Court Opinion

ID: 4698188
Source: CourtListenerOpinion
Date Created: 2021-06-24 15:02:10.392312+00
Date Added: 2024-06-11T08:05:51.609602
License: Public Domain

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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

         FELICE SOLDWEDEL, Petitioner/Appellee/Cross-Appellant,

                                         v.

      JOSEPH E. SOLDWEDEL, Respondent/Appellant/Cross-Appellee.

                            No. 1 CA-CV 20-0326 FC
                              FILED 6-24-2021

            Appeal from the Superior Court in Yavapai County
                        No. P1300DO201700274
           The Honorable Joseph P. Goldstein, Judge Pro Tempore

       AFFIRMED IN PART; VACATED IN PART; REMANDED

                                    COUNSEL

Mull & Brown, PLLC, Prescott
By John G. Mull
Counsel for Petitioner/Appellee/Cross-Appellant

Katz & Bloom, P.L.C., Phoenix
By Norman M. Katz
Counsel for Respondent/Appellant/Cross-Appellee
                      SOLDWEDEL v. SOLDWEDEL
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Lawrence F. Winthrop delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Cynthia J. Bailey joined.

W I N T H R O P, Judge:

¶1            Joseph E. Soldwedel (“Husband”) appeals the superior
court’s entry of a decree awarding spousal maintenance pursuant to a pre-
marital agreement and an amendment thereto. Felice Soldwedel (“Wife”)
cross-appeals the court’s denial of her motion to alter or amend the decree.
For the following reasons, we affirm the challenged rulings in the decree.
We vacate the denial of the motion to alter or amend the decree and remand
with directions for the court to enter an order of assignment/income-
withholding pursuant to Arizona Revised Statutes (“A.R.S.”) section 25-
504(A) through the support-payment clearinghouse.

                 FACTS AND PROCEDURAL HISTORY

¶2            The parties signed a pre-marital agreement on their wedding
day in 2010 and an amendment to it three months later (collectively, “the
Agreements”), both of which included a spousal-maintenance provision in
the event of dissolution. The provision provided that any future spousal
maintenance paid by Husband to Wife would be taxable to Wife and
deductible by Husband under the Internal Revenue Code. The parties
expressly covenanted that spousal maintenance would be non-modifiable
in the event of a change in the law.

¶3            In 2017, Wife filed a petition for dissolution of marriage.
Husband filed a petition for annulment based on fraudulent inducement to
marry, duress, and lack of contractual intent. During litigation, Husband
asserted that Wife had tried to poison him during their marriage. Wife
moved in limine to preclude Husband from offering any evidence of
poisoning at trial. The superior court held the first trial in 2019, limited to
addressing only the discrete issues of validity of the Agreements and the
petition for annulment. The court granted in part Wife’s motion in limine
and precluded Husband from presenting evidence on his claim that Wife
poisoned him, which Husband argued was relevant to his fraud in the
inducement defense to the validity of the marriage. The court found any
alleged poisoning evidence irrelevant to the issues of the validity of the

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Agreements or whether the marriage should be annulled. The court upheld
the Agreements as valid, denied the petition for annulment, and awarded
Wife attorneys’ fees and costs. The court directed entry of final judgment
and signed the ruling pursuant to Arizona Rule of Family Law Procedure
(“Rule”) 78(b). Husband did not appeal this ruling within thirty days.

¶4            Litigation proceeded on the remaining issues relevant to the
petition for dissolution. Husband filed a motion for rescission of the
Agreements based on a change in the tax code in 2017 that he contended
changed the tax implications of the spousal maintenance provisions in the
Agreements whereby any spousal maintenance would no longer be taxable
to Wife or deductible by Husband. Husband argued the tax-code change
rendered the Agreements unenforceable due to mutual mistake and
impossibility of performance. The court denied Husband’s motion, finding
no mutual mistake.

¶5           The superior court held a second trial in 2020 on the
remaining issues, awarded spousal maintenance, and entered a decree
pursuant to Rule 78(b). The court found Wife the prevailing party and
awarded her attorneys’ fees based on the pre-marital agreement and A.R.S.
§ 25-324.

¶6            Wife filed a Rule 83 motion to alter or amend the decree,
asking the court to order that the spousal-maintenance payments be made
by order of assignment or an income-withholding order under A.R.S § 25-
504(A). The court awarded Wife attorneys’ fees and costs related to the
second trial and denied Wife’s motion to alter or amend the decree.
Husband appealed, and Wife cross-appealed.

