IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

DIGITAL SYSTEMS ENGINEERING, INC., Plaintiff/Appellee,

v.

JOHN MORENO and BERNADETTE BRUCE-MORENO, 

Defendants/Appellants.

1

No. 1 CA-CV 16-0156

Appeal from the Superior Court in Maricopa County

No. CV2007-005794

The Honorable Margaret Benny, Commissioner, Judge Pro Tem

REVERSED; WRIT OF GARNISHMENT VACATED

COUNSEL

Marko Law PLC, Phoenix

By Edward J. Marko

Counsel for Plaintiff/Appellee

Dickinson Wright PLLC, Phoenix

By Charles H. Oldham, Amanda E. Newman

Counsel for Defendants/Appellants

 

1 The caption has been modified to more accurately depict the 

relevance of the parties to this appeal. The caption above should be used 

for all future filings in this matter.
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

2

OPINION

Judge Jon W. Thompson delivered the opinion of the Court, in which 

Presiding Judge Randall M. Howe and Judge Lawrence F. Winthrop joined.

T H O M P S O N, Judge:

¶1 Appellants, John Moreno (John) and his wife Bernadette 

Bruce-Moreno (Bernadette) (collectively, the Morenos) appeal from the trial 

court’s order permitting Digital Systems Engineering, Inc. (DSE) to garnish 

John’s wages in his current marital community with Bernadette, whom he 

remarried after divorce, to fulfill his liabilities associated with the Morenos’ 

prior marital community, despite a contrary stipulated judgment 

tantamount to an agreement by DSE to limit the scope of John’s liability. 

For the reasons that follow, we reverse the trial court’s order and vacate the 

garnishment writ.

FACTUAL AND PROCEDURAL HISTORY

¶2 In April 2007, DSE filed a lawsuit against Bernadette, who is 

its former employee, and her husband, John. In the lawsuit, DSE alleged 

that from 2001 to 2005 Bernadette engaged in fraudulent transactions 

causing DSE nearly $300,000 in damages. DSE sought relief from both 

Bernadette and John in their individual capacities and from their marital 

community. After a bench trial in 2008 and 2009, the superior court found 

that John was not individually liable, and entered judgment, on September

4, 2009, only against his undivided one-half interest in his marital property 

with Bernadette.2

¶3 John appealed the judgment and DSE filed a cross-appeal 

challenging the court’s ruling that John was not individually liable. On 

appeal, this court affirmed both the judgment on the fraud claim and the 

determination that John was not individually liable. See Digital Sys. Eng’g, 

Inc. v. Bruce-Moreno, 1 CA-CV 09-0574, 2010 WL 5030808, at * 7, ¶ 36 (Ariz. 

App. Nov. 16, 2010). However, we reversed the court’s damages award and 

 

2 The superior court originally entered judgment in July 2009. It 

amended that judgment in September 2009 because the original judgment

incorrectly stated that John had been found individually liable. 
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

3

remanded the case for further determinations as to the amount of DSE’s 

damages on the fraud claim and directed that the judgment granted to DSE 

against John for unjust enrichment be vacated. Id.

¶4 Back in the trial court, in April 2011, DSE filed a Request for 

Judicial Notice, asking the court to take judicial notice of the fact that the 

Morenos had entered into a marital settlement agreement and that the 

marriage was dissolved on September 8, 2009. On August 3, 2011, the court 

took judicial notice, as DSE requested. 

¶5 Before the trial to determine DSE’s damages, DSE and John 

entered a stipulated judgment, on September 2, 2011, which the court filed 

on September 7, 2011. As relevant here, the Stipulated Judgment provided:

JUDGMENT IS ENTERED IN FAVOR OF PLAINTIFF [DSE] 

AND AGAINST JOHN MORENO’S UNDIVIDED ONEHALF INTEREST IN HIS MARITAL COMMUNITY WITH 

BERNADETTE BRUCE-MORENO . . .

THE CLAIM AGAINST JOHN MORENO’S SOLE AND 

SEPARATE PROPERTY IS DISMISSED WITH PREJUDICE.

(Emphasis added.)

