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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

In re the Marriage of:

WILLIAM DAVID STEWART, Petitioner/Appellee,

v.

MARY STEWART, Respondent/Appellant.

No. 1 CA-CV 21-0442 FC

Appeal from the Superior Court in Maricopa County

No. FN2018-093826

The Honorable Joan M. Sinclair, Judge

REVERSED AND REMANDED

COUNSEL

Horne Slaton PLLC, Scottsdale

By Sandra L. Slaton, Kristin M. Roebuck Bethell

Counsel for Petitioner/Appellee

Padish Law Group PLLC, Scottsdale

By James E. Padish, Erica Padish Conrad

Counsel for Respondent/Appellant

FILED 5-17-2022
STEWART v. STEWART

Decision of the Court

2

MEMORANDUM DECISION

Judge Peter B. Swann delivered the decision of the court, in which Presiding 

Judge Cynthia J. Bailey and Judge D. Steven Williams joined.

S W A N N, Judge:

¶1 In this dissolution action, the superior court awarded a 

commingled account and certain business interests purchased therefrom to 

the husband as his separate property. We reverse those awards and 

remand for reallocation. Because the separate and community 

contributions to the account were delineated, they retained their character 

and the account should have been allocated accordingly. Further, because 

there was no evidence of transmutation, the community had a proportional 

interest in the investments funded by the account.

FACTS AND PROCEDURAL HISTORY

¶2 When William David Stewart (“Husband”) was a young 

child, his family created a Fidelity account, with investment and moneymarket sub-accounts, for his benefit under the Arizona Uniform Transfers 

to Minors Act (“the Act”). Husband’s father acted as custodian of the 

account during Husband’s childhood and continued to unilaterally control 

the account even after Husband became an adult.

¶3 Husband married Mary Stewart (“Wife”) in November 2013, 

when he was twenty-two and she was sixteen. During the marriage, 

Husband’s father caused community funds to be deposited in the Fidelity 

account on several occasions. Also during the marriage, and after the first 

community deposit, Husband’s father used the account to purchase 

interests in five businesses: Cotton Lane Group, LLC; Gulf Mobile Home 

Park, LLC; Landings Resort, LLC; Sunshine RV Resort, LLC; and Sunny 

Grove MHP, LLC. Wife was identified as a stakeholder alongside Husband 

in the operating agreement and a tax document from Cotton Lane Group. 

Tax documents from other of the businesses listed Husband only.

¶4 Husband and Wife separated in December 2017, and 

Husband petitioned for dissolution in September 2018. The parties 

disputed, among other things, whether the Fidelity account and the 

business interests purchased therefrom were separate or community 
STEWART v. STEWART

Decision of the Court

3

property. Husband retained an expert who opined that the business 

interests were funded by Husband’s separate property because at the time 

of each purchase, the majority separate-property portion of the account’s 

total cash value exceeded the purchase price whereas the minority 

community-property portion did not. Wife presented no expert testimony 

but challenged Husband’s expert’s methodology and argued that the 

commingling of separate and community property in the account 

transmuted it, and the investments therefrom, to community property.

¶5 The superior court denied Wife’s motion in limine to preclude 

the expert’s testimony, and he testified at trial. In the dissolution decree, 

the court concluded that there was “no evidence to support a finding that 

the Fidelity account was transferred to Husband,” that Husband’s expert 

was credible, and that the account was not “entirely commingled.” The 

court concluded that the account, and all the business interests except the 

interest in Cotton Lane Group, were Husband’s separate property. The 

court deemed the interest in Cotton Lane Group community property and 

divided it equally between the spouses.

¶6 Wife appeals.

DISCUSSION

¶7 We review the superior court’s characterization of property 

de novo. In re Marriage of Pownall, 197 Ariz. 577, 581, ¶ 15 (App. 2000).

¶8 Wife first contends that the superior court erroneously 

determined that the Fidelity account was not transferred to Husband. We 

deem that finding factually accurate but legally immaterial. The Act does 

not, as Wife contends, describe an automatic age-based transfer to the 

minor. It instead provides that the custodian “shall transfer” the property 

to the minor when the minor becomes an adult. A.R.S. § 14-7670. Here, the 

custodian failed to comply with that directive. But whether the custodian 

relinquished control or not, the account always belonged to Husband—by 

the terms of the Act, the account immediately and absolutely vested in 

Husband at the time of its creation. See A.R.S. §§ 14-7659(A)(2) (providing 

that “[c]ustodial property is created and a transfer is made” when money is 

“paid or delivered to a . . . financial institution for credit to an account in 

the name of the transferor . . . ‘as custodian for [a minor] under [the Act]’”), 

14-7659(A)(2) (providing that the transfer “is irrevocable, and the custodial 

property is indefeasibly vested in the minor”). Husband therefore brought 

the account into the marriage as separate property, see A.R.S § 25-213(A), 

and the superior court properly considered it in his dissolution action.
STEWART v. STEWART

Decision of the Court

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¶9 Wife next contends that Husband’s expert failed to provide 

“‘explicit tracing’ testimony sufficient to overcome the presumption that 

the Fidelity account is a community asset due to the commingling of 

community funds in it during the marriage.” We hold that the presumption 

does not apply because the separate and community contributions to the 

account are easily identifiable. But we reject the expert’s unfounded 

conclusion that the separate property was the sole funding source of the 

withdrawals.