                                ANALYSIS

      I.     Jurisdiction

¶7             In this appeal, Husband in part challenges the superior
court’s rulings rejecting his defenses to enforcement of the Agreements
based on mutual mistake and supervening impossibility and the court’s
preclusion of poisoning evidence. Wife contends this court lacks
jurisdiction to consider Husband’s arguments because the arguments hinge
on the superior court’s first Rule 78(b) judgment that upheld the validity of
the Agreements, which Husband failed to timely appeal.

¶8          This court has jurisdiction over timely filed appeals from final
judgments rendered pursuant to Rule 78(b). See A.R.S. § 12-2101(A)(1);
ARCAP 9(a). Rule 78(b) states that the superior court “may direct the entry

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                          Decision of the Court

of a final judgment as to one or more, but fewer than all, [of the] claims.”
But the inclusion of Rule 78(b) language in an order that does not fully
adjudicate a claim in an action will not render the order substantively
appealable. See Sisemore v. Farmers Ins. Co. of Ariz., 161 Ariz. 564, 567 (App.
1989).

¶9            The Rule 78(b) judgment rendered after the first trial fully
resolved the petition for annulment, upheld the validity of the Agreements,
and left unresolved issues underlying the petition for dissolution, including
spousal maintenance. The first judgment was not final and appealable as
to the spousal maintenance awarded in the second judgment. The court’s
finding that the Agreements were valid was a preliminary ruling the court
later used to enforce the Agreements and provide for the distribution of
property and spousal maintenance. Husband’s decision not to appeal the
first judgment does not deprive this court of jurisdiction over his appeal
from the second judgment.

¶10            Husband also appeals the superior court’s award of
attorneys’ fees to Wife after the second trial. Wife argues that the first Rule
78(b) judgment established her entitlement to attorneys’ fees and that
Husband’s failure to timely appeal that ruling deprives this court of
jurisdiction to consider his challenge to the award of attorneys’ fees after
the second trial. But the court awarded Wife attorneys’ fees after each trial
for separate and independent reasons. Because Husband timely appealed
the attorneys’ fee award after the second trial, we reject Wife’s jurisdictional
argument.

¶11           We have jurisdiction over Husband’s timely appeal under
A.R.S. § 12-2101(A)(1) and Wife’s cross-appeal under A.R.S. § 12-2101(A)(2).

       II.    Mutual Mistake

¶12           Husband argues the superior court erred by failing to rescind
the Agreements because the parties mistakenly concluded therein that the
spousal-maintenance payments would remain tax deductible for Husband
and taxable to Wife throughout any spousal-maintenance term. In denying
Husband’s motion for rescission, the court interpreted the Agreements and
found no mutual mistake, noting that “the express terms of the premarital
agreement show that the parties considered that the law may change and
agreed to hold to spousal support as set forth.”

¶13          We review the superior court’s interpretation of a contract
and legal conclusions de novo. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz.
588, 593, ¶ 9 (App. 2009). Arizona courts will enforce clear and

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unambiguous terms of an agreement. Rose v. Freeway Aviation, Inc., 120
Ariz. 298, 299 (App. 1978).

¶14           The defense of mutual mistake of fact in a contract dispute
requires Husband to prove the parties made a mistake at formation about a
basic contractual assumption. Hall v. Elected Offs.’ Ret. Plan, 241 Ariz. 33,
41-42, ¶ 25 (2016); Restatement (Second) of Contracts (“Restatement”)
§ 152(1) (1981) (providing for voidability of a contract where the parties
made a mutual mistake as to a basic contractual assumption at the time of
contract formation); see also Renner v. Kehl, 150 Ariz. 94, 96-97 (1986)
(applying § 152 to address the defense of mutual mistake of fact). “A
mistake is a belief that is not in accord with the facts” or law in existence at
the time of contract formation. Restatement § 151 & cmt. a (explaining that
“mistake” refers to an erroneous belief relating to facts existing at the time
of contract formation), cmt. b (noting that the Restatement rules do not
draw a distinction between fact and law and treat the laws existing at the
time of formation “as part of the total state of facts at that time”).

