordered reimbursement. See Armer v. Armer, 105 Ariz. 284, 289, 463 P.2d 818, 823 (1970) (finding that a gift exists only when there is 1) donative intent to give a gift, 2) delivery of the gift, and 3) the vesting of irrevocable title upon delivery). Husband argues that since he both lacked the donative intent to make a gift and was able to trace the expenditures to his separate property, the court should have found that a gift had not occurred. ¶9 Assuming, without deciding, that the court should have applied the Armer standard and not the rule expressed in Baum, 5 we still affirm the court s finding that Husband s expenditures constituted a gift to the community. ¶10 No express words or actions are needed to show that a gift has been made to the community. See In re Marriage of Berger, 140 1217, (agreeing Ariz. that inferred , 156, a 162, gift P.2d need not in the particularly relationship ). 680 be 1223 (App. expressed context of but a 1983) can be marital Further, donative intent is not conclusively determined solely by the later-expressed subjective intent of the donor as Husband determined by considering circumstances. See donative is intent contends; the id. rather, totality (citation ascertained in donative of the omitted) light of intent surrounding (finding all is that surrounding circumstances, however, and is not inferred simply because of a marital Neely, relationship 115 Ariz. between 47, 51, the 563 parties ); P.2d 302, accord Neely 306 (App. v. 1977). Accordingly, the fact that the court found that Husband did not believe he was making a gift is not dispositive of the issue of whether donative intent legally existed under the Armer standard. ¶11 In order to find that donative intent existed, there must be evidence that the donor manifest[ed] a [c]lear intent to give to the party claiming as donee and give to the latter before death full possession and 6 control of the property. Neely, 115 Ariz. at 51, 563 P.2d at 306 (quoting O'Hair v. O'Hair, 109 Ariz. 236, 508 P.2d 66 (1973)). In this case, the parties agree that the home itself is community property and that the initial down payment on the home was a gift to the community. Nothing exists in the record to suggest that the subsequent expenditures by Husband differently than the down payment. were to be treated Further, each new loan was in the names of both parties and Husband was aware that his expenditures would benefit the community. Despite such knowledge, Husband never took any action to convey his apparent lack of donative intent to his wife. Both parties were named on the title to the house, each new deed of trust, and the deed of release. the When considering the totality of the circumstances, evidence strongly supports the finding that Husband objectively manifested a clear intent to make a gift regardless of his underlying, unexpressed subjective intent to the contrary. ¶12 he Husband further argues that no gift was made because never intended to transmute his separate property into community property. Husband relies on Noble v. Noble, 26 Ariz. App. 358 89, 546 P.2d (1976), where that court separate property placed into a joint account held found that by a married couple remained separate because no evidence existed that the deposit was meant to be a gift. Husband argues that because he 7 can trace the expenditures to his scenarios should be treated the same. ¶13 As discussed above, separate property, the We disagree. the evidence in this case supports the conclusion that Husband made a gift; accordingly, his payments of the mortgage effectively transmuted his separate property into a gift to the community. Further, unlike the Noble case, the funds here were not merely transferred from one account to community another, debt, and but were thus were actually actually expended used to to pay benefit a the community. ¶14 Finally, Husband argues that, even if we affirm the court s finding that a gift was made, he still has an equitable right to reimbursement, as authorized by Toth v. Toth, 190 Ariz. 218, 946 P.2d 900 (1997). Toth presented a unique set of facts, specifically, a marriage that lasted only a few weeks, which warranted an unequal division of joint tenancy property. Toth, 190 court Ariz. at 221-22, 946 P.2d at 903-04. The Toth recognized that in a marriage of any significant duration, other equitable considerations would likely make unequal distribution based solely on reimbursement inappropriate. P.2d at 904. consider Id. at 222, 946 In determining what is equitable, a court may source of funds, duration of contributions to the marital relationship. 8 the marriage, and In re Marriage of Inboden, 223 Ariz. 542, 547, ¶ 18, 225 P.3d 599, 604 (App. 2010). ¶15 In this thirteen years. case, the parties were married for over During the marriage Wife mainly stayed home with the parties children and took care of the myriad household and child-rearing responsibilities. Under these facts, we cannot conclude the court abused its discretion by ordering the house to be divided equally between the parties. II. Equitable Lien ¶16 The trial court s division of community property will not be disturbed on appeal absent a clear abuse of discretion. Dopadre v. Dopadre, 156 Ariz. 30, 32, 749 P.2d 939, 941 (App. 1988) (citation omitted). Nonetheless, we review all issues of law Soil de novo. Southwest Remediation, Inc. v. City of Tucson, 201 Ariz. 438, 442, ¶ 12, 36 P.3d 1208, 1212 (App. 2001). ¶17 lien Husband argues that he is entitled to an equitable to property contends reimburse for the that him for benefit by the of denying expenditure the him of community. reimbursement, his separate Husband also the court effectively makes his separate property rights subservient to community property rights. ¶18 that In Baum, the court relied on California law and found a spouse who [e]lects to 9 expend separate property on community expenses is entitled to reimbursement from the community or separate property of the other spouse [o]nly if there is an agreement to that effect. 2 584 P.2d at 610. Baum, 120 Ariz. at 146, The rule adopted in Baum was subsequently applied to scenarios involving dissolution and expenditures on real property. 