¶6 The Morenos remarried two years later. In December 2015, 

DSE served a Writ of Garnishment on John’s employer. The Morenos 

objected to the garnishment on the grounds that: (1) the Stipulated 

Judgment is, by its terms, limited to recovery from John’s interest in the 

prior marital community; (2) under Arizona law, the Morenos’ remarriage 

after divorce did not “resume” their prior marital community, but instead 

created a new and distinct community, beyond the reach of the Stipulated 

Judgment; (3) John’s current wages are property of the new community, 

and not the prior; and (4) Arizona law supports limiting an innocent 

spouse’s liability to the community property that existed at the time of any 

tortious acts. In response, DSE argued that the Stipulated Judgment was a 

community debt that the Morenos could not discharge in divorce and that 

John’s wages are garnishable after divorce and remarriage. 

¶7 A garnishment objection hearing was held on January 26, 

2016. Relying on Community Guardian Bank v. Hamlin, 182 Ariz. 627, 898 

P.2d 1005 (App. 1995), the superior court denied the Morenos’ objection and 

affirmed the Writ of Garnishment, ordering that John’s wages “are 

garnishable.”
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

4

¶8 The Morenos timely appealed the ruling. We have 

jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) sections 12-

120.21 (2016) and -2101(5)(c) (2016).

3

DISCUSSION

¶9 In relying on Hamlin in ruling John’s wages are garnishable, 

the court specifically found that:

[P]ursuant to Community Guardian Bank v. Hamlin, 182 Ariz. 

627, 898 P.2d 1005 (Ariz. App. 1995), separate wages of a 

spouse can be garnished to satisfy the community obligation. 

The fraud claim created a community obligation for which 

John Moreno is jointly liable. Id. Divorce does not absolve 

spouses of community obligations, and a judgment creditor 

has the right to pursue collection from both spouses including 

garnishing wages to satisfy a community obligation. Id. 

Because the court’s ruling raises issues of law, we review de novo. Citibank 

(Arizona) v. Bhandhusavee, 188 Ariz. 434, 435, 937 P.2d 356, 357 (App. 1996). 

Ultimately, we hold that the trial court erred by relying on Hamlin in this 

context, and in simultaneously disregarding community property 

distinctions. 

¶10 We first address certain preliminary matters to clarify the 

arguments presented on appeal. DSE mischaracterizes the Morenos’ 

argument in objecting to its garnishment of John’s current wages. On 

appeal, DSE essentially purports that the Morenos ask this court to find that 

divorce and remarriage terminated John’s obligation under the Stipulated 

Judgment. Not only would such an argument be unsupported by the 

chronological order of the facts in this case, it would broaden the scope of 

the issues the Morenos actually present. The record clearly shows the 

Morenos were divorced two years prior to the Stipulated Judgment. Thus, 

contrary to inferences that may be drawn from DSE’s overarching 

argument, the evidence does not compel the conclusion that the Morenos 

divorced each other to avoid liability pursuant to a not-yet-existing 

 

3 We cite the current version of the applicable statutes, unless 

revisions material to this decision have occurred since the events in 

question.
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

5

Stipulated Judgment.4 As to the Morenos’ related request, as properly 

presented, they ask this court, as they did the trial court, to limit 

enforcement of the Stipulated Judgment to its terms. The Stipulated 

Judgment was rendered specifically against John’s “undivided one-half 

interest in his marital community with [Bernadette,]” and disclaimed any 

effort by DSE to execute on John’s separate property. The paramount issue 

before us is whether the superior court erred in relying on Hamlin for its 

ruling, which, as the court pronounced, stands for the proposition that 

“[d]ivorce does not absolve spouses of their community obligations.”

Hamlin, 182 Ariz. at 631, 898 P.2d at 1009. 

¶11 “[S]tipulation as to ‘judgment’ necessarily imports a finality 

of determination of the controversy” between parties. Wolf Corp. v. Louis, 

11 Ariz. App. 352, 355, 464 P.2d 672, 675 (1970). “If the trial court’s finding 

is contrary to a deliberate stipulation, it must fall.” Id. A stipulation 

“constitut[es] an abandonment of any contention to the contrary,” and is 

foreclosed from being repudiated on appeal. Id. Accordingly, here, the 

Stipulated Judgment to which both John and DSE consented guides our 

analysis. 

¶12 The trial court’s ruling improperly deflects the focus of the 

Morenos’ objections from the language of the Stipulated Judgment, to an 

inquiry about whether divorce discharges community liabilities. The 

court’s ruling also fails to reflect this court’s 2010 ruling limiting John’s 

liability. See Digital Sys. Eng’g, Inc., 1 CA-CV 09-0574, 2010 WL 5030808, at 

* 7, ¶ 36 (affirming the ruling that “only [John’s] undivided one-half interest 

in the marital community is liable for the judgment in this matter”). 