¶15            Husband argues the 2010 Agreements set forth the parties’
mutual mistake that spousal-maintenance payments would be tax
deductible to Husband and taxable as income to Wife—tax consequences
that are no longer possible after a 2017 tax-code change. But a 2017 tax-code
change did not exist at the time of formation of the 2010 Agreements and
thus could not be the basis for recission based on mutual mistake. See
Restatement § 151. Husband’s hope that the tax consequences of the
parties’ 2010 Agreements would not change to his detriment is not a
mistake, but instead, at best, is a prediction or judgment as to an event that
would occur in the future. See Restatement § 151 cmt. a (explaining that an
erroneous prediction about future events is not a mistake). Moreover, by
the Agreements’ express terms, the parties contemplated a change in the
law. They expressly agreed that spousal maintenance was non-modifiable
even if there was a change in the law. Husband cannot prove that the
parties made a mistake as a matter of law. We find no error.

       III.   Impossibility

¶16         Husband asserts the superior court erred because it should
have   found the Agreements unenforceable due to supervening

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impossibility of performance after the tax-code change in 2017.1 Husband
argues the availability of the bargained-for tax deduction in the Agreements
is necessary for the performance, and given the supervening impossibility
of performance under the Agreements due to the tax-code change, the
superior court erred by not excusing him from performing. The rule of
supervening impossibility of performance, now referred to as “supervening
impracticability,”2 is set forth in § 261 of the Restatement:

       Where, after a contract is made, a party’s performance is made
       impracticable without his fault by the occurrence of an event
       the non-occurrence of which was a basic assumption on
       which the contract was made, his duty to render that
       performance is discharged, unless the language or the
       circumstances indicate the contrary.

The rule applies when a supervening event renders the performance of an
assumed duty unexpectedly impracticable. Restatement § 261 cmt. a; see
7200 Scottsdale Rd., 184 Ariz. at 345.

¶17           Here, the Agreements require Husband to pay Wife spousal
maintenance in the event of either party filing a petition for dissolution.
Husband does not argue that after the tax code changed, it would be
impossible or impracticable to perform his contractually assumed duty to
pay spousal maintenance, only that he would no longer receive the benefit
of the anticipated tax deduction. This is not a claim for impossibility or
impracticability of purpose. It was not a basic assumption of the
Agreements that the tax implications of spousal-maintenance payments
that existed at the time of formation would not later change.3 The parties

1     Wife argues Husband failed to raise this argument before the
superior court and thus waives it. But the record shows Husband argued
impossibility in conjunction with mutual mistake.

2     See 7200 Scottsdale Rd. Gen. Partners v. Kuhn Farm Mach., Inc., 184 Ariz.
341, 345 n.2 (App. 1995) (“The Restatement no longer uses the term
‘impossibility.’ Instead it substitutes the term ‘impracticability’ for
impossibility.” (citation omitted)).

3      Although a supervening event contemplated by § 261 can include a
supervening prohibition or prevention by law under § 264, the occurrence
of a supervening event may only discharge contractually assumed duties.
See Restatement § 261. Here, Husband contractually assumed the duty to

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                     SOLDWEDEL v. SOLDWEDEL
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expressly agreed that any changes in the law would not alter their duties
under the Agreements. Thus, the superior court did not err in rejecting
Husband’s motion to rescind based on supervening impossibility.

      IV.    Preclusion of Poisoning Evidence

¶18            Husband argues the superior court erred when it enforced the
terms of the Agreements because it wrongfully precluded Husband from
presenting evidence of alleged poisoning that he argued was relevant to
prove his claim the Agreements are unenforceable under A.R.S. § 25-202.
We review evidentiary rulings for an abuse of discretion. Kimu P. v Ariz.
Dep’t of Econ. Sec., 218 Ariz. 39, 42, ¶ 11 (App. 2008).

¶19           Fraud in the inducement to render an agreement
unenforceable on voluntariness grounds under A.R.S. § 25-202 must exist
at the time of execution of the agreement. See Spector v. Spector, 23 Ariz.
App. 131, 140 (1975). Here, any evidence of alleged poisoning years after
the marriage had no tendency to make the fact of Husband’s voluntariness
at the time of execution of the Agreements in 2010 more or less likely and
was irrelevant to Husband’s fraud in the inducement defense to the validity
of the Agreements. See Ariz. R. Evid. 401(a).

¶20           Husband argues the superior court was required to consider
subsequent-acts evidence from which it could infer and determine Wife’s
fraudulent intentions. Although evidence of other acts may be admissible
to prove intent under Arizona Rule of Evidence 404(b), the evidence must
still have independent relevance. See State v. Hays, 17 Ariz. App. 202, 205
(1972). As discussed supra, there is no relevant purpose here. Thus, the
superior court did not abuse its discretion in precluding the irrelevant
poisoning evidence.

