Court Opinion

ID: 9384627
Source: CourtListenerOpinion
Date Created: 2023-04-04 16:02:46.334622+00
Date Added: 2024-06-11T17:17:55.139397
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:

                ARACELY RIOS ACUNA, Petitioner/Appellee,

                                         v.

      MARVIN GEOVANNI PRADO PINEDA, Respondent/Appellant.

                            No. 1 CA-CV 21-0603 FC
                                 FILED 4-4-2023

            Appeal from the Superior Court in Maricopa County
                           No. FN2019-006227
                  The Honorable Michael Rassas, Judge

                                   AFFIRMED

                                    COUNSEL

Strong Law, Phoenix
By Marc R. Grant Jr.
Petitioner/Appellee

Michael L. Gertell LLC, Phoenix
By Michael L. Gertell
Counsel for Respondent/Appellant
                           ACUNA v. PINEDA
                           Decision of the Court

                      MEMORANDUM DECISION

Judge Cynthia J. Bailey delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Vice Chief Judge David B. Gass
joined.

B A I L E Y, Judge:

¶1           Marvin Geovanni Prado Pineda (“Husband”) appeals the
superior court’s decree of dissolution. He argues the court erred in (1)
awarding a parcel of real property (“the Montecito property”) to Aracely
Rios Acuna (“Wife”) as her sole and separate property with no community
lien to Husband and (2) applying the Drahos1 formula to calculate the
community liens on two other properties (“the Hubbell property” and “the
Cholla property”) purchased during the marriage. For the following
reasons, we affirm.

                 FACTS AND PROCEDURAL HISTORY

¶2           In October 2019, Wife petitioned to dissolve the parties’ five-
year marriage. The primary issues at trial (and now on appeal) concerned
whether to characterize the three properties—the Montecito, Hubbell, and
Cholla properties—as Wife’s separate property or community property and
whether a community lien should attach to any of them.

¶3            In March 2014—two months before the parties married—Wife
entered an agreement to purchase the Montecito property, and a warranty
deed conveying the property to Wife was recorded that month. In 2015—
during the marriage—the parties acquired the Hubbell and Cholla
properties to use as rental properties. In 2017, Husband signed separate
warranty deeds conveying the Hubbell and Cholla properties to Wife as her
sole and separate property.

1      See Drahos v. Rens, 149 Ariz. 248 (App. 1985). This court refined the
Drahos formula in Barnett v. Jedynak, 219 Ariz. 550 (App. 2009), and the
formula may also be called the Drahos/Barnett formula. See Saba v. Khoury
(Saba II), ___ Ariz. ___, ___, ¶ 1, 516 P.3d 891, 893 (2022), vacating Saba v.
Khoury (Saba I), 250 Ariz. 492 (App. 2021).

                                      2
                           ACUNA v. PINEDA
                           Decision of the Court

¶4           The court held a trial in July 2021. Both parties testified and
presented exhibits regarding the real property characterization, valuation,
and division matters, and each presented expert testimony on whether
Husband’s signatures on the May 2017 warranty deeds had been forged.

¶5            After taking the matter under advisement, the court issued
the dissolution decree in August 2021. The court awarded the Montecito
property to Wife as her sole and separate property with no community lien.
The court also found that Husband had signed the warranty deeds to the
Hubbell and Cholla properties in 2017 and awarded both properties to Wife
as her sole and separate property, while calculating a community lien of
$188,193.20 on the Hubbell property and $84,530.59 on the Cholla property.
The court ordered Wife to pay Husband his half of each lien on the two
properties.

¶6            Husband filed a timely notice of appeal. We have jurisdiction
under Article 6, Section 9, of the Arizona Constitution and Arizona Revised
Statutes (“A.R.S.”) section 12-2101(A)(1).

                               DISCUSSION

       I.     Montecito Property Award

¶7             Husband argues the superior court erred when it awarded the
Montecito property to Wife without awarding him an equitable lien on the
property. He contends he is entitled to such a lien because (1) trial exhibits
raise questions whether the property was “completely paid in full before
the marriage” as Wife testified and the court found, (2) the parties used
community funds to pay for the mortgage and improvements, and (3) he
testified he performed work on the Montecito property.