Moreover, Hamlin concerned a default judgment against a community 

while the parties were married, in contrast to the Stipulated Judgment here, 

which occurred after the Morenos had divorced. See Hamlin, 182 Ariz. at 

630-31, 898 P.2d at 1008-09. Therefore, it is irrelevant to this appeal. 

¶13 We agree with the Morenos that the Stipulated Judgment 

limits DSE’s recovery from John to his “undivided one-half interest” in the 

only marital community to which the Stipulated Judgment could have 

referred. See Reese v. Cradit, 12 Ariz. App. 233, 238, 469 P.2d 467, 472 (1970) 

 

4 Any argument that DSE may posit suggesting that John divorced 

Bernadette to avoid his liability pursuant to the Stipulated Judgment is

speculative at best. In fact, John’s position on appeal is that “the Stipulated 

Judgment [declaring his liability] remains in effect.” It is also noteworthy 

that DSE knew of the divorce prior to consenting to the Stipulated 

Judgment. 
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

6

(stating that when one spouse did not participate in the tort of the other, the 

innocent spouse may be held liable only as a member of the community and 

such liability is limited to the extent of the community property “as it 

existed at the time of the [tort]”). The marital community formed by the 

remarriage between Bernadette and John in 2013 is a new and distinct 

community which, by the very terms of the Stipulated Judgment, does not 

fall within its ambit. See, e.g., Mejak v. Granville, 212 Ariz. 555, 557, ¶ 9, 136 

P.3d 874, 876 (2006) (applying the principle of interpreting a document “so 

that no provision is rendered meaningless, insignificant, or void[,]” to 

interpretation of a statute); Aztar Corp. v. U.S. Fire Ins. Co., 223 Ariz. 463, 476, 

¶ 45, 24 P.3d 960, 973 (App. 2010) (applying similar principles to contract 

interpretation). 

¶14 DSE argues that John remarried Bernadette and now “seeks

to reinstate the ‘two-dollar bankruptcy’” which was repealed by Arizona’s

legislature in 1973. See A.R.S. § 25-216 (repealed 1973); A.R.S. § 25-215

(2007).

5 The “two-dollar bankruptcy” scheme involves a situation where 

an individual has separate debts that he then attempts to avoid by pointing 

to the fact of his subsequent marriage (or remarriage). Here, John has never 

been determined to be individually liable to DSE—every pertinent 

judgment, and most importantly, the Stipulated Judgment, foreclosed any 

possibility of John (or his separate property that had not been a part of the 

community) being so liable. See supra ¶¶ 2, 3, 5, and 12. Of course, John’s 

earnings after divorce were his separate property, and after DSE’s own 

stipulation, DSE could not have reached those earnings while John 

remained divorced. This point is bolstered by the fact that there is no 

evidence in the record that DSE attempted to garnish John’s wages 

pursuant to his liability under the Stipulated Judgment during the time he 

was unmarried. It thus appears DSE’s Writ of Garnishment rests on some 

novel legal claim that John’s remarriage to Bernadette reactivates some 

foregone right to garnish his wages. Such a “reactivation” claim would be 

without legal grounding.

¶15 Therefore, in light of the Stipulated Judgment, we hold that

the trial court erred in ruling that DSE could garnish John’s wages, which 

constitute community earnings of the marital community existing as of 

2013, to satisfy the community liabilities of the marital community that

 

5 Stating “[t]he community property is liable for the premarital separate 

debts or other liabilities of a spouse, incurred after September 1, 1973 but only 

to the extent of the value of that spouse’s contribution to the community 

property which would have been such spouse’s separate property if 

single.” (Emphasis added.)
DIGITAL v. MORENO and BRUCE-MORENO

Opinion of the Court

7

ended in 2009. Further, given our holding, we grant the Morenos attorneys’ 

fees and costs pursuant to A.R.S. § 12-1598.07 (2016), in an amount to be 

determined upon compliance with Arizona Rule of Civil Appellate 

Procedure 21. We deny DSE’s request for attorneys’ fees, as sought

pursuant to A.R.S. §§ 12-1598.07 (awarding costs and fees only to the 

prevailing party), -349 (2016) (allowing for fees where a party “[b]rings or 

defends a claim without substantial justification,” among other things), and 

13-2314.04 (2010) (discussing civil remedies a private person injured by 

racketeering may obtain).

CONCLUSION

¶16 For the foregoing reasons, we reverse the trial court’s order 

rendering John’s current wages garnishable. We vacate the Writ of 

Garnishment.