91 (1979) Mori v. Mori, 124 Ariz. 193, 199, 603 P.2d 85, (finding that a spouse s expenditure of separate property used to make improvements on community property were presumed to be a gift to the community). about the Baum rule s applicability Accordingly, any doubt to real property was clarified in Mori. ¶19 and Husband contends that, unlike the situation in Baum Mori, his separate easily traceable. funds were never comingled and were Therefore, he argues, the court s denial of his request for an equitable lien was inappropriate. We do not agree that Husband s ability to trace his separate funds in this case requires an outcome different than that reached in Baum or Mori. In Baum, the court concluded that reimbursement for the expenditure of separate funds used 2 to benefit the community Husband also points out that California, where the gift rule in Baum originated, has since mandated reimbursement for expenditures of separate property used to pay community debt absent a contrary agreement. See Cal. Fam. Code § 2640 (West 2010). The actions of the California legislature regarding the rule in Baum have no bearing on the determination of this case, as Baum is still valid law and has not been overturned by either Arizona statute or subsequent case law. 10 would be inappropriate even if the trial court s ruling that the funds were not traceable was erroneous. Baum, 120 Ariz. at 146, 584 P.2d at 610; accord Malecky v. Malecky, 148 Ariz. 121, 123, 713 P.2d 322, 324 (App. 1985). several cases parties held binding in here, which property as the in While Husband cites to reimbursement joint property was tenancy, at bar property and not in joint tenancy. ordered these was cases held as when the are not community Accordingly, we find that the court did not abuse its discretion by finding that Baum prohibited Husband from being awarded an equitable lien for his expenditures. ¶20 Finally, Husband argues that application of the Baum rule is inconsistent with the general principle that courts must treat separate and community property rights equally. See Porter v. Porter, 67 Ariz. 273, 195 P.2d 132 (1948) (declined to be followed on other grounds by Cockrill v. Cockrill, 124 Ariz. 50, 61 P.2d 1334 (1979)); see also Toth, 190 Ariz. at 220, 946 P.2d at 902 (finding that joint tenancy property and community property are to be treated alike only for dissolution purposes. For that purpose, equitably ). the court should divide all such In particular, Husband points out that: The rights of married persons in their separate property are as impregnable and as thoroughly fixed as their right in their community property. 11 property Porter, 67 Ariz. at 282, 195 P.2d at 137. Husband contends that because an equitable lien is imposed when community funds are used to pay a separate obligation, then using separate funds to pay a community obligation should also create an equitable lien. See, e.g. Tester v. Tester, 123 Ariz. 41, 43, 597 P.2d 194, 196 (App. 1979) (community has a claim for reimbursement in the nature of an equitable lien when community funds are used to improve separate property); Barnett v. Jedynak, 219 Ariz. 550, 553-54, ¶ entitled 14, to 200 P.3d equitable separate property). 1047, lien 1050-51 for (App. making 2009) mortgage (community payments on He argues that Porter and Toth also require that he receive reimbursement, as failure to do so would make his separate property rights subservient to community property rights. ¶21 Unlike community property, a court has no authority to equitably divide separate property. 2009). Thus, if community funds are used for the benefit of a separate benefit A.R.S. § 25-318(A) (Supp. property from such or obligation, contribution. property holder benefits. the community Instead, only receives the no separate See Potthoff v. Potthoff, 128 Ariz. 557, 564, 627 P.2d 708, 715 (App. 1981) ( improvements become a part of the realty separate or community, enjoys ). and acquire that the the characteristics, underlying real either property In contrast, when separate funds are expended for the 12 benefit of community property or debt, the community as a whole benefits from the increase in value of such expenditures. As Husband was a member of the former marital community, he is entitled to an equitable share of the community property. Unlike the situations in Tester and Barnett where the community would have unfairly expended its assets without receiving any benefit, Husband here, as a member of the community, reaps the benefits of the increased value of the former family home. ¶22 Moreover, a spouse who contributes separate funds to community property is not precluded from being reimbursed. only requires reimbursement. that the Further, parties even in make absence an of agreement an Baum for agreement, court may order reimbursement under equitable principles. 3 a In re Marriage of Flower, 223 Ariz. 531, 535-36, ¶ 16, 225 P.3d 588, 592-93 (App. 2010). Accordingly, to the extent a spouse does not intend to gift separate funds to the community by paying a community obligation or improving community spouse should have a reimbursement agreement. property, that Therefore, we reject Husband s argument that application of Baum is at odds with Porter, Toth, or any other case within the jurisdiction and 3 Equitable principles are evident in Hrudka where the court reimbursed the husband for his separate property expenditures on community property debts where the wife would not cooperate in payment of the debts. Hrudka, 186 Ariz. at 94, 919 P.2d at 189. Here, there is no evidence Wife refused to pay the mortgages or otherwise failed to contribute to the household, nor does Husband argue that he paid off the mortgages involuntarily. 13 uphold the court s finding that Baum bars Husband from acquiring an equitable lien. III. Attorneys Fees ¶23 appeal Both parties request an award of attorneys fees on pursuant to A.R.S. § 25-324 (Supp. 2009). After considering the statutory factors and in the exercise of our discretion, we decline to award fees on appeal to either party. As the prevailing party, however, we award Wife her costs on appeal upon compliance with Arizona Rule of Civil Appellate Procedure 21(c). CONCLUSION ¶24 For the aforementioned reasons, we affirm the family court s finding that Husband made a gift to the community and its denial of Husband s reimbursement claim. __________________/S/________________ LAWRENCE F. WINTHROP, Presiding Judge CONCURRING: ____________/S/____________________ PATRICIA K. NORRIS, Judge ___________/S/_____________________ PATRICK IRVINE, Judge 14

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.