¶8            We view the evidence in the light most favorable to
upholding the decree. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 522, ¶ 1
n.1 (App. 2007). Although we review de novo the court’s classification of
property as separate or community, we review the distribution of property
for an abuse of discretion. Id. at 523, ¶ 4.

¶9            We will affirm if substantial evidence supports the court’s
decision, Hurd v. Hurd, 223 Ariz. 48, 52, ¶ 16 (App. 2009), and absent an
abuse of discretion, will not substitute our opinion for that of the superior
court, Deatherage v. Deatherage, 140 Ariz. 317, 319 (App. 1984). We defer to
the superior court’s credibility determinations and the weight it gave any
conflicting evidence, Gutierrez v. Gutierrez, 193 Ariz. 343, 347, ¶ 13 (App.
1998), and we will not set aside the court’s findings of fact unless they are

                                      3
                            ACUNA v. PINEDA
                            Decision of the Court

clearly erroneous, Ariz. R. Fam. Law P. 82(a)(5). We also assume the court
considered all relevant information in the record. See Aguirre v. Robert
Forrest, P.A., 186 Ariz. 393, 397 (App. 1996).

¶10           Here, Husband contended that he and Wife used community
funds to pay the mortgage on the Montecito property; Wife testified,
however, that she purchased the property as her sole and separate property
and that she fully paid any balance owed on the property before the
marriage. Although some evidence supports Husband’s contention, Wife
explained or offered controverting testimony. And in determining there
was no community interest in the Montecito property, the court found that,
although Husband testified that he made repairs and remodeled the home,
he failed to provide corroborating evidence. In effect, the court found
Husband less credible than Wife on this issue, a determination we will not
revisit. See Gutierrez, 193 Ariz. at 347, ¶ 13. Husband’s arguments to the
contrary are insufficient to show error. See Gen. Elec. Cap. Corp. v. Osterkamp,
172 Ariz. 191, 193 (App. 1992).

       II.    Hubbell and Cholla Property Awards

¶11          Husband argues the superior court erred when it awarded the
Hubbell and Cholla properties to Wife and calculated a community lien
using the Drahos formula. Husband argues that, at minimum, he should
have received “half of the equity of the value of the properties” because
they were purchased during the marriage, and paid for and improved with
community funds.

¶12           Property acquired during marriage is presumed to be
community property, see A.R.S. § 25-211(A), and a spouse seeking to rebut
that presumption must prove by clear and convincing evidence that the
property is separate, Brebaugh v. Deane, 211 Ariz. 95, 97-98, ¶ 6 (App. 2005)
(citation omitted). A signed disclaimer deed, absent fraud or mistake,
rebuts the community presumption. See Bell-Kilbourn, 216 Ariz. at 522-24,
¶¶ 1, 9-12. Much like a signed disclaimer deed, the warranty deeds
Husband signed in 2017 provided proof that the parties by agreement
changed the Hubbell and Cholla properties’ status. See In re Sims’ Estate, 13
Ariz. App. 215, 216-17 (1970). Husband attempted to nullify the warranty
deeds’ effect by showing that the deeds resulted from fraud. See Powers v.
Guar. RV, Inc., 229 Ariz. 555, 562, ¶ 27 (App. 2012). But the court rejected
that claim, and Husband does not challenge that determination on appeal.
Accordingly, Husband has not shown that finding was error, and the
Hubbell and Cholla properties are Wife’s separate property subject to an
equitable lien on each.

                                       4
                            ACUNA v. PINEDA
                            Decision of the Court

¶13           Determination of the community interest in an equitable lien
in separate property is a mixed question of fact and law. Valento v. Valento,
225 Ariz. 477, 481, ¶ 11 (App. 2010). We defer to the superior court’s factual
findings but review its legal conclusions de novo. See Helvetica Servicing, Inc.
v. Pasquan, 249 Ariz. 349, 352, ¶ 10 (2020).