¶10 “The mere fact that the property was commingled does not 

cause it to lose its separate identity, as long as the separate property can still 

be identified.” In re Marriage of Cupp, 152 Ariz. 161, 164 (App. 1986); see also 

Noble v. Noble, 26 Ariz. App. 89, 95 (1976) (explaining that commingling 

does not cause transmutation “so long as the funds remain traceable”). 

Accordingly, when community and separate funds are commingled in one 

account, “the entire fund is presumed to be community property unless the 

separate property can be explicitly traced” and shown by its proponent “by 

clear and satisfactory evidence.” Cooper v. Cooper, 130 Ariz. 257, 259 (1981) 

(emphasis added) (citation omitted).

¶11 Here, because the dates and amounts of the separate-property 

balance and community deposits were known, the community and separate 

portions of the account are easily delineated. The superior court therefore 

properly declined to conclude that the commingling transmuted the 

account to community property. In view of the community deposits, 

however, the court erred by concluding that the account was entirely 

Husband’s separate property. Though the bulk of the account was separate 

property, the portion attributable to the community deposits was 

community property.

¶12 Husband’s expert properly recognized the separate and 

community portions of the account. He anticipated, however, that 

Husband would “testify that he intended these [business] investments to 

be his sole and separate property.” Husband did not so testify—to the 

contrary, he testified that his father unilaterally managed the account and 

Husband was wholly uninvolved in the transactions. The business interests 

were purchased from commingled funds, and there was no evidence that 

the spouses parsed the funds for purposes of the purchases or agreed to a 

transmutation. See Bender v. Bender, 123 Ariz. 90, 93 (App. 1979) (holding 

that spouses may convey their separate or community interests to each 

other by written agreement coupled with contemporaneous conduct 

showing intent to convey). And though tax documents listed Husband and 

not Wife as a stakeholder for several of the businesses, there is no evidence 
STEWART v. STEWART

Decision of the Court

5

that either spouse directed those documents’ preparation. See Bourne v. 

Lord, 19 Ariz. App. 228, 231 (1973) (holding that because wife’s name on 

deed to trailer purchased with husband’s separate property was inserted 

neither at husband’s direction nor with his knowledge, the form of the deed 

did not alter the trailer’s separate-property status and was in any event 

merely prima facie evidence of ownership). The expert gave the 

community no credit for its contributions to the account, simply because 

those contributions were relatively modest and insufficient to 

independently cover the withdrawals, whereas the separate funds 

comprised the majority of the account and were sufficient to cover the 

withdrawals. The expert’s approach is neither compliant with law, logical,

or fair, and we refuse to endorse it.

¶13 Under Ariz. R. Evid. 702, expert opinions must be based on 

reliable principles and methods reliably applied to the facts of the case. 

Because the expert report in this case fails that basic test, the superior court 

erred by accepting the expert’s opinion. The community had an interest in 

the investments proportional to the community’s interest in the account 

from which those investments were funded. See Horton v. Horton, 35 Ariz. 

378, 381 (1929) (holding that when an asset is “purchased in part with 

community funds and in part with separate funds, it is community 

property to the extent and in the proportion that the consideration is 

furnished by the community”).

¶14 We reject Husband’s argument that Wife waived a 

proportional award by not arguing for such a result in the proceedings 

below or on appeal. It is beyond dispute that Wife challenged the expert’s 

opinion, and we must not limit ourselves to her specific arguments if that 

would cause us to reach an incorrect result. See Liristis v. Am. Fam. Mut. Ins. 

Co., 204 Ariz. 140, 143, ¶ 10 (App. 2002). We further note that waiver is a 

procedural rule that we may forgo when justice requires. Id. at ¶ 11.

CONCLUSION

¶15 The superior court erred by failing to recognize the 

community’s identifiable interest in the Fidelity account and the 

investments therefrom in Gulf Mobile Home Park, Landings Resort, 

Sunshine RV Park, and Sunny Grove MHP. We reverse the court’s 

characterization of the account and those business interests1 as entirely

1 At oral argument on appeal, Husband claimed that the court’s 

characterization of the investment in Cotton Lane Group as community 
STEWART v. STEWART

Decision of the Court

6

Husband’s separate property. We remand so that the court may award the 

community’s share. In our discretion, we deny the parties’ competing 

requests for attorney’s fees on appeal under A.R.S. § 25-324.

property gave Wife a windfall. But Husband did not cross-appeal. We 

therefore do not disturb the superior court’s ruling regarding Cotton Lane 

Group.