      V.     Attorneys’ Fees

¶21           Husband asserts the superior court erred by awarding Wife
attorneys’ fees in the decree based on the terms of the Agreements and
A.R.S. § 25-324, a ruling we review for an abuse of discretion. Gutierrez v.
Gutierrez, 193 Ariz. 343, 351, ¶ 32 (App. 1998).

¶22          Given the pre-marital agreement provision for attorneys’ fees
under a prevailing-party standard, the superior court found Wife the
prevailing party and awarded her attorneys’ fees partly on that basis. Wife

pay Wife spousal maintenance. His tax obligations are not a contractually
assumed duty.

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concedes the prevailing-party standard is erroneous under Breitbart-Napp
v. Napp, 216 Ariz. 74, 84, ¶ 39 (App. 2007), and Bobrow v. Bobrow, 241 Ariz.
592, 593, ¶ 1 (App. 2017) (holding pre-marital agreements stipulating to a
prevailing-party standard for awarding attorneys’ fees violate public policy
per se).

¶23           However, the superior court also awarded Wife attorneys’
fees pursuant to A.R.S. § 25-324, finding Husband had “far greater financial
resources than Wife,” which Husband does not dispute. Although the court
did not address the reasonableness of the parties’ positions in the decree,
which is an additional prerequisite factor relevant to awarding attorneys’
fees under A.R.S. § 25-324, we presume the court made a factual finding
that Husband’s position was unreasonable. See Gen. Elec. Cap. Corp. v.
Osterkamp, 172 Ariz. 191, 193 (App. 1992) (stating that any additional
findings necessary to uphold the judgment are implied if reasonably
supported by the evidence and not in conflict with the court’s express
findings). The record supports this implied factual finding. At the first trial
in 2019, Husband waived all defenses to the validity of the Agreements
except for fraud in the inducement. Despite this waiver, Husband again
challenged the validity of the Agreements before the second trial in 2020,
urging the court to rescind the Agreements based on mutual mistake and
supervening impossibility due to a tax-code change in 2017. The court
rejected these arguments, noting that although Husband argued the
Agreements should be invalidated because a 2017 tax-code change would
render spousal-maintenance payments tax neutral, the express terms of the
Agreements showed the parties considered future law changes and agreed
spousal maintenance was not modifiable. We find no abuse of discretion.

       VI.    Denial of Rule 83 Motion

¶24            In her cross-appeal, Wife argues the superior court erred in
denying her Rule 83 motion that requested monthly spousal-maintenance
payments be paid by order of assignment through the support-payment
clearinghouse per A.R.S. § 25-504(A). We review the family court’s denial
of a Rule 83 motion for an abuse of discretion. See Pullen v. Pullen, 223 Ariz.
293, 296, ¶ 10 (App. 2009). Abuse of discretion includes committing an error
of law. City of Tucson v. Clear Channel Outdoor, Inc., 218 Ariz. 172, 189, ¶ 58
(App. 2008).

¶25          Section 25-504(A) provides that “[i]n a proceeding in which
spousal maintenance is ordered to be paid the court shall order the
assignment on either party’s request.” In its denial of Wife’s motion, the
superior court stated that the statute requires formal request, but that Wife

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                      SOLDWEDEL v. SOLDWEDEL
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had only informally requested assignment via email and Husband had
complied with spousal-maintenance payments. The court’s finding that
Wife’s informal email request was insufficient is an implied finding that she
did not raise the matter before filing the Rule 83 motion and thus waived it.
See Osterkamp, 172 Ariz. at 193. But waiver is discretionary. See Nold v. Nold,
232 Ariz. 270, 273, ¶ 10 (App. 2013). The statute mandates assignment upon
request. A.R.S. § 25-504(A). The statute does not define request, preclude
informal requests, nor set forth any timing, formality, or compliance
parameters. We see no reason why A.R.S. § 25-504(A)’s provision
mandating assignment upon request should not apply after the court
entered the decree and on Wife’s request. Accordingly, we vacate the
court’s denial of Wife’s motion to alter or amend the decree and remand for
the court to order assignment.

                              CONCLUSION

¶26            For the foregoing reasons, we affirm the superior court’s
rulings in the decree, vacate the denial of the motion to alter or amend, and
remand for the court to order assignment. In our discretion, we decline to
award requested attorneys’ fees on appeal to either party pursuant to A.R.S.
§ 25-324. We award taxable costs on appeal to Wife upon compliance with
Arizona Rule of Civil Appellate Procedure 21.

                            AMY M. WOOD • Clerk of the Court
                            FILED: AA

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