¶14           A community’s interest in appreciated separate property can
generally be calculated using the Drahos formula: C + [(C/B) x A], where A
= appreciation in the separate property’s value during the marriage, B = the
appraised value of the separate property as of the date of the marriage (or
the purchase price if purchased later), and C = the community’s
contributions to principal. See Saba II, 516 P.3d at 895, ¶ 12; Femiano v.
Maust, 248 Ariz. 613, 617, ¶ 19 (App. 2020), disapproved in part by Saba II, 516
P.3d at 897, ¶¶ 18-19. The formula is “a value-at-dissolution formula which
takes into account the enhanced value of the property . . . rather than an
amount-spent formula, which is a simple reimbursement scheme.” Drahos,
149 Ariz. at 250. Thus, it “is an appropriate starting point for courts to
calculate a marital community’s equitable lien on a spouse’s separate
property.” Saba II, 516 P.3d at 896, ¶ 14 (footnote omitted).

¶15           Relying on Femiano, Husband argues the court erred in
applying the Drahos formula because the Hubbell and Cholla properties
were purchased during the marriage and no separate funds were spent on
them. See Femiano, 248 Ariz. at 617-18, ¶¶ 20-21, 23. Femiano distinguished
Drahos by noting “that formula was crafted in a context of a separate
property residence on which both separate and community funds were
expended.” Id. at 614-15, ¶ 1. Femiano ruled a marital community is entitled
to an equitable lien for the full increase in equity “if the community pays all
costs associated with purchasing and improving a separate property
residence acquired during marriage—with no separate capital
contributions.” Id. at 615, ¶ 1.

¶16          Our supreme court rejected Husband’s reasoning in its recent
opinion in Saba II, however, which disagreed with Femiano‘s analysis and
conclusion, and instead held:

       The formula [the Femiano court] introduces effectively treats
       separate property as community property, giving no credit
       for the separate ownership of the property. Again, the object
       is a fair reimbursement of community funds, not an equitable
       division of property. The holding in Femiano assumes that the
       community’s contributions are the sole cause of the
       property’s increase in value and fails to credit the separate

                                       5
                             ACUNA v. PINEDA
                             Decision of the Court

       property owner with any increase in value due to simple
       market appreciation. We disapprove Femiano.

Saba II, 516 P.3d at 897, ¶ 19 (footnote omitted).2

¶17           The superior court found that Wife failed to meet her burden
to show that she used sole and separate funds to purchase or make
mortgage payments on the Hubbell and Cholla properties. The court
further noted and ostensibly found credible Husband’s testimony that he
contributed to those properties by making improvements and restoring the
Cholla home, which had previous “burn damage.” Based on these findings,
the court determined that a community lien on each property was
appropriate despite Husband’s decision to sign the warranty deeds, and the
court applied the Drahos formula in calculating the community liens.
Husband has shown no abuse of discretion, as the superior court was not
necessarily bound by any one calculation method, but could select a
method that appeared to “achieve substantial justice between the parties.”
Saba II, 516 P.3d at 896, ¶ 16 (quoting Cockrill v. Cockrill, 124 Ariz. 50, 54
(1979)). Accordingly, we affirm the superior court’s community lien
valuations on the Hubbell and Cholla properties.

       III.   Attorneys’ Fees and Costs on Appeal

¶18           Both parties request an award of attorneys’ fees on appeal
pursuant to A.R.S. § 25-324. Having considered the relevant factors and in
an exercise of our discretion, we decline to award attorneys’ fees to either
party. We award Wife her taxable costs upon compliance with Rule 21,
ARCAP.

2      Our supreme court further noted that “the Femiano court also
neglected to account for the fact that the owner spouse is still liable for the
balance on the loan after dissolution. This mistakenly allocated all the
benefit from the purchase of the property to the community but none of the
risk.” Saba II, 516 P.3d at 897, ¶ 19 n.5 (citing Saba I, 250 Ariz. at 497, ¶ 17).
The owner spouse in Saba I and II was solely liable for the outstanding loan
balance, whereas here, both Wife’s and Husband’s names are still on the
loan documents. Thus, Husband continues to bear some of the associated
risk, but he develops no argument as to how his case might be compared
with or distinguished from Saba II on this basis, meaning he has waived any
such argument. See State v. Carver, 160 Ariz. 167, 175 (1989); Cruz v. City of
Tucson, 243 Ariz. 69, 75, ¶ 23 (App. 2017).

                                        6
                   ACUNA v. PINEDA
                   Decision of the Court

                      CONCLUSION

¶19   The superior court’s dissolution decree is affirmed.

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

                               7